Fiat Relies on Germany to Boost Sales image

As auto sales in Italy are expected to drop 21% to 1.11 million vehicles this year, Fiat plans to boost sales in Germany, by offering steeper discounts.

But the German market begins to be affected by the crisis too, as sales in March dropped 17%, the biggest monthly fall since October 2010. Fiat CEO Sergio Marchionne says Italy’s lack of political leadership increases the economical weakness and the customers’ doubts. The February inconclusive election made consumer confidence fall in March, when sales dropped 13% to 355,000 vehicles, with Fiat down 9.3%.

In 2012 Fiat lost in Europe more than 700 million euro and Marchionne said the automaker will break-even in 2016. But a deepening slump in the home market might make the automaker give up its target. Fiat is relying on Chrysler to sustain earnings, as the US automaker saw its sales increase 5% in March accounting for the 36th consecutive month of growth.

Fiat also plans to transform its plants in Italy into export hubs for Jeep, Maserati and Alfa-Romeo more expensive vehicles. Analysts said that the auto market in Italy will begin to rebound only when the country will have a new government, which will increase consumption and cut taxes. The last time Italy saw such a low level in auto sales was 47 years ago, in 1966, when customers bought 1 million vehicles.

Marchionne plans to focus on Germany, where Fiat will sponsor the country’s top-division Eintracht Frankfurt soccer team in the following three years, placing the Alfa Romeo logo on the players’ jerseys next season. Fiat’s dealers in Germany have offered in February an average discount of 16.5% off list prices, the highest among all automakers.

“Carmakers will look for demand elsewhere, so it becomes a fight on prices on a European level, not just an Italian one,” Marchionne said at an event in Geneva on March 19th.