Fiat hoping to offset losses in Italy by focusing in Germany

Article by Anita Panait, on April 6, 2013

Fiat is offering bigger discounts in Germany compared to other carmakers as it tries to increase its sales in the country. Fiat is seeing Germany as its chance to offset expected losses in its Italian home market, where vehicle deliveries are seen to drop to its lowest level in 47 years. Italy accounts for around 56 percent of Fiat total sales.

As Italian consumers shun from buying expensive items like vehicles, Fiat’s dealerships also suffer from deepening losses, forcing them to close shops. Low demand for new vehicles has also forced Fiat to have its plants operate just at half capacity.

Things are further aggravated by the political turmoil that resulted from an inconclusive election more than five weeks ago, as Fiat sees its sales tumble further. Gian Primo Quagliano, head of automotive researcher CSP in Bologna, said that vehicles sales this year in Italy could shrink by up to 21 percent to 1.11 million cars, the lowest since 1966.

But, there is more bad news for Fiat – vehicle demand in Germany is showing some slump. Results showed that in March 2013, vehicle deliveries dropped 17 percent in Germany, the biggest monthly decline since October 2010. This means that Fiat and other European carmakers need to offset drops in other locations. Fiat's German dealers offered an average discount of 16.5 percent off February vehicle prices, according to data from trade publication Autohaus PulsSchlag.

Fiat is not the only carmaker seeking greener pastures in Germany, which accounts for a fourth of total European deliveries. PulsSchlag estimates that the industry-wide discounting in Germany surged to an average 11.7 percent in February from 11.5 percent in the same month in 2012.

Fiat chief executive Sergio Marchionne remarked in March that carmakers will look for demand elsewhere, turning the situation into a fight on prices on a European level. He noted that Italy's lack of political leadership is "a fundamental and serious problem."

Topics: fiat, germany, sales

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