Fiat said to invest $12 billion euros to help end Europe losses, revive Italian plants

Fiat Group plans to invest as much as 9 billion euros ($12.3 billion) on new models to end European losses in three years and revive nearly empty Italian factories, two people familiar with the matter said.

In addition to bolstering the upscale Maserati and Alfa Romeo marques with new Italy-built models, the carmaker will focus the Fiat line on variants of the 500 subcompact and the budget-oriented Panda small car, and ditch the Punto subcompact, a former best seller, said the people, who asked not to be identified because the discussions are private.

Fiat brand CEO Olivier Francois has said the Panda family will be aimed at budget-conscious customers while 500 models will target buyers willing to pay extra to have a more premium product. "The Fiat brand has two dimensions, Panda-500, functional-aspirational, left brain-right brain," Francois said in a recent interview with Automotive News Europe.

"It's a brave and historic move to abandon your roots," said Roberto Verganti, a management professor at Milan Polytechnic and the author of the 2009 book "Design-Driven Innovation." "Going upscale with cool, high-margin 500 and Alfa models is the only possible strategy to continue building cars in Italy."