Fiat has weakened its case for closing its Sicily factory and extending incentives by suspending all Italian output for two weeks, the minister in charge of the car purchase tax breaks has said.
Fiat Sergio Marchionne said plunging January sales showed the domestic market would be “drastically cut” without incentives.
Go deeper with GlobalData
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
“It makes it more difficult,” industry minister Claudio Scajola told Reuters on Wednesday, referring to a meeting on Friday between Fiat and the government on incentives and production. The two parties last met publicly just before Christmas.
Marchionne has repeatedly said Europe must confront overcapacity with plant closures as the United States has done, the report noted.
He has forecast a 16% fall in European sales this year if incentives are not renewed and has said he would prefer a gradual reduction in tax breaks, perhaps over two years.
Scajola said on Wednesday incentives “are a drug and long-term, they destabilise the market.”
However, he has said they will be extended in some form and details were likely in mid-February. Foreign carmakers’ group UNRAE said the tax breaks likely would focus on methane vehicles – a Fiat strength.
Italian car sales last year of 2.158m vehicles were much the same as in 2008 but incentives to trade in older cars for more fuel-efficient vehicles expired on 31 December.
Auto industry group Anfia has sales could fall 21% to 1.7m units if tax breaks are not revived in Italy.
Marchionne reportedly wants to avoid a costly build-up of inventory – temporary closures were a Fiat fact in 2009 with the Pomigliano plant near Naples working for barely three months.
The Fiat chief has said he wants to halt car production completely at the Termini Imerese plant in Sicily, but has offered in return to move Panda production to Pomigliano from Poland and a boost in Italy output by more than half to as much as 1 million units in 2012.
