Fiat may close second Italian plant due to excess capacity

Article by Anita Panait, on July 6, 2012

Fiat may close another plant in Italy after shutting down its Sicily factory in 2011 in order to adjust to the continuing drop in vehicle deliveries in Europe. According to Fiat chief executive Sergio Marchionne, the carmaker is likely to approve the second closure unless it could produce an economically viable plan to use excess capacity to build vehicles for the North American market.

Sales in the European market have been dropping for the past five years, and Marchionne expects the situation to continue for the next two to three years. In fact, Fiat posted EUR207 million in operating losses for the first quarter of 2012. With this, Marchionne said that there is at least one extra car plant in Italy.

Fiat halted production at its Termini Imerese plant in Sicily in November 2011, which used to build the Lancia Ypsilon three-door minicar. The model has been replaced by a new five-door Ypsilon that is being produced in Fiat's Tychy plant in Poland. However, it is not only Fiat who is looking for ways to reduce excess capacity. 

Rival carmaker Opel, a unit of General Motors, is considering shutting down its Bochum factory in Germany while PSA/Peugeot-Citroen is mulling closing its plants in Aulnay and Rennes, as disclosed by union officials at the French automaker.

European vehicle sales dipped 8.4% in May 2012, marking the eighth consecutive monthly drop, according to industry association ACEA. Fiat, PSA/Peugeot-Citroen and Renault logged the worst sales in the region for the first five months of 2012, dropping at least 15% in the period.

Topics: fiat, italy, plant

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