Mature Market Vehicle Production : Italy

The 127 model, when Fiat made desirable, fun cars

Italy is known for design and flair. It has injected these qualities into its cars, well most of the time. No one always gets it right. Looking at the Italian car industry is a lesson in how to do things and and how not do them as well.

As Europe picked itself up from the horrendous events of mid-century, car making was soon a major part of the recovery. As the standard of living improved, so did car sales. Italy had a strong level of protection initially and the roads were soon swarming with Italian made vehicles.

Import duties went with time and more brands were seen on the roads. This didn't hurt the Italian car making so much as an inflexible working conditions creating inefficiency and later some poor cars that came along. Fiat lost market share in Europe and capacity soon exceeded demand. New models were eventually made elsewhere, not at home.

Fiat still has sizable production volume but not much of it in Italy anymore as just mentioned. From 1989 to 2013 Italian car production (excluding CVs) dropped every year almost without exception. 2014 saw a slight improvement and that only because of Jeep. Jeep should help car production increase in 2015 and beyond.

We can see in the list below how the problem has been cars and not so much CV production, which has been more stable. It now accounts for over 40% of the total.

	Year	Vehicle	Car	CV	% CV
	1950	128,000	101,000	27,000	21.1%
	1955	269,000	231,000	38,000	14.1%
	1960	645,000	596,000	49,000	7.6%
	1965	1,176,000	1,104,000	72,000	6.1%
	1970	1,854,000	1,720,000	134,000	7.2%
	1975	1,459,000	1,349,000	110,000	7.5%
	1980	1,610,000	1,445,000	165,000	10.2%
	1985	1,573,000	1,389,000	184,000	11.7%
	1990	2,121,000	1,875,000	246,000	11.6%
	1995	1,667,000	1,422,000	245,000	14.7%
	2000	1,738,000	1,422,000	316,000	18.2%
	2005	1,041,000	726,000	315,000	30.3%
	2010	838,000	573,000	265,000	31.6%
	2014	698,000	401,000	297,000	42.6%

Summary: When a car maker decided to make cars elsewhere and not at home, you know something is wrong. The failure to address that has been costly in the long run. Short term pain leads to long term gain but if you refuse to bite the bullet, then it only makes things worse in the long run. Italy seems a classic case of that failure. 

Picture credit: Martin Šimon.