Italy’s Fiat dealers in for a sad Christmas

December 24th, 2010 - 11:44 am ICT by IANS  

Milan, Dec 24 (IANS/AKI) Holiday shoppers pack the streets around Milan’s famous Gothic cathedral shopping centre carrying bags from Gap, Gucci and Prada. But a few blocks away at a Fiat showroom, there’s no sign of the bustle.About a third of Italy’s 3,600 dealerships are at risk of going bankrupt in the next 18 months, taking 15,000 jobs with them, as car sales plunge following the expiration of government incentives, the Italian dealers’ association said.

Last year Italy offered 1,500 euros to consumers who traded in cars older than 10 years. The incentive programme, which was part of a two-billion-euro stimulus package approved by the government in February 2009, wasn’t renewed for 2010.

“Whoever does come in is interested in buying a specific model and visits several dealers to find out the best deal,” says Cristina Fermi, a sales assistant at the showroom. “The risk is a cannibalization of the market. We may bleed ourselves dry to get a new client in a losing competition with other dealers.”

Car sales in Italy, Europe’s third-largest auto market, plummeted 21 percent last month.

Auto sales in Italy will continue to decline in the first quarter, Fiat chief executive officer Sergio Marchionne told analysts in October.
The Italian car market is dragging on Fiat’s profit potential. Fiat raised its 2010 forecast, thanks to demand in emerging markets. Annual profit will be at least two billion euros, up from a previous target of 1.2 billion euros, Fiat said in October.

The company, which also controls Chrysler, is splitting into two by spinning off its industrial business Jan 3.

The number of Italian dealers shrunk by more than 200 in 2010, and more than half of current dealerships are losing money, according to the dealers’ association.

Dealers are in talks with Fiat to receive “extraordinary resources” beginning next year that would include an overhaul of the bonus and margins’ policy on car sales, said Filippo Pavan Bernacchi, who heads the dealers’ association.

“At Christmas we usually have many clients popping in, such as fathers who want to give a new car to their sons ” said Angelo Colaneri, head of Gruppo Colaneri, which has four Rome dealerships. “This year they are not coming. I’ve never seen such a crisis in the more than fifty years I’ve sold cars. Our survival is at risk. It’s a very sad Christmas”

Fiat witnessed sales slump in Italy in November for eighth consecutive month. The drop off has increased throughout the year because people who ordered a new car by the end of 2009 could still get the government payment even if the vehicle was delivered.

Italian car dealers as a whole have faced losses for the last three years, and 2011 will be again be difficult, especially for Fiat dealers because the automaker isn’t planning many new models for next year, said Filippo Pavan Bernacchi, who heads the dealers’ association.

Fiat’s Italian market share fell in November to 28.5 percent from 30.4 percent.

Fiat has plans to launch a European version of the 300C sedan from Chrysler under the Lancia nameplate next year and an updated Panda compact by the end of 2011. The company will also unveil its new five-door subcompact Lancia Ypsilon in Geneva in March.


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