Fiat Reduces Production of the 500L to Avoid Overcapacity image

Fiat plans to manufacture 180,000 units of the 500L model by the end of this year, but the delay in launching the model in Russia will cut production to 110,000-140,000 units.

Fiat announced that it will reduce production of the 500L for this year from the initial target of 180,000 units, to be built at the automaker’s plant in Serbia. The target has been reduced to between 110,000-140,000, due to the delay in launching the model in Russia. This is the market where the 500L should have hit a boost in sales. If the delay will continue, Fiat might be forced to further reduce production.

Although Serbia and Russia have a free-trade agreement, this does not include vehicles. This means that the 500L will be subject to a tax in Russia, which might be a reason for this delay. The Serbian government tries to sign an agreement with the Russian officials to make the 500L imports-process easier. Fiat’s plant in Kragujevac has been built as a JV between the Italian automaker and the Serbian government which owns 33% of the shares.

Currently, the plant builds vehicles for Western Europe and has 2,500 employees. The automaker will add 600 more workers, needed for the 500L production. The increase in workforce and the 1 billion euro investment shows Fiat’s decision to revive an old plant was not such a bad idea after all.

Source: Automaket