Fiat Warns Of Likely Car Plant Conversion

Italian carmaker Fiat SpA (F.MI) Friday said it is sticking to plans to convert a plant in Sicily, despite protests from workers.

Union workers at the Termini Imerese plant have been protesting all week, demanding that Fiat provide more certainty on the future of the plant, which the firm has said is the most costly to operate of all of its plants.

After the workers occupied the town hall, politicians vowed to raise their concerns with Fiat in the coming weeks.

But Fiat Chief Executive Sergio Marchionne said Fiat is sticking to plans to convert the plant by 2012.

"Keeping all of the plants open and doing all these necessary things are... demands that are no longer feasible in a world that has drastically changed," he told reporters at an event at Fiat's research centre in this town near Turin in the country's northwest. "We can't turn back to a reality that no longer exists."

Marchionne said a single Fiat plant in Brazil made more cars than its six plants in Italy combined over the year. He has yet to say what he wants Termini Imerese to do if not cars.

He and other Fiat officials are to hold meetings with union and government officials in the coming weeks to discuss their plans for Fiat in Italy. Their plans are a likely extension of the one presented in Detroit Nov. 4 to revive Chrysler Group LLC, its U.S. partner.

Marchionne is also expected to discuss the possible extension of Italy's car scrappage scheme when he meets with the government next month.

With several of these schemes expiring across Europe, analysts fear that demand will fall once more, making 2010 a difficult year for carmakers already struggling to survive the industry's worst crisis in decades.

Fiat will keep Alfa Romeo, sees U.S. role

In an interview with Reuters, Montezemolo dismissed a suggestion by analysts with asset management fund Sanford Bernstein that Volkswagen AG could be the right buyer for the money-losing brand. He also said Fiat doesn't need an Asian partnership to match recent tie-ups by European competitors with Japanese automakers.

"We will present the new Alfa that substitutes the 147, and we think there are also very important opportunities for Alfa Romeo in the United States," Montezemolo said.

Alfa's aging 147 hatchback will be replaced early next year by the Giulietta, a car that may be Alfa's last new model. Fiat CEO Sergio Marchionne has ordered a strategic review of the brand to consider whether to freeze substantial investments after the introduction of the Giulietta or to refresh Alfa's lineup using Chrysler Group platforms. Those platforms could be used to replace the aging Alfa 159 sedan and wagon and the discontinued 166 flagship sedan.

Alfa's new-car sales have declined steeply in the past decade as its range became older and new products were delayed.

Last year, Alfa sold 103,000 new cars, down from 203,000 in 2000. The brand has lost between 200 million and 400 million euros a year in the past 10 years, according to industry sources. Fiat does not release separate financial results for any of its brands.

Marchionne is expected to announce the future of Alfa early next year, when the Italian automaker presents its 2010 to 2014

Fiat CEO: Plan to shut Sterling Heights plant unchanged

Fiat SpA CEO Sergio Marchionne said Thursday he "has no plans on my desk" to reverse a decision to close the company's Sterling Heights assembly plant by the end of 2010, putting about 1,300 employees out of work.

Hundreds of those workers and their families rallied last Friday in front of the plant, urging Marchionne to reconsider their future. Chrysler cut about 35,000 jobs in the two years leading to its April 30 filing for Chapter 11 bankruptcy protection.

Marchionne said he dropped the idea two weeks ago of freshening the Chrysler Sebring and Dodge Avenger, the two weak-selling midsize sedans Sterling Heights workers make. Marchionne took control of Chrysler June 10 when a taxpayer-funded sale of Chrysler's most competitive assets closed.

He met Thursday in Auburn Hills with Claudio Scajola, Italy's Economy and Development Minister, and journalists.

U.S. sales of Chrysler, Jeep and Dodge vehicles fell 42% in September from a year earlier. Through the first 9 months of this year, sales of the Sebring and Avenger are down 72% and 49%, respectively, from the year-ago period.

Earlier this week, Marchionne said Fiat, which gained a 20% stake of Chrysler without paying cash, will invest $215 million in an Italian factory it bought at auction from bankrupt coach builder Bertone.

Next year, Chrysler's agreement with Magna Steyr, for production of Chrysler 300C sedans and Jeep Grand Cherokees in Graz, Austria, expires. Fiat will transfer that production to the former Bertone factory in Italy. Those vehicles are sold in Europe.

Despite Chrysler's anemic sales, Marchionne said the company is "not bleeding like people think we are."

Fiat will report its results for the third quarter on Oct. 21.

Marchionne called the cash-for-clunkers incentive, which drove purchases in August, a disturbance.