expected recovery in the European commercial vehicles market. However, BMI is concerned whether the carmaker will be able to sustain these levels in view of the hurdles to its overall production restructuring plan in the home market and the challenges in turning around US carmaker Chrysler. In either case, the effects of these uncertainties will be deeply felt in the Italian autos industry, given Fiat's position as the dominant player.
The extent to which Fiat is important for Ita audi ly is evident from the fact that the company's plans to improve the efficiency and productivity at its plants nationwide have turned into a broader national issue. As Fiat's January 2011 deadline for closure of its Termini Imerese plant in Sicily drew closer, the Italian government moved in to provide grants of up to EUR450mn (US$610.6mn) to seven companies for the takeover of the plant. Such government support has long been a regular occurrence in the Italian autos industry.
However, pressure on companies to streamline their operations for improved capacity utilisations and pressure to reduce costs is compelling Fiat to rationalise its production network in Italy or seek for cost effective bases in Poland and Serbia. If Fiat chooses the corsa latter, it could put severe downside risks to BMI's forecast of the country's autos production recovering to 945,200 units in 2015, compared with the 817,536 units produced in 2010 (according to Anfia estimates).
Domestic demand, on the other hand, is not looking particularly promising either. Estimates from the Anfia show that the fall in total vehicle demand continued in 2010, with total sales falling 5.76% y-o-y, to 2.17mn units - underperforming BMI's expectations of 2.23mn units by year-end. While economic conditions have certainly improved, we believe consumer dynamics to remain weak in 2011. As such, the overall new vehicles market is expected to fall more than 2% y-o-y, to 2.18mn units, in 2011. We see some recovery from 2012, but we do not envisage a complete recovery in market demand any time during the forecast period. By the end of 2015 we expect total sales of only 2.44mn units, nowhere near the 2.79mn units sold in 2007.
This clearly gives Fiat good reasons to seek growth in emerging markets. The carmaker is accordingly prioritising growth in Latin American markets while BMI identifies strong opportunities for long-term expansion for Fiat in Asia. The ultimate goal is to double the revenue of Fiat's core automotive division by 2014.
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