Fiat boss Demel is making big cuts in Germany

Frankfurt. Fiat Auto CEO Herbert Demel is planning massive cutbacks for German Fiat operations.

Between 60 and 100 of Fiat Automobil's 308 employees may be discharged, sources say.

"These figures are pure speculation," said Germany boss Stephan Winkelmann. "But it is true that we have to look at potential ways of making savings and that we might need to realize them at short notice."

Fiat group CEO Sergio Marchionne was scheduled to visit the German Fiat headquarters to discuss its budget today (November 8).

Insiders say part of Turin's cost-cutting plan is to close the German head office in Hessen and move it to the Duesseldorf branch.

While the offices in Hessen are rented, almost two floors of the Duesseldorf location are empty. Apparently Fiat is examining how to end the Hessen lease early, before its 2006 expiration.

Stephan Winkelmann also could be under pressure. Winkelmann has been in office only since February. Peter Weis is a potential successor, say sources. Weis took over the Fiat operations in Austria and Switzerland from Winkelmann and was German sales and marketing director in the late 1990s.

Winkelmann declared that such reports are no more than "stupid rumors."

But Weis could take responsibility for all three markets to reduce costs.

Fiat is in desperate need of cost reductions. During the third quarter alone the car sector made losses of 270 million euros. Unit sales are low despite new models. According to provisional figures by KBA, Fiat group had approximately 71,000 new registrations in Germany between January and October, a loss of 3,600 units from the previous year.

"With 2.6 percent, we have almost maintained our market share," a Fiat spokesman said.

Fiat's German-market target for 2004 remains 90,000 units, compared to roughly 88,500 vehicles in 2003.

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