FACTBOX - What Italy might do to help Fiat
Date: 16-Oct-02
Country: ITALY
But car sector specialists said this week strict European Union rules largely limited the government's options.
Following is a summary of measures that Italy could introduce:
- It could extend an incentives programme aimed at encouraging consumers to buy environmentally cleaner cars, due to expire at the end of the year. But since its launch in July, the programme has boosted sales by other manufacturers more than Fiat.
Italy's EU Affairs Minister Rocco Buttiglione suggested the government might help finance research and development for environmentally friendly cars. The EU is currently considering how to develop fuel cells and hydrogen powered vehicles.
Another proposal by the minister for "limited" help for restructuring of Fiat plants would face rigorous EU scrutiny.
- It could introduce new tax breaks for the auto sector, though these could fall foul of EU rules on state aid and fly in the face of Italy's attempts to raise corporate tax income to tackle a budget deficit.
- It could allow more public sector acquisitions of Fiat vehicles, though already foreign carmakers have made inroads with supply deals. - The state could buy a stake in Fiat or car arm Fiat Auto, but such a move would be a controversial use of taxpayers' money in a private company, especially if Fiat's controlling Agnelli family did not contribute. Fiat's creditor banks and General Motors Corp, which owns 20 percent of Fiat Auto, might refuse to put up new cash.
- The government might encourage Fiat to exercise an option to sell the rest of Fiat Auto to GM, a move which could turn Fiat's base in Turin and other areas into a European centre for GM, possibly via a merger with GM's Opel in Germany. But the sale option begins in 2004 and GM could decline to bring it forward; also GM might offer little for Fiat Auto in its current state.
- The government could also try and persuade the Fiat group to sell some of its more valuable assets like truck maker Iveco, insurance company Toro or aerospace arm Fiat Avio to raise cash for reinvestment in Fiat Auto. Fiat has so far resisted pressure to include its most prized holdings in an asset sale plan.
For the main story on the options for Fiat, please click on.
