Fitch's decision to drop Fiat's rating from "BB+" to "BB" and regard its outlook as "negative", follows a similar re-rating announced by Moody's Investor Services which also further downgraded Fiat's creditworthiness last month.

Fitch, while accepting that the on-going integration of Chrysler with Fiat offers future cost saving and synergy potential, is however causing a significant short term drag on Fiat's finances, and that both companies are currently stretched, particularly at a time when new car sales aren't robust.

"The current ratings are based on Fiat's standalone credit profile, but incorporate heightened short-term risks for Fiat from its combination with Chrysler LLC in an increasingly challenging environment for the group," read a note written by analyst Emmanuel Bulle. "Chrysler has a weaker credit profile than Fiat, and sustained benefits to Fiat from this deal should only accrue in the medium to long term."

"Chrysler may require financial, technical, operational and/or human resources help from Fiat, and this may ultimately disrupt Fiat's underlying operations at a time when pressure is intensifying on Fiat's standalone business," Fitch added.

Fitch also noted that: "Chrysler's technology, product range and geographic diversification have become central to Fiat's strategy, and Fitch considers it increasingly unlikely that Fiat could abandon Chrysler." It all adds up to a turnaround from the Chapter 11 procedure in 2009 when the key selling point behind a Fiat takeover was Chrysler's access to the Italian carmaker's small and downsized engines and technology. Instead, Chrysler Group has dropped plans to introduce subcompact cars based on Fiat platforms and technology (apart from the niche Fiat 500) and in fact its own larger vehicles - the Dodge Journey, Chrysler 300, Chrysler Town & Country and Chrysler 200 Cabrio are being exported to Europe to be rebadged by Fiat Group Automobiles' brands.

Meanwhile at yesterday's launch of the new Lancia Thema (Chrysler 300) and Lancia Voyager (Chrysler Town & Country), Fiat CEO Sergio Marchionne was upbeat that this year's financial targets wouldn't need revising downwards. "There's no need to change the numbers," he was quoted by the Wall Street Journal as telling reporters. Those figures, which were revised after Fiat took control of Chrysler currently project a full year 2.1 billion euro trading profit (less exceptional and one-off items) on revenues of around 58 billion euros. "The good thing about at least parts of our business is that they are in cash-generation mode. The U.S. is in good shape. Latin America is in good shape. Europe continues to be a big area of concern," he added.