Fiat is banking on a pick-up in its fourth quarter sales this year to herald a financial turnaround. In a statement distributed to shareholders, Fiat said it needed to ‘break the trend’ in the last three months of the year to balance out the usual third-quarter sales dip and meet its target of a full-year loss in line with the first half.
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Fiat should at least experience some support in the Italian market from a government incentive scheme that has recently been introduced.
At an extraordinary shareholders’ meeting held in Turin this week, shareholders approved an emergency three billion euro bank loan to Fiat, which can be converted into Fiat shares if the group misses targets or if paying back the loan in cash would cost Fiat its investment grade credit rating.
Fiat’s automotive division, Fiat Auto, has looked increasingly vulnerable this year in the face of falling market share in Italy, rising losses and disappointing sales of its recently launched Stilo range.
There is also speculation that Fiat Group’s major creditors would like to see Fiat Auto sold to GM as soon as possible. GM already holds a 20% stake in Fiat Auto and Fiat can sell the remaining 80% to GM in 2004.
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