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EDITIONS
Friday, 4 October, 2002, 11:27 GMT 12:27 UK
Fiat warns of more job losses
Ferrari Enzo
Fiat Group may sell some of its Ferrari shares
Italian industrial group Fiat has said thousands of workers at its loss-making car unit will be told next week that they will lose their jobs.

The job losses will be part of a restructuring plan which aims to cut the car making unit's massive debts.

Italian Prime Minister Silvio Berlusconi
Mr Berlusconi has been informed
As yet, the company has not divulged how many jobs will go, though in as many as 6,000 lay-offs could be planned, unions feared.

Italian newspapers speculated that as many as 8,000 jobs could go.

Realistically, the figure due to be announced on Wednesday could be about half that if, as expected, the company freezes production at two Palermo and Milan factories.

On Thursday, Prime Minister Silvio Berlusconi discussed the plan with Fiat chairman, Paolo Fresco.

"They were discussions to inform the government about a restructuring programme that they are working on," Mr Berlusconi said.

Weak sales

Earlier this year, Fiat Auto said almost 2,500 jobs would be cut due to a sharp fall in demand for its key Fiat, Alfa Romeo and Lancia cars.

Alfa Romeo sales staff
Alfa Romeo's sales staff are not busy

Fiat Auto relies heavily on domestic sales, where it claims a market share of almost 25%.

But this year, sales have fallen by 19.2%.

Elsewhere in Europe, Fiat Auto commands less than 5% of the market.

Massive debts

Fiat Group earlier this year said it would aim to halve its debts to 3bn euros (1.89bn; $2.96bn) by next spring, possibly by selling some of its 90% stake in supercar maker Ferrari Maserati.

The group may also sell its 80% stake in Fiat Auto to US car giant General Motors (GM) which already owns 20% of the Italian car maker.

Fiat Group has a contractual right to sell its stake in Fiat Auto to GM.

Earlier, Fiat Auto had said its alliance with GM should bring savings of 2bn euros by 2005.

But instead, debts have soared.

Rising market

Car sales in Italy have been weak this year - 11% lower during the first nine months compared with the same period last year.

But in recent weeks sales have picked up, standing 3.4% higher last month than in September 2001.

The rise has been partly attributed to the removal in July of registration fees, a reform the government hoped would bolster Fiat's sales.

Instead, car buyers flocked to other car makers, with Fiat's sales falling by more than 9% last month.

Fiat's market share has now slipped to 21.2% from 24% a year ago.

Ford's market share rose by almost 11% during the same period.


Cars and strategies

Background
See also:

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