The Italian elections, which have given the country a parliament without any party holding majority, could affect Fiat SpA.
The elections were among the most inconclusive in the country’s history, as votes have been divided between a center-left coalition led by Pier Luigi Bersani, a center-right coalition led by former prime minister Silvio Berlusconi and a populist party led by professional comedian Beppe Grillo.
Investors feared the elections’ results could make Italy’s already bad economic situation worse and worried about the impact of the political crisis on Fiat. The Italian carmaker is struggling to remain profitable as new car sales in the country fell to levels not seen since the late 1970s.
On Monday, Fitch Ratings downgraded’s Fiat’s credit rating to “BB-” from “BB,” on grounds that “the group’s latest strategic plan is subject to substantial execution risks and will take several years to bear fruit.”
The plan involves major new investments aimed at retooling Fiat’s underutilized Italian plants to manufacture more profitable luxury cars and crossovers. However, analysts were not impressed with the plan, noting that demand for luxury cars is also falling.
Fiat’s stock closed down 3.43 percent Tuesday at an even 4 euros per share, after losing nearly 12 percent of its value over the past month.
Source: The Detroit News