Fiat to cut investments in Europe by 500 million euros

Article by Anita Panait, on June 15, 2012

Italian carmaker Fiat is slashing its investments in Europe by around EUR500 million as it expects that the continent’s auto market would not be able to recover in the second half of 2012, according to Fiat chief executive Sergio Marchionne. Fiat’s CEO, during an interview at an annual meeting of the European auto association ACEA, said that the recovery of the European auto market depends on several factors like the current debt crisis in Greece, the direction of the euro, and Europe’s plans to sustain growth.

Fiat has stopped making new investments and launching new models in the continent.  Marchionne has plans to eventually merge Fiat and Chrysler Group LLC, in which the Italian carmaker owns a 58.5 percent stake, in order to increase sales to over EUR100 billion by 2014 and cut its reliance on Europe.

According to Marchionne, the new Grande Punto model, originally set for production in 2013, is one of the company projects that the carmaker is reconsidering “in line with the changes" to the market in Europe.

The Fiat chief executive revealed that the company is currently holding partnership talks with other parties, with topics including its architecture for the Punto. Marchionne remarked that Fiat will definitely be at lower sales levels for some time in Europe. According to Richard Hilgert, an analyst at Morningstar Equity Research, since Europe will have a long, slow recovery, Marchionne is focusing more on growth outside the continent.

Meanwhile, Marchionne revealed that Fiat has already sent a letter to exercise its option to acquire additional stakes in Chrysler. Fiat has to spend less than EUR200 million to increase its stake by 3.3 percent to 61.8 percent.

Topics: fiat, europe

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