By on February 12, 2014

2014 Fiat 500L Exterior, Picture Courtesy of Alex L. Dykes

Citing weak results in 2013 and guidance challenges for 2014, investment ratings agency Moody’s has cut Fiat’s rating from B3a to B1, four notches below investment grade.

Automotive News reports that the rating was decided upon by the agency after placing the automaker under review for a possible downgrade back in the opening days of 2014 just after Fiat struck a deal to take full control of Chrysler for $4.35 billion. In turn, the B1 rating for Fiat means the automaker will have a harder time securing much-needed financing in order to right the ship for their loss-making European operations.

Aside from the aforementioned reasons cited for the downgrade, Moody’s lead analyst for Fiat Falk Frey added that

“We have downgraded Fiat’s ratings following its weaker-than-expected performance in fiscal year 2013 and our view that the company faces significant challenges in terms of achieving its outlook guidance for the current fiscal year.”

 “We are also concerned that Fiat may not be able to offset any further profitability deterioration in its Latin American operation through anticipated improvements in other regions and in its luxury and performance division,” 

Other factors in the downgrade include Fiat’s overreliance on the European market — still weak from the Great Recession — rising price pressures, a lack of major new models coming down the ramp in 2014, and overcapacity in Fiat’s home market.

Although Fiat and Chrysler merged not too long ago, Moody’s will keep the former duo’s ratings separate for the foreseeable future. The agency also said Fiat’s rating’s outlook overall has improved from negative to stable.

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12 Comments on “Moody’s Cuts Fiat’s Rating Down Due To Earnings Worries, Outlook...”


  • avatar
    bunkie

    Not to pick nits, but that Moodys rating doesn’t look right. B1 is four steps below Baa3 (which is what I think was meant). There is no Moodys B3a rating. Three steps above B1 is Ba1.

    Ah, after Googling, it appears that the rating cut was from Ba3 to B1 which is only one step, not three or four.

    http://www.reuters.com/article/2014/02/11/fiat-moodys-idUSL5N0LG49Z20140211

  • avatar
    vent-L-8

    It’s no Tesla

  • avatar
    05lgt

    Well, I am most likely wrong, but shouldn’t they just secure loans/issue bonds via the higher rating given “Chrysler” and spend it on “Fiat”? FCA is a single financial entity, no matter how Moody’s feels about it.

    • 0 avatar
      Lorenzo

      The FCA union isn’t “official” until this Fall, though it’s complete for all practical purposes. Moody’s is just one rating agency, but the separate ratings and lowered Fiat rating could be indicative of market misgivings, until they see the actual structure of the new company. The other agencies may do nothing, but investment companies are probably waving caution flags at their clients, until the merger is complete.

    • 0 avatar
      deanst

      Chrysler did not have a higher rating.

      The ratings reflect the agencys’ opinion of the consolidated company.

      S & P affirmed Fiats ratings at BB- after the 100% acquisition of Chrysler, which is equivalent to Moody’s Baa3.

      The acquisition was funded by debt, so while the business profile may be stronger, the financial profile has declined (more leverage – higher interest payments).

  • avatar
    cwallace

    Look at the photo on this post for Fiat’s next new thing, and then look at the photo on the previous post, shot in the scrapyard. The striking similarities between the two can’t be good for Fiat dealers in the US.

  • avatar
    johnhowington

    Sing some more songs Bob Dylan, the US needs to prop up those crazy Italians.

  • avatar
    oldyak

    and my local Fiat dealership wanted no part in discounting a 2013 500 sport in January 2014??????
    What are they doing/thinking??

  • avatar
    stanczyk

    who cares what that crooks from Moody’s feels … they rate themselves AAA+ , but they are just bunch of banksters puppets ..


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