Fiat, the Italian car group, said on Monday that it would shelve the flotation of Ferrari, the luxury carmaker, because of deteriorating conditions on the Italian stock market.

Fiat, which owns 56 per cent of the luxury sports car brand, had planned to offer shares in Ferrari to the public in the summer. But Giuseppe Morchio, Fiat’s chief executive, conceded yesterday that the flotation would be indefinitely postponed while the company concentrated on improving trading at Maserati, its other upmarket brand.

Speaking as he reported another disappointing set of full-year results, Signor Morchio said: “The conditions are not right today for a stock market flotation. We must delay this operation.”

Fiat shares fell nearly 3 per cent to €6.21 on the Milan stock exchange as analysts reacted badly to news that it lost €1.95 billion (€1.3 billion) in the 2003 financial year.

The group sold 1.7 million cars in the year, a drop of 8.8 per cent on the same time last year. Turnover dropped to €20 billion but operating losses were reined in from €1.34 billion in 2002 to €979 million.

Signor Morchio said he drew strength from a solid fourth quarter, during which the carmaker made an operating profit of €142 million, adding that the company had yet to benefit fully from a restructuring last summer.

“Fiat Auto expects to post further reductions in its operating loss during the year as it continues to pursue its objective of achieving breakeven by 2005,” he said.

Last June Fiat launched its third restructuring in two years, asking its shareholders for €1.8 billion amid news that it was going to let go of 12,000 workers.

The restructuring was premised on a commitment to invest in the production of new models in the hope of bringing the business back to profit by next year.

The continuing erosion of Fiat’s share of the Italian market, along with General Motors’ shareholding, had prompted rumours that the icon of Italian industry would soon lose its independence.

Fiat said yesterday that it had managed to increase its domestic market share to 30.9 per cent on the back of successful new launches of Fiat, Lancia and Alfa Romeo cars.