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EU approves EUR 16m for new Fiat transmission unit

The European Commission has authorised, under EU state aid rules, EUR 16 million of regional investment aid, which the Italian authorities intend to grant to Fiat Powertrain Technologies S.p.A. (FPT), a subsidiary of the Fiat Group, for the production of car transmissions in Verrone (Piemonte), Italy.

FPT's existing plant will be equipped with new machinery, heat treatment and assembly lines to produce an innovative transmission unit intended for mid-range vehicles. The investment is expected to create 600 new jobs once full production is reached in 2013. The Commission found the measure to be compatible with the requirements of the Regional Aid Guidelines 2007-2013 and in particular with the rules on large investment projects, because FPT will not significantly increase its production capacity and the investment takes place in a growing market.

“In these difficult times, innovating and creating jobs is of utmost importance. Fiat Powertrain's investment project is expected to achieve this without unduly distorting competition", said Commission Vice President and Competition Commissioner Joaquín Almunia.

The Italian authorities intend to grant €16 million of regional aid for a total investment amounting to €392 million to Fiat Powertrain Technologies for producing the new C635 transmission unit, both manual and dual dry clutch transmissions, which will gradually replace the existing C530 transmission. The project includes the extension of the existing plant and a significant change in the production process, to make it more efficient and to adapt it to the new C635 model.

The public support is granted under an existing aid scheme but, due to the amount and investment costs involved, the measure had to be notified to the Commission for individual assessment and clearance.

The assessment of regional aid to large investment projects requires that the Commission checks the market share of the beneficiary and the production capacity created by the investment remain below certain thresholds set by the Regional Aid Guidelines. When the thresholds are not exceeded, the effect of the aid on competition is deemed to be outweighed by its positive contribution to regional development.

The Commission assessed FPT's position on the relevant transmission and car market segments and found that FPT's market share and capacity increase for this project would remain below the thresholds.

The non-confidential version of the decision will be made available under the case number N 27/2010 in the State Aid Register.

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