Fiat, Peugeot to Invest $900 Million in Van Venture

Fiat SpA (F) and PSA Peugeot Citroen (UG) plan to invest more than 700 million euros ($900 million) on new delivery vans over five years to cut costs as they replace aging models.

Fiat will invest 550 million euros, while Peugeot will invest 150 million euros in developing new versions of the full-sized Fiat Ducato, Peugeot Boxer and Citroen Jumper models, Turin-based based Fiat said today. The vehicles will be built at the manufacturers’ SevelSud plant in Italy.

With the extension of the van partnership, “we are relaunching a bet together with Peugeot,” Fiat Chief Executive Officer Sergio Marchionne said today at an event at the factory in Val Di Sangro. “We have started the investment, including development costs for products and works to modernize the plant.”

Fiat and Peugeot, which already cooperate at SevelSud on assembly of the models, agreed in May 2011 to end a similar partnership to make mid-sized delivery vans in France. Paris-based Peugeot plans to invest more than 750 million euros to produce a new vehicle on its own at the SevelNord plant.

The cooperation at the SevelSud joint venture factory runs to 2019, according to the companies. A Peugeot representative wasn’t immediately available to comment on the investment plans.

Photographer: Alessia Pierdomenico/Bloomberg

Peugeot Boxer vans travel along the production line at the SevelSud van manufacturing plant, jointly operated by Fiat SpA and PSA Peugeot Citroen, in Val Di Sangro, near Atessa, Italy. Close

Peugeot Boxer vans travel along the production line at the SevelSud van manufacturing... Read More

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Photographer: Alessia Pierdomenico/Bloomberg

Peugeot Boxer vans travel along the production line at the SevelSud van manufacturing plant, jointly operated by Fiat SpA and PSA Peugeot Citroen, in Val Di Sangro, near Atessa, Italy.

Marchionne said further investment in Italy, where Fiat’s factories are under-used because of slumping European car demand, will require reforms that should be agreed on with unions, businesses and the government.

Fiat “needs clear and reliable rules” before investing in more projects in its home country, the CEO said today. The company “won’t put its survival at risk.”

Fiat is in a legal dispute with the Fiom union over new labor rules, including longer shifts and shorter breaks. Fiom, which claimed the new rules are anti-union, didn’t sign the contract. Fiom is part of Italy’s biggest union Cgil.

To contact the reporter on this story: Tommaso Ebhardt in Milan at tebhardt@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net

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