Will the Chinese have to bail out Italian automakers? That's the price of neoliberal reforms

W kwietniu Alfa Romeo zaprezentowała nowy model o nazwie Milano, nawiązującej do korzeni marki założonej ponad sto lat temu właśnie w Mediolanie. To jednak nie spotkało się z ciepłym przyjęciem włoskich władz. W czym problem? Milano będzie produkowane w Tychach.
Fiat Topolino. Fot. YOURCAR/Youtube.com

In recent months, Meloni's right-wing government has found itself on the warpath with Stellantis, the multinational automotive conglomerate that now owns almost all Italian car brands. The conflict was sparked by the production of Fiat and Alfa Romeo models abroad.

This text has been auto-translated from Polish.

Italy was for decades associated as an automotive powerhouse. Fiats were produced and sold in mass quantities in all corners of the world, including Poland, while Lancia and Alfa Romeo achieved success in motorsports. Now, however, the strength of the Italian automotive industry is not so obvious, especially if one excludes the supercar market, where, for example, Ferrari still has a very strong position.

Production has been declining in recent decades, with several manufacturers going out of business. Almost all of the brands still in operation are owned by the multinational Stellantis, where the French seem to have more say. What's more, criticism from the Italian government falls on the corporate authorities, accusing the manufacturer of neglecting Italian factories and being very selective about the pedigree of individual brands.

Polish Milano and Moroccan Topolino? No, thank you

In April of this year, Alfa Romeo unveiled a new model called Milano, referring to the roots of the brand founded more than a century ago right in Milan. This, however, was not warmly received by the Italian authorities. What was the problem? Milano will be produced in the Polish city of Tychy, so the name was considered to erroneously suggest Italian origins, which is prohibited by local law. Stellantis had to relent and the new model enters the market as Junior, using a different historical name.

This is not the only such episode in the dispute between the Meloni government and Stellantis. A few months ago, the Guardia di Finanza (financial police) stopped several hundred electric Fiat Topolino cars at the port of Livorno. This time it was due to the presence of Italian flags on the cars made in Morocco, which again was alleged to be fraud and cheating customers. The manufacturer has announced that it will remove the tricolor markings from the detained cars and subsequent series, but this is unlikely to end the uphill war between the government and the corporation.

Indeed, the confusion over overly Italian names and symbols is only the tip of the iceberg. The main stoke of the conflict is the fact of declining car production in Italy, for which Fiat's successor Stellantis is now primarily responsible, cutting costs and laying off thousands of Italian workers. However, this can hardly be considered a new trend - over the past quarter century, passenger car production in Italy has fallen by nearly one million, to eight hundred thousand vehicles. The Meloni government wants to turn things around and has set a goal of 1.3 million made in Italy cars.

Italian nationalists are counting on Chinese automakers

An unexpected lifeline for Italy's auto industry could come from Chinese investment. There is unofficial talk of talks with several manufacturers, such as Dongfeng and Chery, all of which are state-owned companies. While for Italy cooperation would mean saving jobs, Chinese manufacturers would not only gain access to a skilled workforce and developed infrastructure, but most importantly would gain a foothold for expansion into European markets.

It is still uncertain to what extent the flirtation with the Chinese serves as a bogeyman for Stellantis, which would very much not want additional rivals, and to what extent it represents a real attempt to attract a new manufacturer to Italy. If Meloni really wants the latter, it's not even out of the question to use one of the already defunct Italian brands, such as Autobianchi or Innocenti, as a banner under which the Chinese cars will be produced. This is because the Italian government has the right to take over and transfer to another investor a brand that has not been used for at least five years. For an unknown foreign manufacturer, reaching for an old name would be at a premium.

Currently, the two brands in question are owned by Stellantis, so handing them over to a competitor would be an additional affront to the corporation so criticized by Meloni. The Italian prime minister, by the way, is not the only opponent of the corporation's authorities - CEO Carlos Tavares has been repeatedly criticized for granting himself a salary of 36 million euros, while cutting jobs at the company and calling for belt-tightening. But there are no other heads of government or heads of state with whom Tavares has had such a strained relationship. In Italy's case, frustration over mistakes made in previous decades comes into play.

Privatization devours its own children?

Since Meloni accuses Stellantis of favoring French interests, it is fair to ask why a multinational would listen more to one country. The simple answer would be to recall that the French government is one of Stellantis' major shareholders - through its previous co-ownership of Peugeot and Citroën, it now owns about 6 percent of the Dutch-registered company's shares, and while that doesn't seem like much, it does make the state represented in Stellantis' decision-making bodies. When the fate of more plants is at stake, such a tool of leverage sometimes proves invaluable.

This raises another question - this time about the reasons for the absence of the Italian government among the shareholders of Italy's largest (partly) automaker, when it brings such advantages.

At one time the state owned Alfa Romeo, among others, but it was handed over to Fiat in the 1980s, when public assets were sold off in a neoliberal wave. Prior to that, ownership over the car company had been used by the government, for example, to promote the development of the country's backward south when it was decided to open new factories in the Naples area. The Italian government has single-handedly deprived itself of such tools for economic policy and has not even retained a minority stake, as was done in France to retain influence over the major car companies.

Another safeguard for the interests of local industry, which the Italians themselves abandoned, was strong labor rights to protect against mass layoffs and rapid plant closures. When the Renzi government liberalized the labor code nearly a decade ago, it was supposed to have the effect of attracting investors and boosting the economy. In the case of the automobile industry, the effect was the opposite. Having received such a gift from the authorities, manufacturers have used it to move factories abroad faster, and the right-wing ruling coalition has no plans to make any changes in this area.

Ironically, in view of this, the potential salvation for the Italian auto industry is a state-owned company, but an Asian one. Chinese manufacturers thrive largely on public support, and this is currently no exception. In Turkey, more electric models are being unveiled by state-owned Togg, with plans to export one million cars by the end of the decade. In this light, the Polish Izera seems to fit in with global trends, although the snail's pace of implementation puts the whole project in question. Whether the current government will have enough determination to finalize the plans of its predecessors remains an open question.

Translated by
Display Europe
Co-funded by the European Union
European Union
Translation is done via AI technology (DeepL). The quality is limited by the used language model.

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Artur Troost
Artur Troost
Doktorant UW, publicysta Krytyki Politycznej
Doktorant na Uniwersytecie Warszawskim, publicysta Krytyki Politycznej.
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