Fiat Pledges to Keep Italian Plants, Shift Focus to Foreign Markets by Building Chrysler Models

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As expected after last week’s announcement, on Saturday, Italian Prime Minister Mario Monti met with Fiat CEO Sergio Marchionne and the company's Chairman and heir to the Agnelli family empire, John Elkann, to discuss the automaker’s future in the country.

The meeting was arranged after rumors surfaced that Fiat, which is expected to lose around €700 million (US$904.5 million) this year due to a sales slump in the European market, is considering closing some of its plants and moving production out of Italy.

Earlier this month, Marchionne announced that the company had to revise its original plan that called for a €16 billion (US$20.6 billion) investment to increase production in Italy to around 1.4 million units by 2014.

Prior to his meeting with Monti, Marchionne had praised the Brazilian government’s incentives for the creation of a new manufacturing plant in the South American country. He also commented on Italian Industry Minister Corrado Passera praising Fiat managers in Brazil for their job.

“I’m happy that Minister Passera took note of Fiat’s great results in that country”, said Marchionne. “I’m sure the Minister knows that car makers that go and produce in Brazil can obtain financing and fiscal incentives.”

Incentives were certainly not on the agenda of Monti, Passera or Labor Minister Elsa Fornero when they met with the two top Fiat executives at Rome’s Palazzo Chigi on Saturday.

“We know very well that, given current European regulations, similar financing conditions are not possible with the European Union”, Marchionne said.

After a five-hour meeting, Fiat and the Italian government agree that, they will look for ways to improve efficiency and export capacity. While Marchionne and Elkann left without talking to reporters, the automaker announced later that it will “re-orient its business model” and “focus on exports, particularly outside of Europe”.

The company added that it will also “focus on the strategic prospects offered by its integration with Chrysler”. This means that Fiat's Italian plants, which currently operate at below 50 percent of capacity, will produce Chrysler brand products that will be exported to other countries.

Full details of the group’s new investment and production plans will be announced on October 30.

By Andrew Tsaousis

Story References: Reuters and La Repubblica