Why Italy slashed $5bn from its auto industry support

Italy’s automotive sector faces a setback as the government moves to reduce its industry support by nearly $5 billion, a budget plan revealed. The cuts, which stretch from 2025 to 2030, aim to reallocate funds to other areas, sparking criticism from the automotive industry and opposition leaders who argue it undercuts Italy’s competitive edge.

“This is a harsh blow that contradicts efforts to support our industry through a challenging transition,” remarked Gianmarco Giorda, Managing Director of automotive association ANFIA. He pointed to challenges like the ongoing shift to electric vehicles and weak European demand, saying, “Confidence in the sector has already been shaken.”

The plan, led by Economy Minister Giancarlo Giorgetti, scales back previously allocated funding, leaving only 1.2 billion euros out of the 5.8 billion euros budgeted for the next five years. The steepest reductions—around 2.4 billion euros—are set for 2028-2030, crucial years in the industry’s transformation to greener technologies.

The opposition Democratic Party (PD) voiced strong objections, with lawmaker Vinicio Peluffo calling for the resignation of Industry Minister Adolfo Urso. “Urso has shown he is not up to the task,” Peluffo asserted, accusing him of failing to secure sufficient resources for Italy’s auto sector.

Urso responded, insisting the government will support auto industry components, which he describes as Italy’s “true strength.” “Investment will continue where it matters most,” Urso added, reaffirming Italy’s commitment to the green transition.

The funding cuts have also raised concerns for Stellantis (STLAM.MI), Italy’s last major automaker, which relies on state support to maintain its operations domestically. Stellantis CEO Carlos Tavares has previously argued that Italy lags behind other EU nations in automotive funding, which hampers the industry’s growth and threatens jobs.

The funding changes also come as Volkswagen (VOWG_p.DE) announced plans to close three German factories and cut thousands of jobs, highlighting the broad challenges facing Europe’s auto sector.

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