Fiat-Chrysler Automobiles (FCA) is the latest to receive a multi-billion euro government-backed loan, with €6.3 billion being made available to the company from one of Italy's largest banks, news agency Reuters reports.
This comes after FCA announced in April 2020 that the company had drawn down €7.75 billion from credit facilities dating back to 2015.
In the same month, FCA had secured an additional €3.5 billion of private debt from a syndication of thirteen banks. It's understood that credit has yet to be accessed by the car company.
Despite FCA employing 55,00 Italians and contributing an estimated 6.2 per cent of Italy's GDP, the latest €6.3 billion government-backed deal has drawn local criticism due to the company moving its legal headquarters to the Netherlands ahead of its merger with French automaker PSA.
The Italian government has agreed to guarantee 80 per cent of the €6.3 billion loan.
In total, it's estimated FCA has secured €17.55 billion in loans.
No announcement has been made yet on a €5.5 billion special dividend to shareholders that is meant to accompany the merger between FCA and PSA. However, FCA has decided to scrap its 2019 dividend payment of €1.1 billion to shareholders in response to the global economic slowdown.
Billions flow into global auto industry
Italy is not the only government to guarantee billions in loans to the auto industry.
Only yesterday Renault received €5 billion in bank loans, with the French government guaranteeing up-to 90 per cent. The government is deploying an additional €3.8 billion to help the struggling French auto industry, which includes a €12,000 consumer bonus for buying an electric vehicle, reports Time magazine.
Germany's chancellor announced a €130 billion economic stimulus package last week that also provides incentives for purchasing electric vehicles. According to The Financial Times, the package has been condemned by German car companies for its narrow focus.
As reported last month, Mazda was seeking 300 billion Yen ($US 2.8 billion) from Japan's three largest banks after the pandemic impacted the business.
In late May, Hindustan Times reported that General Motors had raised a total of $US27.1 billion of capital, of which $US5.5 billion was raised from the bond market.