Fiat plans temporary plant shutdowns on weak demand

By Gianni Montani

TURIN, Italy, July 7 (Reuters) - Fiat (FIA.MI) will temporarily shut down most of its plants in Italy for periods in the coming months because of the weak demand for its cars.

Fiat plans to shut four of its five plants in Italy for an average of one week per month between August and November, according to company information obtained by Reuters.

The closures, which will send thousands of workers home on a reduced salary, would be the most drastic such measures it has taken since the industrial group fell on hard times at the beginning of the decade.

Fiat will also suspend production at some plants at its tractor and combine division, CNH (CNH.N), according to information it provided to its unions on Monday.

Production lines for the Alfa Romeo MiTo and the Lancia Delta, two new cars launched in June, will not be halted.

Along with other car makers, Fiat has seen a drop in sales this year as drivers have postponed buying new cars in the face of a weakening economy.

Italian sales of cars from its three brands -- Fiat, Lancia and Alfa Romeo -- fell 16.5 percent in June, in what its chief executive described as a "disastrous" month.

Such is the predicament of the automotive industry that analysts doubt European manufacturers like Renault (RENA.PA) will be able to meet their targets for the year. Sales have fallen, while costs such as raw materials have risen.