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Fiat to Temporarily Shut Italy Plants Due to Coronavirus

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Fiat Chrysler Automobiles N.V. (FCAU - Free Report) recently announced that it will temporarily halt operations at four plants in Italy — two of which produce vehicles for the United States — to prevent the spread of coronavirus. The plants — Pomigliano, Melfi, Atessa and Cassino —are expected to reopen on Mar 16, 2020.

Melfi plant produces the Jeep Renegade SUV and Fiat 500X crossover, while the Cassino plant manufactures the Alfa Romeo Giulia sports car and Stelvio SUV for the U.S. market. The Pomigliano plant makes the Fiat Panda city car. The Atessa plant — which jointly runs with its pending-merger partner Groupe PSA — produces the Fiat Ducato commercial van.

Fiat plans to change the manufacturing processes and cut production levels in the plants to support the nationwide campaign addressing the Covid-19 crisis. To limit contact among workers, the company will increase space between employees at their workstations. While all areas of the plant, including rest areas and bathrooms, will receive intensive sanitisation. Other measures to contain the spread of the virus include enabling some employees to work from home and controlling numbers at company cafeterias.

The move is in sync with Italy government’s decision to impose sweeping restrictions on travel and public gatherings across the country, as it tries to contain the outbreak of the virus. Italy has the biggest coronavirus outbreak outside China, with more than 800 dead and more than 12,000 COVID-19 infections.

Fiat currently sports a Zacks Rank #1 (Strong Buy). After the announcement, shares of the company declined 3.64% premarket to $10.60 and are off 20% in the past month. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

COVID-19 is a concern for other global auto biggies like Groupe PSA, Ford (F - Free Report) , General Motors (GM - Free Report) , Honda Motor (HMC - Free Report) , Nissan and Renault. All of these companies have manufacturing plants in Wuhan — China’s motor city. As part of the nationwide shutdown, many automakers have closed their factories and their production as well as sales has gone for a toss. The pandemic has not only dented consumers’ sentiments and waned vehicle demand but also triggered supply-chain issues on a global scale.

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