Fiat's Dances With Governments Goes Bad

Edward Niedermeyer
by Edward Niedermeyer

Fiat’s Sergio Marchionne looked like a pretty shrewd operator when he was able to snag a bailed-out Chrysler from the US government without paying a penny. Between that and the booming European sales on the back of government-funded scrappage schemes, Fiat pretty much spent 2009 proving that automakers should cater to governments almost as much as consumers. But as 2009 wound down, Fiat’s government affairs winning streak came to a halt as the Italian government started asking for a little quid for its quo, and it’s been going downhill from there. Now that Fiat wants to shut down its Sicilian Termini Imerese plant, and right-size Italian production, the love affair is officially over. “We are examining the possibility of renewing [consumer incentives],” Italian Prime Minister Silvio Berlusconi told reporters from Automotive News [sub]. “But Fiat does not seem interested in them.”

Of course Fiat is interested in the incentives that it has admitted its addiction to. Berlusconi’s paternal pronunciation merely indicates that Fiat isn’t ready to guarantee jobs at the money-losing Imerese plant, which is the Italian government’s political price. “We have to have the courage to say that there have been enough government handouts if they do not safeguard jobs and industrial sites,” explains Italian Senate Speaker Renato Schifani.

And it’s not just the government. Workers staged strikes last weekend and yesterday, and even the Pope has condemned Marchionne’s decision to shut down Termini Imerese. But Fiat is stuck between short-term profit goals and long-term capacity adjustments, as the Termini plant is a perpetual profit-sucker, but Fiat acknowledges that it likely won’t reach profitability this year without Italy’s consumer incentives. The company projects that Italian sales would slide 20 percent if the incentives aren’t renewed.

Marchionne claims to want any decision more than the current uncertainty, telling the WSJ that:

The government has to make a decision and we will accept it without making a scene. But we need a decision soon to get out of this uncertainty, then we will be able to manage the market and the situation whatever the outcome.

Which means that Fiat had better be planning on an incentive pullback at some point, as artificially stimulated demand always crashes eventually. For someone who heaps scorn on other automakers for their dependence on captive-finance and dealer incentives, Sergio has quite the little incentive addiction problem himself. And feigned nonchalance aside, withdrawals are never easy.

Edward Niedermeyer
Edward Niedermeyer

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  • ClutchCarGo ClutchCarGo on Feb 04, 2010

    Gov't stimulus via incentives must eventually fade away and/or stop stimulating sales, but production over-capacity and inefficiency are forever. It's time to take the first of those twelve steps.

  • Philadlj Philadlj on Feb 04, 2010

    Serg, I know how to smooth this over. Just send Silvio and His Holiness some awesome gift-wrapped Chrysler/Dodge/Jeep apparel and merchandise!

  • CanadaCraig You can just imagine how quickly the tires are going to wear out on a 5,800 lbs AWD 2024 Dodge Charger.
  • Luke42 I tried FSD for a month in December 2022 on my Model Y and wasn’t impressed.The building-blocks were amazing but sum of the all of those amazing parts was about as useful as Honda Sensing in terms of reducing the driver’s workload.I have a list of fixes I need to see in Autopilot before I blow another $200 renting FSD. But I will try it for free for a month.I would love it if FSD v12 lived up to the hype and my mind were changed. But I have no reason to believe I might be wrong at this point, based on the reviews I’ve read so far. [shrug]. I’m sure I’ll have more to say about it once I get to test it.
  • FormerFF We bought three new and one used car last year, so we won't be visiting any showrooms this year unless a meteor hits one of them. Sorry to hear that Mini has terminated the manual transmission, a Mini could be a fun car to drive with a stick.It appears that 2025 is going to see a significant decrease in the number of models that can be had with a stick. The used car we bought is a Mk 7 GTI with a six speed manual, and my younger daughter and I are enjoying it quite a lot. We'll be hanging on to it for many years.
  • Oberkanone Where is the value here? Magna is assembling the vehicles. The IP is not novel. Just buy the IP at bankruptcy stage for next to nothing.
  • Jalop1991 what, no Turbo trim?
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