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Fiat extended closure underscores sales 'crisis'

Fiat extended closure underscores sales 'crisis'
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Fiat says its Pomigliano plant, near Naples will remain shut for another two weeks after the usual summer holiday closedown.

That is not as dramatic as Peugeot Citroen’s layoffs and plant closure but is another indication of the overcapacity in European car production in the face of rapidly falling demand.

A Fiat statement talked about a “sales crisis that shows no sign of stopping.”

Fiat said the Pomigliano plant would remain shut from August 20-31, after the closure planned for the summer. “In coming months the situation will be continually monitored,” the carmaker added.

There is little early respite in prospect for Fiat or other Italian companies.

The Bank of Italy predicts the country’s economy is set to shrink sharply this year and continue contracting into 2013.

In its latest economic report, the central bank said it thinks GDP will fall 2.0 percent this year and 0.2 percent next year.

It bases that on the assumption that tight credit will mean consumers spending less and companies cutting back on investment.