Fiat may close Second Italian plant image

Fiat SpA (F) Chief Executive Officer Sergio Marchionne said he may close a second Italian factory as European auto deliveries sink for the fifth-straight year.

This comes after Italian new car sales fell 24.4 percent in June from the same month a year ago to 128,388 vehicles, Italy’s Transport Ministry said on Monday, their lowest level since 1979.
The drop was steeper than the 13.9 per cent decline seen in May.

Over the first six months of the year, new car sales fell 19.73 per cent.

New car registrations in the 27-nation European Union dropped 8.7 percent to 1.107 million vehicles in May, which had one less working day than May 2011, as all major markets except the U.K. declined, auto industry association ACEA said in a statement last month.

Fiat Group’s sales in Europe dropped 17 percent in the first five months of the year and its market share fell to 6.8 percent from 7.5 percent a year earlier.

Sergio Marchionne told reporters that the automaker will shut another plant after closing one in Sicily last year unless it can come up with an economically viable plan to use excess capacity to build cars for North America.

In addition Fiat will cut investments in Europe by 500 million euros this year.

“The target was 7.5 billion euros and he (Sergio Marchionne) has cut 500 million of it. The reduction is coming out of Europe, essentially out of investments in new products,” including the Grande Punto model, a Fiat spokesman said.

Source: Bloomberg News