Fiat may start Italy car plant investments in coming weeks

Fiat's Mirafiori and Melfi plants will be among the first to be re-tooled for new models in the Italian carmaker's plan to fix its struggling European business, and work may begin within weeks, a union source said.

A sharp downturn in Europe has forced Chief Executive Sergio Marchionne to focus on bolstering the company's European activities instead of buying more shares in U.S. automaker Chrysler Group LLC, which it also controls.

Shares in Fiat closed 4.3 percent lower on Wednesday as investors doubted that a plan by the carmaker to fix its money-losing European operations by increasing investment in premium brands Alfa Romeo, Maserati and Jeep would work.

Fiat's revised 2013-2014 plan, presented to unions on Tuesday, cuts sales targets and pledged increased spending to shift the focus onto the carmaker's higher-margin brands. It calls for three new car models to be built in Italy next year, and six new models in Italy in 2014.

Europe's debt crisis, government spending cuts and high unemployment have hit consumer budgets and sent demand for cars plunging, with new car registrations in the region showing their sharpest contraction in 12 months in September and mass-market automakers bearing the brunt of the slump.

Fiat did not provide model names or details in the new product plan, which was being deciphered in bits and pieces by unions and analysts on Wednesday.

For 2013, the plan shows that Fiat will make four cars: a new Fiat made outside Italy (probably the seven-door 500L, in Serbia); a new Alfa Romeo in Italy (probably the 4C sportscar, in Modena); and two already-announced Maseratis, at its new Officine Maserati di Grugliasco (OMG) plant in Turin.

In 2014, the company plans to make a new Fiat, which unions believe could be a sports utility vehicle (SUV), or a new Jeep, likely to be made at Melfi, where workers making the Punto compact are sitting at home several days a week on a temporary layoff scheme.

Two Alfa Romeos are on the cards for 2014. One may be the long awaited Giulia sedan, to be made in Cassino, which builds the Giulietta, the Fiat Bravo and the Lancia Delta, union sources said.

The other is a high-end Alfa Romeo, possible a substitute for the 164, to be made at Mirafiori in Turin, they added.

A new Maserati may be made at Mirafiori in 2014. This is likely to be the Levante SUV, which was earmarked for Chrysler's Jefferson North plant in Detroit where it makes the Jeep, said a union representative who attended the Tuesday meeting.

Given the new models planned for 2014, work at Mirafiori and Melfi should start in a few weeks, said a union source. Fiat previously planned to make a small Fiat-branded SUV at the plant at the end of 2013 and a small Jeep SUV in 2014.

The huge flagship Mirafiori factory, which is almost fully idled, will instead be twinned with the OMG to make high-end cars, Marchionne said during the presentation.

LESS CLEAR IN 2015

Visibility in 2015 is dimmer. Fiat aims to make four Fiat-branded cars outside Italy, of which one outside Europe.

Union sources believe that the Punto and Bravo models will be progressively shifted out of Italian factories and transferred to Poland to supply Eastern European markets.

The other Fiats made outside Italy should be Fiat 500s, to be made in Serbia.

In 2015 the company envisions making three Alfa Romeo models and two Maseratis, its presentation showed. These cars could be made at Mirafiori, which would have enough space to accommodate them as they are likely to be high-end and not mass market cars.

(Correcting to include name of Melfi plant, as per original story in Italian.)

(Reporting by Stefano Rebaudo; Editing by Helen Massy-Beresford)