In a sit-down with Italy’s Prime Minister Mario Monti , Fiat CEO Sergio Marchionne and chairman John Elkann came to a belated conclusion: A slump in Europe is not such a bad thing of you can sell you cars elsewhere. After the sit-down, Fiat told Reuters that it wants to “re-orient” its business model in Italy “to focus on exports, particularly outside of Europe.” This, the person familiar with the situation said, can mean only one thing: Get ready for made-in-Italy Jeeps and Imported from Torino Chryslers.
Fiat had caused an excrement storm after it said it would halt investments into its European operations and models. It furthermore fanned the flames by stating that a plant in Brazil would gets generous government aid, while Fiat gets niente from Italy. This caused Marchionne and Elkann to be called on the carpet at Monti’s office in Rome. Both probably didn’t go there with the hope that they would return with a big check.
Students of the European market recall that technocrat Monti served as a European competition commissioner from 1995 to 2004, where he was not seen as a fan of the auto industry. Under him, several European carmakers were fined for their transgressions of free trade. He was a major force behind the European Block Exemption Regulation that busted cushy quasi-monopolies of carmakers, importers, and dealers and changed the European auto market into a large free-for-all. The carmakers promptly called him (not in his face) “Super Mario,” and the moniker stuck.
It would be foolish to assume that the former free trade hardliner Monti would suddenly flaunt European regulations that generally forbid government support for ailing companies.
At the Monti-meeting, Marchionne and Elkann threw their hands up in “che cosa fameo???” fashion Fiat outlined its forecasts for the Italian and European markets. Then, a statement was issued. TTAC provides the translation:
“Fiat confirmed its strategy of investing in Italy, at the right moment, to develop new products to take full advantage of the recovery of the European market.” Translation: Don’t hold your breath, or you’ll die.
“The Industry Ministry will set up a working group to examine how to improve Fiat’s export capacity.” Translation: Ouch, now even the exporting will take twice as long.
When it comes to exports outside of the European market, governments’ hands are tied much looser than in the intra-European trade. The biggest export assistance provided by the governments of Italy, Spain, Greece etc. is a low euro. A weak currency makes for strong exports. Except that Fiat’s northern colleagues made maximum use of the opportunity.