By Paola Arosio and Jennifer Clark
MILAN/TURIN, Sept 24 Italian carmaker Fiat
plans to start making cars at its idled Italian
factories to sell in the United States, a source close to the
matter said on Monday, as the government mulls fiscal and other
incentives to help the group's exports.
Chief executive Sergio Marchionne, who also runs
majority-owned U.S. carmaker Chrysler, met Italian Prime
Minister Mario Monti on Saturday to discuss how Fiat can keep
its factories open at a time when car sales have plunged to
their lowest level in 40 years.
A joint statement after the five-hour meeting said Fiat
would refocus its domestic business model to making cars in
Italy for export outside Europe but little detail has emerged
from the talks.
"We may introduce mechanisms for Fiat and for the entire
manufacturing sector, destined to make exports easier either in
fiscal terms or otherwise," Industry Minister Corrado Passera,
who attended the meeting with Marchionne, said on Monday.
A person familiar with the situation said Fiat would use
loss-making Italian factories to produce cars to sell in the
United States, where the market is growing and Chrysler's
factories are already running at full capacity.
Italian factories could make Jeep and Chrysler models, the
No firm commitment or timetable has yet emerged for the
Fiat will no longer release a detailed strategy on products
and plants on Oct. 30 as previously planned, two sources close
to the matter said. Fiat declined to comment.
Marchionne reiterated the company's targets on Monday at an
industry conference in Turin where he said he does not see the
European car market recovering until at least 2015.
"The European car market is a disaster. It has plunged off a
precipice that doesn't seem to have bottomed out yet. The
prospects are anything but rosy," Marchionne said.
GOVERNMENT GETS INVOLVED
Marchionne was called in by Monti to detail Fiat's strategy
for its Italian plants as the economic recession heightens fears
of job losses at the country's biggest private employer.
Monti, already struggling to cut public spending to balance
Italy's budget, said on Monday Marchionne had not asked at their
meeting on Saturday for aid or extra cash for a state-funded
"Financial aid was not asked for, and had it been requested
it would not have been given," Monti said in Rome.
Any specific aid to Fiat is bound to be resented by voters
in a country where the euro zone debt crisis has forced millions
to tighten their belts, creating a political hot potato.
The combined Fiat-Chrysler group, which now makes more than
two thirds of its profits in the United States, had so far only
earmarked a fraction of the 16 billion euros ($21 billion) of
new investments in Italy which Marchionne outlined in a
five-year plan in 2010.
That stalled investment plan has created a public relations
firestorm for Fiat in Italy, where it is the biggest private
industrial group and employs more than 20,000 people.
It promised the investments in return for greater labour
flexibility. New labour contracts are now in place at its
plants, but in the meanwhile Fiat has shifted some production to
lower cost countries and put investments in Italy on hold.
"We are none the wiser after the meeting with the
government," said Giorgio Airaudo of the FIOM union. "It's all
very well to say we'll make cars to export, but until they say
which models and how many cars we are back to square one."
Marchionne has said he will not waste money by making
investments during a five-year European market slump. Fiat will
lose 700 million euros in Europe in 2012, he said last week.
"We are facing a crossroad, the choice is between reducing
output capacity and firing thousands of employees ... or trying
to use our skills, our knowledge of products and processes, the
technology of our plants, to make inroads in foreign markets,"
Marchionne told an industry conference on Monday.
Analysts, however, have so far appeared unimpressed with the
talk of an export-led solution to Fiat's deep problems.
"It remains our view that fixing Fiat's European business
will be tough to achieve without a significant reduction in
capacity," Deutsche Bank said in a note to investors after the
weekend meeting between Monti and Marchionne.
Italian broker Banca Akros also said it was unclear how Fiat
could increase exports from Italy in the short term if it
Fiat's shares were up two percent at 4.58 euros at 1450 GMT,
when the Stoxx Europe 600 automotive sector index was
down 0.5 percent.