FCA Payday: Italy Readies $7.1 Billion for Automaker
Italy is on the cusp of approving a 6.3 billion-euro ($7.1 billion) loan for Fiat Chrysler Automobiles (FCA). Suppressed sales stemming from coronavirus lockdowns have encouraged governments around the globe to lend businesses a hand or — more accurately — fists full of money.
Bloomberg claims FCA’s payday will be Europe’s biggest government-backed financing of an automaker since the start of the pandemic, but it’s hardly the only company needing money. General Motors and Ford utilized credit lines to amass billions of dollars for their rainy day funds — and it’s definitely pouring outside. Ford figures it lost roughly $5 billion in operating costs in the three months leading up to June. Meanwhile, Fiat Chrysler estimates it lost $5.5 billion through the first quarter of this year.
FCA says the funding will be used exclusively for the manufacturer’s Italian activities — especially payroll, issuing payments to suppliers, and planned investments for domestic facilities. Intesa Sanpaolo reportedly authorized the the loan last month and trade-credit insurer Sace will guarantee 80 percent of the total amount.
From Bloomberg:
“Car sales in Italy will plunge this year to 1.2 million compared with 2.1 million in 2019,” said Dario Duse, a managing director at consulting firm Alix Partners, who forecasts that industry-wide sales may take more than five years to return to pre-pandemic levels.
Registrations fell 57 percent in Europe in May after a 78 percent drop in April. The exact shape of a potential recovery is still unclear as automakers from Volkswagen Group to FCA prepare to announce results for what likely will be a devastating second quarter.
The situation has already encouraged other European nations to pour buckets of money into brands like Daimler and Renault, both of which received billions in government-backed loans from Germany and France, respectively. The last piece in FCA’s puzzle will be approval from Italian Finance Minister Roberto Gualtieri. While the loan terms have yet to be reviewed in their entirety, it’s presumed the ministry will sign off.
[Image: MikeDotta/Shutterstock]
Consumer advocate tracking industry trends and regulations. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied, he pivoted to writing about cars. Since then, he has become an ardent supporter of the right-to-repair movement, been interviewed about the automotive sector by national broadcasts, participated in a few amateur rallying events, and driven more rental cars than anyone ever should. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and learned to drive by twelve. A contrarian, Matt claims to prefer understeer and motorcycles.
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Why only $7.1 billions and why Italian government? Italians are poor, that's not fare. If Sergio was alive he would, via some arm twisting, force US Government to shell out $15 billions of American liras from CARES act.
>>FCA says the funding will be used exclusively for the manufacturer’s Italian activities