Fiat managed in the second quarter to transform the $303 million loss into a $440 million profit, thanks to Chrysler’s unexpected profit.
It seems that Fiat’s CEO and Chairman Sergio Marchionne new what he was doing when he saved the bankrupt Auburn Hills automaker, and now his decision and struggle paid off. Marchionne now tries to convince the European Union that the only way to save the region’s automakers is by allowing them to close facilities and lay off employees, in an effort to avoid costly excess capacity. Fiat saw a dramatic fall in sales during the second quarter, especially in the Italian market where such low levels were not seen since 1979.
“The European market continues to show signs of weakness,” Marchionne told analysts and reporters during a conference call Tuesday. “It is highly unlikely that this market will recover in 2012.”
A study made by AlixPartners shows that 40% of the plants in Europe are producing below their break-even point and the situation is to become worse. Although closing plants and laying off workers may be considered a solution to save the auto makers, pro-labor governments are arduously guarding their own manufacturing sectors.
“If Europe is to exist as a common market, then I think it is in the interest of the European Union to act as the coordinator of the rational, equitable allocation of the reduction,” Marchionne said. “The request to the European Union is to take that on instead of taking on free-trade discussions with Japan.”