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Fiat two-year plan could be last throw of the dice

Fiat Auto chief executive Giancarlo Boschetti has two years to turn the company into a profitable part of the larger Fiat Group. His strategy, outlined to analysts last month, is effectively the last throw of the dice - failure would force Fiat Group to invoke the put option negotiated with General Motors when it took a 20 per cent stake in the auto division.

Boschetti has cut seven per cent of the workforce and aims to cut expenses in areas not linked to customers - saving nearly £400m.

He also intends moving away from fast turnover, low profit fleet business like daily rental and reduce the number of model variants in the car range. But slashing costs alone will not ensure survival. For that to happen Fiat needs to sell more cars across its three main operations: Fiat, Alfa Romeo and Lancia.

Fiat has now outlined new cars it hopes will lead to sales growth across Europe over the next few years. They include replacements for the Fiat Punto and a new D-sector car - both vital to the company's revival.

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