A history of failure: FIAT and the Romanian automobile industry under Ceausescu, during the 1970s

Ioan Achim Balaban () and Valentina Fava ()
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Ioan Achim Balaban: Venice School of Management, Università Ca' Foscari Venice
Valentina Fava: Venice School of Management, Università Ca' Foscari Venice

No 1, Working Papers from Venice School of Management - Department of Management, Università Ca' Foscari Venezia

Abstract: This article examines the failures of FIAT to establish industrial cooperation in the automotive field with Romania in the early 1970s, drawing on the historical archives of the FIAT Group. The article argues that the failure of negotiations in 1973 to produce a FIAT model in communist Romania was related to the Romanian desire to export half of the production to Western Europe through FIAT's foreign distribution network. FIAT refused because it feared that the poor quality of the FIATs produced in Romania would damage the brand. The other reason for FIAT's refusal to partner with Bucharest was concern that a Romanian export deal would upset FIAT's car manufacturing agreements with Yugoslavia and Poland, as both countries would demand similar export deals. Given the experience of Renault and Citroën in Romania in the 1970s and 1980s, FIAT made the right decision to reject Bucharest's offer of a partnership through the establishment of a mixed-capital joint venture. For Romania, however, the failure of the negotiations with FIAT was a major blow to its emerging foreign economic policy based on partnerships with Western non-financial companies. The Romanian/Citroen deal was the result of the failed FIAT deal.

Keywords: FIAT; Romania; car industry; Détente; Romania balance of payments; car exports (search for similar items in EconPapers)
Pages: 28 pages
Date: 2025-01
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