Fiat Chrysler may reconsider $5.7 billion plan if Italy taxes diesel, petrol vehicles

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Fiat Chrysler (FCA) could reconsider its 5 billion euro ($5.7 billion) Italian investment plan, which consists of a shift to cleaner engines, if Rome increases taxes on petrol and diesel cars.

“Were these measures to be confirmed as of 2019, a thorough examination of their effect and an update to strategies already announced would be necessary,” FCA’s Europe head, Pietro Gorlier, stated in a letter to government representatives in the northern Piedmont region, where some of the new investment would be concerned.

In an amendment to the 2019 budget law passed in country’s lower house last week, the government authorized subsidies of up to 6,000 euros for lower emission vehicles, but added a surcharge of up to 3,000 euros on petrol and diesel cars.

However, the government immediately pledged to modify it in the Senate, where it will be voted on next, after one of the ruling parties disputed the measure.

Italy’s ruling parties – the anti-establishment 5-Star Movement and the right-wing League – have been at odds over the concern, with the latter disputing any new taxes on cars, while the pro-environment 5-Star has recommended the new rules.

Unions and auto sector associations have also cautioned about the proposed new tax, saying it would damage not only the automakers but also the whole supply chain and could cost jobs.

FCA stated earlier month it plans to spend over 5 billion euros on new models and cleaner engines in Italy during the next three years to increase jobs and profitability.

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