Fiat, Italy’s largest carmaker is in danger to close two of its five plants in Italy if plans to export to the United States market don’t materialize, CEO Sergio Marchionne said in an interview on Friday, Reuters reports.
“The demand for cars in Europe is destined to remain low for quite a while to come. At least until 2014. General car manufacturers have too much production capacity,” Marchionne said in an interview with Il Corriere della Sera.
On the prospects of Fiat, which has the lowest capacity utilization rate of any European carmaker, Marchionne said the company had an “extraordinary opportunity” in the U.S., where unlike Europe many factories have been closed over the years in line with demand trends.
A weakening euro will help Italian automotive exports to the U.S. but Fiat needs “competitive costs,” Marchionne said.
The executive, who is also head of Fiat-owned U.S. based car group Chrysler, said Chrysler factories in the U.S. were already working to full capacity, and plants in Mexico, Canada or Europe are needed to fill a third of the U.S. demand.
Fiat’s Italian sites therefore had the opportunity to export to the U.S., he said.
It’s clear now that Marchionne is counting on Chrysler to propel growth at Fiat, whose volume brands lost about 500 million euros in Europe last year as the region’s debt crisis causes consumers to hold back on purchases.
“Marchionne aims to aggressively capitalize on the spectacular recovery of the U.S. car market,” said Wolfram Mrowetz, chairman of investment firm Alisei SIM in Milan, who bought Fiat shares earlier this week.
“He’s betting on Chrysler sales as Europe remains a problem.”