Chrysler Tries to Offset Fiat’s Loss in Europe image

The fact that bike sales surpassed auto sales in Italy, puts higher pressure on Chrysler to increase profit in North America to compensate for Fiat’s European loss.

According to Eurostat, the European Union’s statistical office, unemployment reached 10.7% in Italy, under Spain’s 25.1% but almost twice as Germany’s 5.5%.

“The middle class …is basically disappearing,” said Gianluca Spina, dean of the business school at Politecnico de Milano in Italy. “It is something really new for this country.”

In 2011 Italians bought 1,750,000 bikes compared with 1,748,000 cars. This urges Sergio Marchionne to rush his plans to merge Fiat and Chrysler. But Fiat’s dependence on a single country, Italy, makes the automaker particularly vulnerable. Almost one-third of all vehicles sold in Italy are Alfa Romeo, Fiat, Ferrari, Maserati or Lancia models.

During the first eight months of this year, Fiat sales declined 17.1% in Europe, which is more than twice the industry’s 7.1% drop. Fiat sells mostly small to midsize cars in the European market, which are bought by Italy’s middle class and since there is no money in their pockets, there will be no cars sold for Fiat.

“I do not expect really a surge in car sales in Italy in the next six months at least,” Spina said. “And, in this landscape, I would say the position of the Fiat/Chrysler Group is worse than other groups.”