Shares in Fiat fell more than 8.5 percent on Wednesday to their lowest level this year, with traders citing concerns that investors who voted against the Italian carmaker's merger with Chrysler would exercise their right to sell the stock, potentially jeopardizing the tie-up.

The decline added to a 3.1 percent fall on Tuesday and the stock was last quoted down 8.55 percent at 6.26 euros. Trading in the shares was halted by the Italian bourse on several occasions due to excessive volatility.

The losses wiped out all the gains the carmaker has made since announcing on Jan. 1 that it would buy out the shares in its U.S. unit Chrysler it did not yet own, cementing the creation of the world's seventh largest auto group.

Fiat issued a statement on Tuesday saying no shareholders had declared an intention to exercise the exit right at that stage.

CEO Sergio Marchionne wants to incorporate the two carmakers as a Dutch-registered combine, Fiat Chrysler Automobiles (FCA), paving the way for a U.S. listing which it hopes will help fund an ambitious turnaround plan.

But the merger is still subject to some conditions, including a limit on the number of dissenting shareholders who exercise their right to sell out.

"The problem remains the cash exit rights," one Milan-based trader said. "The more the stock drops, it increases the expectation of more people selling out, which in turn increases the number of people selling."

Fiat shareholders approved the merger with a two-thirds majority of those present at a meeting on Friday.

Should enough of Fiat's investors who voted against the merger exercise their rights to sell by Aug. 20, and the total sum that needs to be paid for those rights to shareholders and creditors exceeds 500 million euros ($668 million), the merger could fail, Fiat has said.

The more the stock falls, the more appealing the cash exit right price of 7.727 euros per share becomes, increasing the likelihood that more shareholders sell out.

This in turn means that the 500 million euro cap could be exceeded and the merger would not proceed.

The creation of FCA will not lead to significant operational cost savings or synergies, Fiat has said, and failure to get the final OK for the tie-up would have little operational impact.

However, a rejection would likely prove embarrassing for Marchionne and may result in higher financing costs going forward, analysts have said.

Analysts and management have said chances of this happening were slim. Marchionne also said that should the merger project fall through, he would attempt to create FCA at a later stage.