Either change or close. There is little room for manoeuvre for the automotive sector as the transition to green cars is not going as it should. In Europe, Volkswagen, a historic brand that has not closed a single factory in 87 years, is showing the first signs of a slowdown, while in Italy the situation could explode when layoffs end at the end of the year.
Let’s try to assess the situation and discuss with Gianmarco Giorda, Anfia’s general manager, the end of the internal combustion engine by 2035. What needs to be done to save the Italian automotive sector? Is Turin really at risk of turning into a ghost town, Detroit?
What awaits us?
The automotive sector in Italy has been recording disappointing figures for years, but this time the situation seems more serious than expected. Even in Germany, which has always been successful in producing high-end cars, stormy winds are starting to blow. But Berlin is also our biggest customer in terms of exports, especially in the automotive parts sector, and that says a lot about what lies ahead.
“The worst is probably yet to come – Anfia’s general manager Gianmarco Giorda confirmed in an interview with Today.it -. We are quite worried about the next few months because there are a number of simultaneous factors that create a lot of uncertainty”, such as the geopolitical situation, high energy prices and high interest rates. “Since Covid, 2.5 million fewer cars have been sold, which means 6 or 7 production sites. But the most frightening is the decline in productivity in Germany, which will and will have a very significant impact in the coming months. It is a negative development in terms of orders for Italian companies that have so far been selling successfully to German manufacturers or large component suppliers”, he said.
Does Turin love Detroit?
It is not only the slowdown in Germany that is worrying, because in Italy we are also looking with concern at the production volumes of Stellantis, the country’s only major manufacturer when it comes to cars. “They have been falling for several years, but the decline compared to last year in the first months of 2024 is very noticeable.”
In short, Turin could become a ghost town of Detroit after the great automotive crisis of 2008. To recall, the American automotive city suffered a great loss of population after the closure of the historic Ford automotive industry, the bankruptcy of Chrysler and General Motors, and the subsequent predation of criminals and drug addicts, especially in the suburbs (the abandoned factories of the Packard Motor Car Company in the photo below). The population, which was almost 2 million in the 1950s, is now around 600 thousand.
The hypothesis is certainly risky, but in Piedmont more than one in two component workers are at risk of being laid off, totaling 25,000 (40,000 in all of Italy). To these could be added many workers from Mirafiori, the historic factory south of Turin where Fiat was born. Today, the company employs 12,000 people and produces the electric 500 Abarth and the Fiat and Maserati GranTurismo and GranCabrio. Unfortunately, production of electric vehicles was only 18,500 by September, compared to 52,000 in the same period in 2023, a drop of 83%.
The difficulties of Mirafiori and the industries that depend on it are throwing into uncertainty all the workers who revolve around this great reality, from cleaners to security personnel, but also the bars, restaurants and small shops that make a living thanks to automotive workers. Who knows if Mirafiori will be able to recover with the 500 hybrids that were supposed to start production in 2026. In the meantime, we continue with the layoffs that started at the beginning of the year and continue intermittently until mid-October. according to the latest information.
“It is difficult to say which parts of our country are most at risk, but in general almost all factories are under-utilized,” the Anfia executive commented. To prevent the worst, the government has started looking for a second manufacturer. “We are very open to a second manufacturer, probably Chinese, provided that it also brings supplies to the relevant sectors, also ensures that local components work and is not just an assembly plant for parts coming from China.”
The numbers from the crisis in Italy
The big European carmakers can’t keep up with the competition from China. They have enviable know-how in batteries, the beating heart of the electric car, and their production costs are much lower than ours. In Italy, green car prices are too high relative to salaries, so sales aren’t growing.
Even incentives are not saving us. Suffice it to say that EV sales fell by 40.6% in August compared to last year. But the entire automotive market is disappointing: sales fell by 13.4% last month; automotive production fell by 24.8% in July, the fifth consecutive month of double-digit decline; the motor vehicle manufacturing index fell by 35.1% in July (Anfia data).
In Italy, only 23 thousand cars were produced in one month, 54.7% less than in July 2023, while cars produced since January are 225 thousand, 35.5% less than in the same period in 2023. Apart from this, the government has a target of one million cars. .
Even incentives can’t save us
“We are working on new hypotheses for 2025 regarding incentives. Of course, we need to encourage the purchase of electric cars so that they become more widespread in these years. These need to be rethought, perhaps structured for a few years. We are thinking of making them a little more effective and ensuring that we reach a higher market share, because today we are at the bottom of the list in Europe.”
But according to Giorda, we can’t just focus on electric, we also need to develop alternative technologies that “have very low emissions and are non-polluting, such as synthetic fuels and biofuels. In this way, we can continue to produce internal combustion engines and save parts of the more traditional component supply chain that would otherwise not exist by 2035 or even earlier.” As Porsche’s head of R&D, Michael Steiner, put it, “the problem is not the internal combustion engine, but what burns inside it.”
Possible solutions to the crisis
Faced with such a scenario, a crisis seems inevitable, and there are those who want to postpone the ban on gasoline and diesel cars, which was a hypothesis that was not even possible until a while ago, until 2035. “The problems of the automobile sector are also partly unrelated to the EU decisions. Focusing solely on electric vehicles has certainly created uncertainties among manufacturers, but instead of postponing the date to 2035, we stand with Minister Urso in bringing forward the possibility of reviewing the legislation by 2025.” In fact, EU Commission President Ursula von der Leyen made it known that reviewing what has already been decided will only be possible in 2026. However, according to the Anfia manager, there is no point in wasting another year, we need to assess as soon as possible what the economic and social repercussions of such a decision will be, given that thousands of businesses and employees are at risk.
“Instead of pushing forward the date to 2035, we intend to revise the measurements for the calculation of CO2, taking into account not only what comes out of the exhaust but also everything related to the creation of the final product. Such an analysis would also leave room for other fuels and still allow the use of internal combustion engines.” Francesco Borgomeo, president of Unindustria Cassino, shares the same opinion, recalling what Sergio Marchionne said 7 years ago, saying that “the electric motor imposed in this way is a scam”. The visionary executive of Fiat Chrysler, who died in 2018, argued that it was a contradiction to manufacture electric cars or their components in factories that use fossil fuels. Not to mention the fact that India, the United States and China are responsible for more than half of global CO2 emissions (see photo above) and that Beijing is 4 times more polluting than Europe. But that is a whole other topic.
Source: Today IT
Roy Brown is a renowned economist and author at The Nation View. He has a deep understanding of the global economy and its intricacies. He writes about a wide range of economic topics, including monetary policy, fiscal policy, international trade, and labor markets.
