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FIAT size

Thanks to Ed at Caribou for the very interesting unit auto sales data from
Europe. Here are some comments on the data and on Ed's observations.

The claim that FIAT is Europe's largest automaker really means FIAT is the
largest European COMPANY that is also making cars. FIAT is a very large
producer of other transportation and industrial equipment. When you add up
all their sales, worldwide, they are HUGE. As a corporation,  they are
bigger than Chrysler, and I believe, bigger than Ford.

Ed pointed out that 100,000 units sold in the U.S. would only add 6.2% to
their unit sales volume.  However, this COULD be very profitable business.
Incremental sales are the most-profitable sales, because the cost of units
sold is only  the variable cost -- the fixed costs of development, tooling,
etc., are already paid. Some producers could make good money on .1 million
incremental cars. MG, Austin, Jaguar, Morris, and lots of others never sold
near this number per year in the U.S. and still found it an attractive
market. Unfortunately, FIAT has not demonstrated the ability to market
EFFICIENTLY in the U.S., so they could still lose money by not managing the
selling and operating costs well, but they would have to work hard at it.
Of course, they should NOT use the FIAT brand on the car, but one of their
other brands or a new new name, if they did come back.

Although Mercedes only surpassed 100,000 units sold in 1997, this isn't
because they COULDN'T achieve this level in less than 40 years. Keeping
sales at annual levels below 100,000 units was part of their pricing
strategy. The strategy was to maintain semi-exclusivity by constraining
supply and consequently keeping the price high. It has worked well.

In the end, Ed is most-likely right -- don't hold your breath waiting for
FIAT to return to the U.S. UNLESS there is a serious, extended economic
downturn in Europe. Then they will all be back, dumping LST-loads of
marques on our shores -- some we haven't seen here since the sixties and
some we've never seen before.

Paul Rollins
Vancouver, WA

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