Marchionne Meets Monti as Fiat Pushes Talks on State Aid

Fiat SpA (F) Chief Executive Officer Sergio Marchionne, facing 700 million euros ($910 million) of losses in Europe, praised Brazil’s aid to carmakers ahead of his meeting today with Italian Prime Minister Mario Monti.

Marchionne, in a statement late yesterday, said Brazilian incentives encouraged the Turin, Italy-based carmaker to build a factory in the country. The CEO was responding to Italian Industry Minister Corrado Passera, who met with Fiat managers in Brazil this week and said the company’s success in the South American country should set an example.

“I’m happy that Minister Passera, traveling in Brazil, took note of Fiat’s great results in that country,” Marchionne said. “It certainly won’t have escaped him that the Brazilian government is particularly attentive to the problems of the automobile industry. I’m sure that the minister knows that carmakers that go and produce in Brazil can obtain financing and fiscal incentives.”

Marchionne has been under pressure from politicians and unions to clarify Fiat’s strategy in Italy. The company, which controls Chrysler Group LLC, said Sept. 18 that it won’t give up on its home market, even as sales drop and European losses are estimated at 700 million euros this year. The aid from Brazil can’t be a template for success in Italy, Marchionne said.

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

Rome Talks

Marchionne and Fiat Chairman John Elkann are scheduled to meet with Monti, Passera and Italian Labor Minister Elsa Fornero at the prime minister’s office at 4 p.m. in Rome.

With European car sales on pace to fall in 2012 for a fifth consecutive year because of the region’s sovereign-debt crisis, Fiat cut production in Italy last year to fewer than 500,000 cars from 650,000 in 2009, according to industry association Anfia. Marchionne reiterated on Sept. 13 that conditions no longer exist to carry out an investment plan which was targeted at boosting production in Italy to 1.4 million cars in 2014.

“The long history of Fiat in Brazil demonstrates that when we work with determination toward the development of a country, through thick and thin, we can have excellent results,” Passera said Sept. 20, according to Italian newswire Ansa.

Registrations in Europe fell 8.5 percent in August, according to the Brussels-based European Automobile Manufacturers’ Association, or ACEA. The market has shrunk for 11 consecutive months, and the ACEA is forecasting a 17-year low for full-year sales. Fiat said in August that it’s focused on temporary layoffs, as opposed to permanent job cuts, as a response to the contraction.

To contact the reporters on this story: Andrew Frye in Rome at afrye@bloomberg.net; Tommaso Ebhardt in Milan at tebhardt@bloomberg.net.

To contact the editors responsible for this story: James Hertling at jhertling@bloomberg.net; Chad Thomas at cthomas16@bloomberg.net.

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