Fiat confirmed that it is planning for its Italian plants to produce vehicles that will be marketed outside Europe as the carmaker aims to offset a five-year market decline in the continent. Fiat chief executive Sergio Marchionne remarked that Italy and Europe could no longer be considered the only end markets for the carmaker.
Marchionne said that they must think of the auto industry in Italy in a different way, refocusing it to become an important production hub for exports outside Europe. Fiat’s CEO then confirmed that the carmaker’s domestic plants will be building cars for sale in the United States. A source privy to the matter told Reuters that Marchionne’s statement means building vehicles, likely Jeep and Chrysler models, for the US, where the market is still growing and Chrysler plants are operating at full capacity.
Following a weekend meeting between Marchionne and Italian Prime Minister Mario Monti, Fiat disclosed that it would commence producing cars at its idled Italian factories for sale outside Europe. Fiat, which currently owns a 58.5-percent stake in Chrysler, has been managing the unit since a 2009 bailout agreement with the U.S. government.
Fiat was able to make Chrysler as its largest income generator for the combined group, accounting for more than two-thirds of total profits. Fiat is expecting to post EUR700 million in losses in Europe in 2012 and its CEO is under pressure to provide assurance on how it could keep its Italian plants open. Fiat has effectively cancelled plans to invest EUR16 billion ($20.6 billion) into its Italian factories, placing them on hold until it sees signs of a market rebound.