Fiat-Chrysler CEO Sergio Marchionne says the current financial storm raging around European capitals has made the vehicle pricing environment worse as ratings agency Standard & Poors continues to downgrade national currencies.
Marchionne’s comments come as reports today (17 January) indicate S&P had lowered its assessment of the European Financial Stability Facility (EFSF) to AA+ from AAA, with that news coming hard on the heels of the body’s decision to slash long-term evaluations on nine Eurozone members.
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Insisting the next few weeks would prove “crucial” for European currencies as they continue to be battered on myriad fronts, Marchionne painted a bleak assessment of the current situation, particularly with regard to pricing at the recent Automotive News World Congress in Detroit.
“The underlying rationale is unchanged from 2009,” he said. “We will be looking at a market which is at best unchanged and which may actually come down. Therefore the question about how you manage this decline, how you deal with capacity and restore some kind of pricing, clearly becomes a big issue.
“That issue has been made worse by what has happened with the European crisis ballooning. Unless there is a concerted European effort to deal with the European problem, these issues will not go away. The next few weeks are crucial.”
Warming to his theme, Marchionne said either the Euro would hold or it would not, but if the latter, then debt would “take on a completely different form” in a challenging environment.
“It is a particularly difficult situation and people should not underestimate the consequences of the decisions that have been made,” he said.
Standard & Poors said its assessment was that initiatives taken by European policymakers in recent weeks: “may be insufficient to fully address ongoing systemic stresses in the eurozone.
A statement issued by the ratings agency added: “In our view, these stresses include: tightening credit conditions; an increase in risk premiums for a widening group of eurozone issuers; a simultaneous attempt to delever by governments and households; weakening economic growth prospects and an open and prolonged dispute among European policymakers over the proper approach to address challenges.”
