Fiat SpA chief executive Sergio Marchionne has suspended new investments in Italy, prompted by the continuous dwindling sales in Europe due to the current debt crisis in the continent. In an e-mail to Bloomberg, Marchionne said that the economic crisis and current difficulties in Europe are preventing Fiat from being able to “give any indications concerning future investments."
Marchionne added that Fiat will disclose its new plans for its plants in Italy at the end of October, when it will release results for the third quarter of 2012. Marchionne has vowed to shut down a second Italian plant after closing one in 2011, unless a way to export cars from Europe to the United States is found.
Europe is on course to have its fifth straight year of decline in car demand, mainly due to lower consumer spending amid the high unemployment and the sovereign debt crisis in the region. Marchionne is cutting Fiat’s capital spending in Europe in 2012 by EUR500 million, in contrast to a $4-billion investment at Chrysler Group LLC, a subsidiary of the Italian carmaker that he also heads.
Fiat acknowledged the difficult economic conditions in Europe, particularly in Italy where demand is nearing the lowest level since 1979. The Italian carmaker noted that some its European rivals who are heavily exposed to the European market are experiencing significant losses, prompting them to announce plant closures. PSA/Peugeot-Citroen and General Motors recently announced plans to shut down plants in France and Germany respectively.