Fiat Auto's 2003 operating losses were 978 million euros, much higher than the company's internal forecast.
The automaker had hoped that its 2003 losses would be half of the previous year's losses of 1.34 billion euros.
Demel, who was appointed Fiat Auto CEO last November, announced his austerity plan to his top executives in Turin.
Automobilwoche has learned that Demel has cut Fiat Germany's sales budget for the current year by 39 percent to approximately 10.3 million euros.
The Lancia brand is hit hardest with a sales budget reduction of 63 percent to approximately two million euros.
This means that 40 gaps in Fiat's German sales network will not be filled and a planned dealer training program has lost its funding.
The 78 million euro budget for marketing Fiat, Lancia and commercial vehicles in Germany, has been cut by 28 percent.
Fiat's model range will also be cut. There will be no successors to the Lancia Lybra and the Fiat Barchetta.