Sergio Marchionne, Fiat’s CEO, recently announced the company will temporarily stop new investments in Italy, due to the European debt crisis.
After Marchionne closed an Italian plant last year, announced he will close another one if he doesn’t find a solution to export vehicles to the US. The European auto market is heading towards its 5th straight year of sales decrease and high unemployment due to the debt crisis, which makes consumers draw back when it comes to big purchases.
“For the time being, the economic crisis and current difficulties in the European auto market prevent the company from being able to give any indications concerning future investments,” the Italian carmaker said.
Chrysler Group, also managed by Marchionne, will see its capital spending up by the end of the year, from $3.1 billion in 2011, but Fiat’s investments will be reduced by 500 million euro this year. The company will announce its new plan for the Italian plants when it will release its third-quarter results at the end of October.
“Difficult conditions persist in the European auto market, particularly in Italy where demand is approaching the lowest level since 1979,” Fiat said in the statement.