Invitation to Tata and M&M to buy Fiat’s Sicilian plant

Fiat has sought investment from Indian Automobile supremos Tata and Mahindra to take over its plant in Sicily that is on the verge of closure. Talks are on between the firms to arrive at a decision soon.

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 $8 billion. Sources close to the delegation have revealed that talks are on between the companies and the Government of Italy to acquire the Fiat’s automobile unit in Termini Imerese at the Sicilian island.

When Tata Motors was contacted regarding this, their spokesperson declined to comment while Mahindra’s counterpart simply said that 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.”

The plant, the smallest of FIat’s five plants can still produce 400 cars a day and employs around 3,500 directly, 3,000 more are employed through component suppliers. It is by far the costliest too as cars have to be shipped to and from the Island. Fiat and Chrysler CEO is said to have met Scajola regarding Fiat’s decision to close down its fifth plant and get rid of excess capacity to cut costs when sales of the Fiat group sales are dwindling. The Italian government is understood to be against this decision as it would lead to protests over job losses from the locals.

Fiat and Tata Motors have an exclusive dealer sharing agreement in return of which Fiat provides Tata access to some of its technology and powertrains. The agreement could be extended to this plant if Tata felt the feasibility to use it. We all do know that if Tata needs to take the Nano to Europe, it does need some assistance and this could be it, but producing the Nano is Sicily could bump its prices. Another way of looking at it is Mahindra’s interest-Mahindra are desperately looking at expanding into European markets and remember that Mahindra is presently developing a world-SUV and this could just be the right option.

“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.

ET