Fiat CEO says car incentives should be cut over 2 years image

Governments should reduce incentives to buy new cars gradually over the next two years and at the same time overcapacity should be addressed, Fiat Chief Executive Sergio Marchionne said on Tuesday.

“If it were me, I would be planning for a gradual reduction of incentives over 2010 and 2011,” Marchionne told journalists at an event on an aircraft carrier to present the new Punto Evo.

Marchionne said if incentives were continued in 2010, Fiat should have a market share of over 9 percent next year.

He added that a gradual decrease in incentives would allow the industry “at the same time (to) address overcapacity.”

Governments worldwide have been giving incentives for buying new cars as they attempt to support the industry which is facing crimped demand because of the financial crisis.

But the United States has already ended its incentive scheme and European governments could follow.

Marchionne is travelling to Rome on Wednesday to discuss incentives with the Italian government and then goes to Detroit with Italian Industry Minister Claudio Scajola.

But Marchionne added “you must rationalise capacity. That issue remains unmoved.

Marchionne, who is also chief executive of Chrysler, said the plan for the U.S. car maker’s future would be presented to U.S. authorities sometime during October, ahead of a public announcement in November.

On Tuesday, Fiat was launching its Punto Evo to succeed the Grande Punto which has led the market in its segment with 7 million vehicles sold since it was introduced in 1993.

Fiat has used technological developments to make the Evo less noisy, more fuel efficient and less polluting — trademark strengths of the car producer which it plans to take to Chrysler, where it holds a 20 percent stake.

He said Chrysler was working on so-called “universal” car models that can be adapted to appeal to a variety of buyers, in a similar way to the Punto Evo, which has a sporty version for young people as well as one that appeals more to families.

“There’s no doubt people have had success with what I call a universal car … the architecture must allow you to do it,” he said. “I think we are doing that for Chrysler.”

Asked what the future was for the Chrysler Sebring and the Dodge Avenger, Marchionne said “they have a great future, you’ll love the cars.”

Source: Reuters