Fiat to Show Plans for Italy

Sergio Marchionne, CEO of carmakers Fiat and Chrysler Group, will present the Italian government a restructuring plan of the production in Italy, in an attempt to secure tax breaks for new cars. The proposal includes stopping production at the Termini Imerese plant in Sicilly by 2011.

The unions asked to government to refuse the extension of the incentive scheme if Fiat decides to close down Termini Imerese plant. Industry Minister Claudio Scajola, who is meeting Marchionne on Tuesday, has said it would be "folly" to shut the plant.

"In my personal experience, before you use an extreme word like folly, you should know the figures. Once you know the figures, maybe you will come to a different conclusion," Marchionne told the journalists in Turin.

Minister Scajola admitted in a letter sent to Il Giornale newspaper that building cars in Sicily is more expensive. Each car built there costs Fiat 1,000 Euros more due to the island’s weak infrastructure. "Termini Imerese is too small, there are no economies of scale, it's inconvenient for suppliers and it's inconvenient for Fiat," said Pierluigi Bellini, a director at IHS Global Insight.

According to Marchionne, Europe's car industry needs to cut production in order to deal with the low demand. Most of the sales in Europe and Italy have been supported by government-funded incentives, but these are coming to an end. In Italy, they will cease after Dec. 31. Car sales in Italy fell just 3.87 percent in the first 10 months of the year, according to figures from the Transport Ministry. November figures are due on Dec. 1.
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