ROME Fiat SpA FIA.MI chief Sergio Marchionne assured Italy's industry minister at their first face-to-face meeting on Friday that the country's largest employer will not cut jobs.
Newly-appointed minister Flavio Zanonato had recently asked Fiat "to stay in Italy" after its planned merger with U.S. unit Chrysler next year, which Italian unions fear will herald a move of the group's headquarters to the United States.
Fiat and Zanonato pledged to work together to relaunch Italy's recession-hit car market, the ministry said in a statement, and stressed the importance of the group's Italian manufacturing base as part of its brand image.
Zanonato met with Marchionne and Fiat's controlling shareholder John Elkann, both of whom gave assurances Fiat intends to maintain employment even as Italy's car market shrinks to levels last seen in the 1970s.
Italian car sales fell nearly 20 percent last year and are seen falling 5 percent more this year to about 1.3 million vehicles. The Italian government, already grappling with a recession and austerity-mandated budget cuts, has few tools at hand to help sales revive.
Yet Fiat has plans to build Jeeps and a new line of Alfa Romeos in Italy, for export to markets in Asia, Latin America and the United States.
"The meeting went really well," Marchionne told reporters in Rome. "We have confirmed our commitments for Italy."
Despite Fiat's plants running at well below capacity, the carmaker has repeatedly reassured politicians and unions it does not intend to close factories, unlike mass-market competitors Ford Motor Co (F.N), General Motors Co (GM.N) and Peugeot SA (PEUP.PA), which have said they will shutter plants.
Fiat loses money in Europe and its profits come from its luxury marques Ferrari and Maserati, as well as sales of mass- market brands in the U.S. and Brazilian markets.
"The meeting took stock of the automotive market's situation and offered the chance to take the first step in working together to relaunch Italy's car market," the Ministry said.
Along with Fiat's commitment to keep a manufacturing base in Italy, politicians are eyeing plans for the merger with Chrysler for any signs of a lessening role in Italy.
Zanonato requested the meeting with Marchionne after Fiat's sister company, truck and tractor maker Fiat Industrial SpA FI.MI, said it plans to shift its tax residence to Britain following a planned merger with its U.S. unit CNH Global NV CNH.N.
Fiat and Fiat Industrial employ a total of about 80,000 people in Italy.
(Editing by Stephen Jewkes and David Holmes)