03 June 2012

LIFE: Fill'er Up

SARONNO, Italy – Now here’s an idea. To help spur auto sales in Italy, Fiat, the Italian (err, American) automobile maker has made an agreement with the oil company API (Anonima Petroli Italiana- Anomina Italian Petrol) to sell gasoline and diesel fuel for 1 euro a liter for three years to anyone who buys a new car.  
Fiat's new Bravo Multijet
For example, if you buy a new FIAT Bravo Multijet, you will be able to fill up your gas tank at any of the 3,700 API gas stations throughout Italy, and pay only 1 euro per liter. The difference between what you, Mr. New Car Buyer pays and what the market price of gas is, will be paid by FIAT (Fabbrica Italiana Automobili Torino, – Italian Automobile Company Turin). And the better news is, the card is valid until 2015.  

Gas prices are on everyone’s mind these days, especially with summer just around the corner, and long, lazy days at the seaside beckoning to us northern land-locked worker bees. In January 2012, average gas prices in Italy were 1.735 euro per liter for gasoline and 1.684 euros per liter for diesel. Since one US gallon is equal to 3.8 liters, a gallon of gas in Italy costs about 6.59 euros per gallon or $8.67 (using an exchange rate of 1.315, that is, $1.34 will buy you one euro).
At the Pump
For Italians it does sound like a deal, especially since a liter of gas just went up another 2 eurocents, and is slowly, albeit ever so slowly, creeping up to 2 euros a liter. What FIAT is counting on is the Italian character to always go with the safe bet. Italians may be a lot of things but they are not risk takers, or gamblers and if they can lock up a fixed price on gasoline for three years, they just might prefer to do that than take any type of immediate discount on a new car deal.

According to the technicians at FIAT, with the 1 euro a liter deal, a family would be able to drive their new FIAT 500 2 cylinder TwinAir from Milan to Naples for only 33 euros, and if they buy a Punto Multijet, it drops to 27 euros. How far is that you ask? Driving distance between Milan and Naples is 774Km / 481 miles. It’s a great savings, especially since I just paid 40 euros to go from Milan to Liguria by train, which is only 80 miles or 128.72 kilometers. 
 Jay Leno and his FIAT 500
What I don’t know, of the many things I don’t know, is if the 1 euro a liter price includes taxes or not. I think not. I also don’t know how much of the 1.735 euros per liter is tax, and how much is the pure cost of the gasoline. It’s an important component to consider as the government is getting ready to increase excise taxes to help raise money needed to rebuild the parts of Emilia hit by the recent earthquakes. That move alone is going to make the gas prices in Italy among the highest in Europe.

So while Chrysler – who is FIAT’s daddy now – is in its 25th consecutive month of growth, thanks to a smart move by Obama, the growth in Italy’s automotive market has almost slowed to a meager increase of 1.6% over last year. Not good at all.
 Making FIAT Babies
So FIAT’s new deal may seem like a good deal to new car buyers in Italy as it is part and parcel of the Italian character to always prepare for the worst. I can remember several times in the past when rumblings of a potential conflict in Northern Africa hit the media, and in less than half an hour the shelves of the grocery stores were totally devoid of pasta and cans of peeled tomatoes. War or no war, recession or no recession – you gotta put food on the table. That’s how they have survived crisis in the past, and I have to think that is how they will survive this   crisis as well. 

P.S. Thanks to all of you who wrote asking if I was OK after the earthquake last week. I was on the Riviera when it happened and while there were several reports of tremors, I didn't feel or see any evidence of it. It is getting worrisome though.

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