FIAT Auto, the Italian car maker, is preparing to axe up to 8000 jobs amid growing fears the firm will be sold to US giant General Motors.
The automotive division of the Fiat industrial group is struggling with mounting debts and weakening sales in its domestic market, and is expected to make a loss of around £650 million this year, compared with a profit last year of £1.95 billion.
Fiat has already made 2900 workers redundant since May this year, and the group will tell unions it plans to axe up to 8000 more staff - many of them temporary workers - at a meeting on Wednesday.
Chairman Paulo Fresco is understood to have explained the proposals to Silvio Berlusconi, the Italian prime minister, last week.
The cutbacks are likely to centre on Fiat’s factories in Turin, Arese and Termini Imerese.
Around 200 workers at the Mirafiori plant in Turin staged a wildcat strike on Friday in protest against the imminent redundancies.
In order to meet its target of breaking even next year, the company is accelerating plans to scale back its production base.
The shadow of General Motors looming over the group is adding further impetus to the restructuring plans. GM acquired a 20 per cent stake in Fiat Auto two years ago, along with the option to buy the remainder of the company in 2004. This leaves little time for Fiat and the Agnelli family, which controls 30 per cent of the group, to bring the Italian industrial legend back to fiscal health.
A growing number of Italian leaders appear resigned to seeing Fiat sold to GM. Piero Fassino, party secretary for the Democrats of the Left, the main opposition party, said executives needed to "work toward integrating Fiat Auto" within GM to ensure its future.
With more than two-thirds of car production carried out in Italy, Fiat appears to have little choice but to slash its domestic workforce as sales cars struggle to keep up with Ford, Toyota and Volkswagen.
Last week, the company announced its share of the Italian market had fallen to a low of 28.7 per cent in September, more than three percentage points down on the previous year.
Fiat said the decline was due to a new policy of reducing discounts in an attempt to improve margins, but the fall in market share came in a month when the overall Italian market grew 3.9 per cent, the first monthly increase in car sales this year.
Fiat’s sales rose 18 per cent in Spain, compared with seven per cent market growth. In the UK, where the market fell 2.4 per cent, sales were down seven per cent.
In July, the Italian government introduced new incentives to consumers trading in old cars. But the plan, which lasts until the end of the year, has so far been of more benefit to Fiat’s rivals.
The deteriorating sales outlook has forced Fiat’s bankers to demand further action after an agreed debt reduction plan in May.
The sale of assets, such as a 33 per cent share in Ferrari and a stake in insurer Generali, are intended to help to halve the group’s net debt to £1.95bn.
