Fiat hikes production of 500 minicar to 200,000 units

Fiat has boosted production of its popular 500 minicar to more than 200,000 units annually in response to increasing European demand for fuel-efficient compacts.

"Capacity for the 500 is now over 200,000 units a year," Fiat group CEO Sergio Marchionne said last week in a conference call with analysts.

Fiat now plans to sell 195,000 units of the popular 500 during 2008.

The Italian carmaker initially planned to sell 120,000 units this year. High demand for fuel-efficient small cars saw Fiat lift the target to 140,000 units earlier this year.

Fiat booked 230,000 dealer orders for the 500 between the car's July 2007 introduction and the end of its June 2008 reporting period, the company said.

The company said it sold 94,000 units in the first half of 2008.

Market researcher Jato Dynamics said the Fiat 500 was the Europe's second best-selling minicar over the January to May period, with 76,533 units sold.

The 500 was second to the Fiat Panda – the segment leader since 2004 – which sold 101,645 units in the first five months of the year, Jato said.

The Renault Twingo was the third best-selling minicar, with 59,855 sales over the January to May period.

Fiat launched the 500 in mid-July in India, where a 98 percent import duty has transformed the high-volume minicar into a premium model.

A 1.3-liter, 75hp diesel 500 in India costs the equivalent of 22,500 euros, compared to 14,750 euros in Italy.

Pricing is expected to limit demand and volume for the 500 in India. "This is a lifestyle product. We expect to sell a few hundred cars in the next 12 months," said Rajeev Kapoor, CEO of Fiat India Automobiles.

Fiat India Automobiles is a joint venture between the Italian automotive group and India's Tata Motors.

Ford plant in Germany might cut 700 engine-making jobs

Ford Motor's plant in Cologne, Germany might have to cut 700 out of the nearly 1,000 jobs working at the engine production plant if it is not awarded the contract to make three-cylinder engines, a company spokesman said.

He said the 700 will be transferred to other jobs elsewhere at the plant because the union has an agreement with management that there will be no mandatory layoffs until 2011.

The facility currently produces six-cylinder engines but will be stopped "in the foreseeable future". He declined to give a timeframe.

Discussions are going on whether the production of three-cylinders would be made at the Cologne plant or in Craiova, Romania, or split between the two sites.

He rejected German media reports that the Cologne plant is on the brink of being shut down.

The Cologne plant employs 17,300 people, of which almost 1,000 are in the engine production facility. The engine facility currently makes around 100,000 engines annually, mainly for the U.S. market.