MILAN -- Alessandro Cardini may benefit from the desperation gripping debt-plagued Italy by holding off on replacing his 10-year-old Opel Corsa.
The 40-year-old manager from Milan had planned to buy a new car for months. Now, with the Italian government falling apart in the face of austerity measures and soaring debt costs, he'll hold off a little longer in hopes of getting a steeper discount from hard-up dealers.
Such decisions are creating a "vicious circle" for the auto industry, according to Italy's Federauto, the nation's association of car dealers.
"We may pay a lower price for a new car next year, so it's worth it to wait a couple months," Cardini said. "The crisis will make dealers even keener on giving a higher discount."
Italy's slump is hitting the European auto market hard because it ranks behind only Germany, France, and the U.K. in terms of vehicle sales.
Car deliveries in Italy, home to Fiat, tumbled 11 percent through the first nine months of 2011, fueling a 0.9 percent dip in the region's auto market, according to ACEA, the European automakers association.
Fiat shares have lost 39 percent this year, giving the company a market value of 5.14 billion euros.
General Motors Co. this week abandoned a goal of breaking even this year in Europe, where it makes Opel and Vauxhall models, as economic conditions in the region deteriorate.
Fiat, which sold about 30 percent of its cars in Italy last year, is struggling to end losses in Europe estimated by analysts at 800 million euros ($1.1 billion) annually.
"Producers may survive this crisis thanks to their sales in other markets, such as Brazil and China; dealers can't," Filippo Pavan Bernacchi, head of Italian dealer association Federauto, whose family has been selling Fiat vehicles near Padova in northern Italy for over 60 years.
"Some dealers are cutting jobs; others will disappear. We are in a vicious circle. We are destroying ourselves, one against the other," he said.
Discounts range between 10 percent and 20 percent on new cars and can be as high as 35 percent on so-called zero-kilometer vehicles, which are new cars that have been registered as used so they can be sold at a lower price, Bernacchi said.