| 6:19 PM EST

FCA Lands a $7.1 Billion Guaranteed Loan in Italy

Funds may further complicate FCA-PSA merger plan
#europe #Chrysler #Fiat


Facebook Share Icon LinkedIn Share Icon Twitter Share Icon Share by EMail icon Print Icon

Italy is backing a $7.1 billion loan to buoy the local operations of Fiat Chrysler Automobiles.

FCA’s factory in Pomigliano, Italy.  (Image: FCA)

The three-year loan comes out of a $450 billion emergency fund set up by the government to help businesses survive the disruption caused by the COVID-10 pandemic.

Economy Minister Robert Gualtieri confirmed the deal earlier today, saying the funds will help “preserve and strengthen” the country’s automotive supply chain.

Strings Attached

The loan will certainly help FCA in Italy, where car sales plummeted 50% through May because of lockdowns imposed to control the health emergency.

FCA insists all the money will be spent in Italy. But the deal has spawned plenty of backlash in Italy, in part because FCA has been financially headquartered in the Netherlands since Fiat and Chrysler merged in 2014.

The aid also complicates the math involved in FCA’s increasingly complex plan to merge with PSA next year. FCA had planned to give shareholders a $6.2 billion dividend in 2021 before closing the deal next year, a move many analysts warned could bar government loans.

It was not immediately clear whether dropping the dividend was a condition of the loan. Italy’s bailout program says only that loan recipients cannot pay dividends until after 2020, according to Reuters.

But Gualtieri does confirm the agreement contains undisclosed commitments to jobs and capital investment in Italy. He also said last month that FCA would not be considered for a loan unless it promised not to move production capacity out of Italy.

Related Topics


  • 8 Rules for Getting Things Done Through People

    Effective management is a timeless skill—as demonstrated by this treasure of an article from the AutoBeat Group archive. Although the tools of the trade have changed and proliferated, the basics remain the same. Here are 8 old school (and just darn practical) rules for being an excellent manager. 

  • Can You Glue A Car Together?

    I'm not talking about a plastic Revell model of a '57 Chevy, but a real vehicle, one that rolls off an assembly line in 1999 with another 99,999 just like it right behind. Is it possible, or is this just a fantasy of the marketing department at Elmer's?

  • 2016 Prius: The Fourth Generation

    The little car that could still can. And this time as a car that not only gets great fuel economy, but which has ride and handling that makes it more than an econo-box (and its styling is anything but boxy).