FIAT SpA, Italy's biggest car maker, will close four of its six auto plants in the country for three weeks between September and November because of slumping sales.
The closures would affect factories in Mirafiori, Termini Imerese, Pomigliano and Melfi, a company official told Bloomberg News yesterday. The sites employ about 22,000 people, or about three quarters of Fiat Auto's Italian workforce.
Sales in Europe's second-biggest car market fell 19.5 percent in June, a sixth straight monthly decline, as record oil prices and a slowing economy put consumers off buying. Registrations at Turin-based Fiat declined 16.5 percent to 60,220 vehicles.
"The production cutbacks show the slowdown is going to have a strong impact on earnings," said Karim Bertoni, who helps manage US$24.8 billion at Banque Syz & Co in Geneva. "The slowdown will be harsher and car sales even more disappointing."
Fiat shares fell as much as 68.5 euro cents, or 6.6 percent, to 9.64 euros and were trading at 9.73 euros as of 10:40am in Milan yesterday. The stock has slumped 45 percent this year, cutting the company's market value to 11.9 billion euros (US$18.7 billion).
The nine-member Bloomberg Europe Auto Manufacturers' Index was down 3.3 percent, the most since February 5.
Fiat said last Thursday it would reduce production of its best-selling Daily truck, made by the Iveco SpA unit, by about 10 percent to 325 vehicles a day. The company said then it would also lay off about 6,000 workers for four days this month at the Melfi plant in southern Italy, which makes Grande Punto cars.
Of the other factories affected, the flagship Mirafiori site produces Fiat Multipla and Idea minivans, as well as Grande Puntos and the Lancia-branded Musa van.
Termini Imerese makes Lancia small cars and the Pomigliano plant the upscale Alfa Romeo brand.
A decline in Italian auto sales is outstripping the rest of Europe as the government reduces cash incentives to replace older models just as the economy slows and crude oil trades above US$140 a barrel, depressing sales.
Incentives last year helped boost registrations to a record 2.5 million, making the country Europe's No. 2 auto market after Germany.
Growth in the continent's fourth-largest economy would stall this year, the government forecast last week.
The European Commission said on April 28 that Italy's economy would expand 0.5 percent this year, the slowest pace of the 15 nations sharing the euro.
"The cutbacks, which will involve some thousands of Fiat workers, were inevitable in the light of the Italian market slump," Enzo Masini, head of automotive affairs at the Fiom-Cgil trade union, said yesterday.
Fiat said that during the layoffs it would apply to have its workers paid by Cassa Integrazione Guadagni, a public fund financed by companies and the state government.