Fiat's June Italian car sales slump 30.5 percent

MILAN, July 3 Reuters reported that Italy's Fiat saw car sales in its key domestic market slump 30.5 percent year-on-year in June, spelling more bad news for its struggling auto unit which the company says it might sell in 2004.

Figures released by the Transport Ministry on Wednesday showed Fiat's share of the Italian new car market skidded to 28.7 percent in June from 34.2 percent this time last year, probably an all-time low for Italy's historic carmaker.

"The drop is a surprise. I'd been expecting Fiat's market share to be about 30 percent," said Antonio Tognoli, a car analyst at ING Barings in Milan.

Fiat shares fell 1.92 percent to 12.62 euros by 0816 GMT.

The sharp drop in Fiat sales, which includes the Alfa Romeo and Lancia brands, compared with a 17.2 percent fall in the Italian car market. Italy accounted for 40 percent of Fiat's total car sales last year.

It was the sixth month in a row that car sales fell in the euro zone's third largest economy, which is performing worse than weak markets elsewhere in Europe.

Slow car sales have been blamed for heavy losses and debts at Fiat and Chairman Paolo Fresco said this week that if Fiat Auto does not turn around by 2004, the industrial group could sell it off.

Fiat has an option to sell its 80 percent stake in Fiat Auto to partner General Motors Corp from 2004. GM bought the other 20 percent in 2000.

"There's still time for them to turn the car business round but to do it they need to invest over the next two years everything they failed to invest over the last five," ING's Tognoli said.

"If they don't manage to turn things around, what kind of price are they going to get from GM?" he added, saying Fiat Auto was most likely to become another of GM's European marques.

Fiat's market share has been falling this year and hit what UBS Warburg analysts called an all-time low of just over 31 percent in May.