Fiat tries to assure on one hand the labor unions that it will not cut jobs in Italy and on the other hand, the investors that it is able to deal with the excess production capacity.
On October 30th, Fiat will present the third-quarter results and a new strategy plan, several days after plant closures, plunging profit and state bailout shook the European auto industry. Last month Europe was hit by the deepest fall in sales in the past 12 months, due to high unemployment, the debt crisis and the low demand, which continue to dramatically affect the region.
Recently CEO Sergio Marchionne announced his plans to manufacture Chrysler and Jeep models for the US markets at its five Italian plants. But investors don’t seem confident about the automaker’s long-term plans, fearing that they might not come true.
“If Marchionne is not unfreezing the investments for future car launches, we need to know what he is doing,” said an analyst who rates Fiat a ‘sell’. “We’d also like to know what other solutions he is looking at to deal with overcapacity.”
In October Moody’s downgraded Fiat a notch to Ba3 and many equity analysts have already cut the stock. Therefore investors fear that Fiat might fall deeper in the European market, and that its North American operations won’t be enough to make up for the loss in the region.