Those keeping track of our editorial pieces know that Fiat, despite having acquired a controlling stake in Chrysler, hasn’t been healthy in more than a decade — too much Fagioli, if you ask me. In our last article on the Italian automaker, we concluded that it needs Chrysler more than Chrysler needs it. With Reuters reporting that the company is seeking help from the Italian government for its dwindling sales in its home market of Italy, our analysis gets another validation.
With the company’s 28.3 domestic market share dropping by 18 percent in the first months of the year, CEO Sergion Marchionne and his top executives will have an emergency meeting with Italian Prime Minister Mario Monti to likely discuss the future of Fiat in Italy.
Faced with a serious overcapacity issue, coupled with Europe’s ailing economy, Marchionne has stated that the company could be forced to close two of its Italian factories. Doing so will just add to a rising number of drastic cutbacks that have been made in recent years, including the reduction of new model releases from 10 to just six in 2012. Despite its predicament, the company plans to invest around $3.3 billion (2.5 billion euros) in a major overhaul of its assembly plants with a focus on exploiting new products and technologies sourced from its alliance with the Chrysler Group.
The pending investment, plus Fiat’s close ties with Monti, allows for some glimmer of optimism, though Marchionne knows his company is still deep in the woods.