Although Fiat is out to conquer the world, financial gurus expect the automaker to encounter some pretty serious trouble in the coming months. Will Chrysler’s saviour be strong enough to weather the storm?
After Standard & Poor’s last February, reputable rating agency Moody’s has now cut Fiat’s credit rating down from Ba1 to Ba2.
The American agency believes Fiat and Chrysler will intermingle more and more as time goes on, and as they share engines, platforms and components they’ll become increasingly dependent on one another. If either of the two gets caught in financial foibles, they’d have to support each other, and that could be catastrophic.
The teetering European economy, the “relatively infrequent model renewal rate” and Fiat’s declining sales (-13%) in the first half of the year across the pond are some of the reasons evoked.
Moody’s also noted that the Italian automaker was at risk in Brazil, its most profitable market. The heavy competition has contributed to lower demand, leading to risks of overproduction and price wars.
Fiat’s rating could be cut further if it continues to lose ground in Europe, its financial position weakens or Chrysler’s performance deteriorates.
Fiat and Chrysler are looking to make around 100 billion euros in revenue and sell 6 million units by 2014.
Source: Automotive News
After Standard & Poor’s last February, reputable rating agency Moody’s has now cut Fiat’s credit rating down from Ba1 to Ba2.
The American agency believes Fiat and Chrysler will intermingle more and more as time goes on, and as they share engines, platforms and components they’ll become increasingly dependent on one another. If either of the two gets caught in financial foibles, they’d have to support each other, and that could be catastrophic.
The teetering European economy, the “relatively infrequent model renewal rate” and Fiat’s declining sales (-13%) in the first half of the year across the pond are some of the reasons evoked.
Moody’s also noted that the Italian automaker was at risk in Brazil, its most profitable market. The heavy competition has contributed to lower demand, leading to risks of overproduction and price wars.
Fiat’s rating could be cut further if it continues to lose ground in Europe, its financial position weakens or Chrysler’s performance deteriorates.
Fiat and Chrysler are looking to make around 100 billion euros in revenue and sell 6 million units by 2014.
Source: Automotive News