MILAN/ROME -- Italy is close to approving a 6.3 billion-euro ($7.1 billion) credit facility for Fiat Chrysler Automobiles, setting the stage for Europe's biggest government-backed financing to an automaker since the start of the coronavirus pandemic, according to people familiar with the matter.
The guarantee still needs a sign-off from Finance Minister Roberto Gualtieri after accounting offices at his ministry approved the terms, the people said. It will then need to be green-lighted by Italy's state auditor.
An approval by the minister is expected as early as this week, the people said.
A spokesman for the minister as well as a spokesman for FCA declined to comment.
The financing will be used exclusively for the automaker's Italian activities, FCA has said. The company will use the funds for workers' salaries, to pay suppliers and for planned investments at domestic facilities.
Italy's automotive supply chain includes 200,000 small and medium-sized companies and the domestic industry generates more than 100 billion euros in annual revenue.
Italy's top lender Intesa Sanpaolo gave the go-ahead to the loan last month. Trade-credit insurer Sace will guarantee 80 percent of the amount.
"Car sales in Italy will plunge this year to 1.2 million compared with 2.1 million in 2019," said Dario Duse, a managing director at consulting firm Alix Partners, who forecasts that industry-wide sales may take more than five years to return to pre-pandemic levels.
Registrations fell 57 percent in Europe in May after a 78 percent drop in April. The exact shape of a potential recovery is still unclear as automakers from Volkswagen Group to FCA prepare to announce results for what likely will be a devastating second quarter.
In the U.S., Ford forecast a $5 billion loss for the three months through June.
FCA burned through $5.5 billion in the first quarter, and the company and French peer PSA Group last month scrapped a plan to pay out 1.1 billion euros in dividends as part of their 2019 merger agreement.
General Motors and Ford have tapped credit lines to stock up on billions of dollars in cash. In April, Daimler secured a 12 billion-euro credit line and Renault struck a 5 billion-euro loan guarantee deal with the French state.