With European financial struggles continuing, Fiat looks for exports to help company’s bottom line
San Francisco, CA -- (SBWIRE) -- 10/04/2012 -- Fiat is planning to produce cars intended for the U.S. market in its Italian factories. The company would not say which models were intended for such production. Analysts have speculated that Jeeps and Chryslers would be the most likely candidates.
It will be the first time Italian plants produce vehicles for the United States. Fiat does produce the Fiat 500 at a plant in Mexico, which is then markets in the United States.
Fiat’s Chief Executive, Sergio Marchionne, said on Tuesday that Italy and Europe could no longer be considered the only end markets for the automaker.
“We can and we must think of the car sector in Italy in a different way, refocus it, so that it becomes an important production center for exports outside Europe,” Marchionne said in a speech to workers in Turin. “In our case, that means above all the United States.”
According to Fiat, the meeting with Prime Minister Mario Monti and Marchionne regarded the underutilized plants in Italy that must be readied for creating exports outside of Europe. The decision comes as demand continues to fall in Europe due to a weak economy, while the U.S. market is gaining steam.
Fiat is hoping that the Italian and European authorities help make the country and region more competitive with regulatory rulings.
Marchionne stated that the ECB (European Central Bank) needs to make it easier to attain credit. He also stated the EU Commission must find ways to make free trade agreements that did not unfairly favor other markets such as Japan and South Korea. Marchionne has a history of accusing other companies, such as Volkswagen AG of the “bloodbath” among carmakers, resulting in a poor competitive level in that nation states.
Fiat has been managing Chrysler for the past three years following the U.S. government-led bankruptcy. Fiat owns 61.8% of the group. Chrysler’s has seen considerable turnaround since then thanks to the Italian management.
Fiat expects to lose $907.37 USD this year across Europe. However, Marchionne is still under pressure to keep the factories within Europe open and running.
Fiat turned its back on its previous plan to put $20.6 billion USD into its Italian factories in order to see if Europe can first make a considerable rebound. Lines in Italy stay idled, and workers of said factories remain on reduced pay to put a stop to the financial bleeding.
“The feeling is that the wait-and-see attitude will lead to Fiat losing market share,” said a union source attending a meeting with the government on Tuesday evening. There is little hope from Unions and analysts alike that Fiat can help plants in Italy return to their full if delays continue regarding the investments into the country.
The Italian government is considering tax incentives, as well as other spurring efforts to help its export of merchandise. However, Rome is having trouble finding ways to cut spending due to the debt crisis.
Said Marchionne, “Sometimes I have asked myself if it’s worth it. I have asked myself if it makes sense to do things for a country that does not appreciate them, hopes that a foreign investor will do a miracle and paints us as incompetent exploiters,” he said.
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