Stellantis' Italian output to drop sharply if incentives don't change trend, union says

MILAN (Reuters) -Automaker Stellantis' output in Italy could drop by around a third this year if the government's recently introduced purchase incentives don't boost demand, especially for electric vehicles, the FIM-CISL union said on Monday.

The union said output could fall to just over 500,000 vehicles from 751,000 last year, well below the one million target that Stellantis is discussing with the Italian government for the end of this decade.

After announcing at the beginning of this year a new incentive scheme supporting purchases of electric and hybrid vehicles, as well as of less polluting petrol ones, the government introduced the measures only last month.

"Their impact on output volumes is not yet visible," FIM-CISL's head Ferdinando Uliano said, presenting the union's quarterly report on Stellantis' production levels, which showed a 25% decline in output in the first half of this year to 303,510 vehicles - both passenger cars and vans.

"If incentives do not change the picture, at the end of the year we'll be most likely only halfway to the one-million 2030 target," he said.

Stellantis said on Monday the difficult market situation in Italy and in Europe was having a negative impact on the country's production, for EVs in particular, but confirmed the "shared ambition" with the Italian government to reach output of 1 million vehicles in Italy by 2030.

"However we need to overcome the uncertainties linked to the electrification process and a greater stability in demand," the automaker said in a statement.

Uliano said the output drop in the first half was due partly to strong comparable figures from the year before, when Stellantis recovered lost production from the previous year, which was still affected by semiconductor shortages.

He added a potential boost to Stellantis' Italian output should come from new models scheduled to start production at the Melfi plant in southern Italy in the coming years.

Between next year and 2026, Stellantis plans to begin production in Melfi of five new mid-sized models for brands including Jeep and Lancia, starting with a new DS car in the first quarter of 2025.

(Reporting by Giulio Piovaccari; Editing by Mark Potter)