Italy invites Tata Motors, M&M to buy Fiat's Sicilian car unit

[RSM]

Is this true?
Economictimes

Italy on Wednesday sought investments from Indian car makers and said it would encourage Tata Motors and Mahindra & Mahindra to take
over Fiat's unprofitable car unit in Sicily that is teetering towards shutdown.

Minister for Economic Development Claudio Scajola invited Indian firms to invest in Italy's automotive and auto components sector. Scajola is in India to boost trade ties between the two countries, which currently stands at USD 8 billion.

Sources in the Minister's delegation said Tata Motors and M&M are in talks with Fiat and the Government of Italy to acquire the company's automobile unit in Termini Imerese at the Sicilian island.

A Tata Motors spokesperson declined comment, while a M&M spokesperson said the company does not comment on speculation. "We are absolutely happy and open to any Indian investment in the automotive industry as well as in any other industry," Scajola told reporters here.

The Minister denied knowledge of any negotiations having taken place, but said, "I wish it were true. I hope so. We do hope that Indian investors come to Italy."

Fiat's unit in Termini Imerese can produce up to 400 vehicles per day, an official in Scajola's delegation said. It is the smallest of Fiat's five Italian plants but also the costliest manufacturing facility as parts of the car have to be shipped to the island, adding extra cost.

The facility employs 3,500 people, while component units around it have about 3,000 more staff.

Fiat Chief Executive Sergio Marchionne is understood to have met Scajola to discuss the plant's closure after 2011 to get rid of excess production capacity as the company grapples with dwindling sales.

The Italian Government is understood to be averse to the shutdown as it would lead to protests over job losses from the locals.

Tata Motors and Fiat have an exclusive dealer network sharing agreement under that the Ratan Tata-led company markets models of the Italian carmaker through its dealers in select cities in India. "We (Italy) have a good collaboration with India in the automotive field through the Tata-Fiat tie up. I think we can collaborate in the field of cars and components and grow the business," Scajola said.

[Akash]

Whats this Fiat's Sicilian car unit? I mean what cars does this unit since you mentioned that it is nonprofitable section. I am sorry for stupid quetion but i didnt get that thing.

[RSM]

Fiat has one plant, Termini Imerese plant, in Sicily. Its one of the five plants they have in Italy and it is the smallest one. It had some < 2000 employee and Fiat layed off some of them. There is some problem (strike) going-on from some time.

Actually so many companies eyeing on this.

[Akash]

Oh got it. But i have a feeling that TATA will soon take over if they get a chance to.