ITALY: Fiat may shut two (of five) factories – Marchionne

According to Khabarkhodro,Fiat may shut two of its five car factories if it can't produce competitively in Italy and export vehicles to the United States, local media reports said on Friday (24 February).

Fiat and Chrysler Group CEO Sergio Marchionne told newspaper Corriere della Serathe company must take advantage of a revived US car market since the outlook for the European business is bleak, Bloomberg News reported.

"We have everything needed to seize the opportunity to work competitively also for the US market," Marchionne was quoted as saying. "If it doesn't happen, then we will have to close down two of the five plants." His comments were confirmed by a Fiat spokesman.

Fiat, which has a controlling 58.5% slice of Chrysler, closed its Sicilian plant at the end of last year to cut costs and improve productivity in Italy after losing EUR500m (US$670m) in Europe last year in the volume-car business, Bloomberg noted. European car sales are likely to fall this year for a fifth consecutive year.

The report noted that Marchionne last month said in Detroit that he didn't expect a recovery in Europe before 2014 and forecast Italian sales may slump this year to the lowest since 1985.

Fiat, which moved back production of its redesigned subcompact Panda to Italy from Poland, decided to slow down the introduction of models in Europe because of the "scarcity" of demand, Marchionne told the Italian daily on Friday.

"Vehicle production will keep on falling in Italy and Europe as we don't see the end of the crisis of car sales in the region," Giuseppe Berta, a professor at Bocconi University in Milan, who has written several books on Fiat, was quoted as saying.

Fiat in 2010 unveiled a EUR20bn plan to boost production in Italy to 1.4m vehicles a year by 2014, from 650,000 in 2009, in exchange for labour concessions by unions. Italian car production fell 15% to under 500,000 vehicles in 2011, according to carmakers' association Anfia.

"Italian plants have the opportunity to export to the US," Marchione told Corriere. "This is what I'm doing for Italy. I find it unbearably racist being described as an unpatriotic man."

Carmakers in Europe need to consolidate to compete with VW, which had a market share in the region of 23.3% last year, Marchionne said in January.

This week General Motors and PSA Peugeot Citroen were reported to be in talks on a broad-ranging product development and model sharing alliance.

GM is grappling with its loss-making Opel unit which has excess capacity and is said to be mulling closing two plants to adjust output to demand and improve efficiency.