TURIN - Italy's new scrapping incentives ought to continue for another six or seven years, says Loic Caperan, Fiat Auto sales and marketing director.
Caperan says short-term, one-off incentive programs, like those in France, won't retire enough old cars that emit too much pollution and get poor fuel economy.
He also says that Europe's goal of standard car inspection rules could prove too expensive for less affluent drivers without trade-in incentives.
Automotive News Europe's Luca Ciferri recently interviewed Caperan in Turin about Italy's incentives and their impact on Fiat sales.
Does Italy need incentives?
Incentives are really important in a country like Italy. After record years from 1989 to 1992 we had four years of deep crisis, with annual sales down to 1.7 million units. With the incentives to scrap cars older than 10 years, the market is growing again this year.
We expect 1997 registrations to be between 2.1 million and 2.2 million. This means the market is recovering, but not enough to say that all the problems are over.
Volume in 1997 will still be about 10 percent lower than the record years. And even though 800,000 units will be scrapped this year, this is too little in a country where over 20 million cars still lack a catalytic converter. If we really want cleaner emissions and more modern cars that burn less fuel, the incentives should continue for at least another six or seven years.
In addition, rapid passage of new EU rules that require an inspection after four years and then every two years could hurt the less affluent motorists. Changing from the existing system of first inspection after 10 years, then five years could be painful for many. Continuing the incentives would help less affluent motorists who could not afford a new car at its normal price.
Environment Minister Edo Ronchi wants to continue the incentives, but use them to promote greener cars. Do you agree?
In principle, I totally agree. The problem is how to determine what is 'greener.' A car that emits less pollution as a percentage of exhaust gases, or a car that - burning less fuel to cover the same distance - emits less pollution? In addition, we must account for different types of fuel. Diesel emissions are basically greener than gasoline. Then, how do you consider new categories, such as CNG and electric cars? This is a tough question and Fiat Auto is open to discuss it in detail with the relevant authorities.
What do you think of Spain's incentive, the Plan Prever?
I think it is very good. After the incentives end the market collapses, as France and Spain have already shown. This is also bad news for the government. It receives substantial income from taxes related to the motor business.
Second, it is important for carmakers, suppliers and dealers to be able to program their work. Ups and downs in demand hurt everybody.
Plan Prever means 'to preview,' 'to program,' and that is a good thing for everyone, the government included. The state is able to predict its medium-term income from the car business.
Fiat brand sales in Italy from January through April were good. Lancia and Alfa Romeo sales were not. Why?
First, Fiat brand's potential has not been fully reached. Demand for our small cars exceeded output for the first quarter and we barely outsold the market. From April, our gain was more evident: sales up 66 percent in a market up 52.4 percent. We gained almost three points of market share.
Take the Panda, for example. In April, we had three times the unfilled orders we had for the car in April 1996. In February, we decided to hire 2,400 workers to increase capacity. But because they had to be trained only half of them were working from mid-May onwards in our Mirafiori, Melfi and Pratola Serra plants. The other half will follow in mid-June. Only then will we reach peak production.
Alfa Romeo operates in segments only marginally affected by the incentives. In addition, the revamped 145-146 range arrived only in January.
But things improved in April. After a first quarter decline, Italian sales rose 35.6 percent. For Lancia, the situation is mixed. The Delta, Dedra and K are almost unaffected by the incentives, as are other cars in the same segments.
In contrast, demand for the small Lancia Y is more than the 600 units a day we are currently making, six days a week. So sales will improve as capacity rises, thanks to the new workers hired for Melfi.
The incentives increased Italy's share of the European market, so Fiat Auto's share in Europe also rose in the first four months of 1997. But your market share excluding Italy fell from 6.3 percent to 5.7 percent in the first quarter. Does this worry you?
Not much. In the first four months of 1996, our European sales excluding Italy were particularly strong. That was due mainly to the incentives in France, which raised our export volumes considerably. This year, the booming demand for minicars in Italy is making our small-car export stock very tight, and the Fiat brand is suffering in market share outside of Italy.
As for Alfa Romeo and Lancia, we are not happy with their current results. Partly it is a problem of product, but also of their dealer networks.
We have shown the 156 that replaces the 155 this fall. And it is widely known that the 164 will be replaced next spring. This clearly affects sales of the current models. Export demand for the Lancia Y is higher than we can meet right now, and the K has greater potential.
Alfa and Lancia export numbers are also suffering because of the dealer network. Four years ago we began the total renovation of our foreign dealers.
We thought it was going to be finished last year. It was much more complicated and took longer than we expected.
We need another three years to complete it.