Fiat Group Automobiles

Fiat, Abarth, Alfa Romeo, Lancia and Fiat Professional

HIGHLIGHTS

(€ million)    2010   2009 
Net revenues   27,860
 26,293
Trading profit/(loss)    607
 470
Operating profit/(loss) (*)    515
 217
Investments in tangible and intangible assets    1,652
 1,495
of which capitalized R&D costs    529
 446
Total R&D expenditure (**)    722
 669
Passenger cars and light commercial vehicles delivered (no. of units)   2,081,800
 2,150,700
No. of employees at year end    57,611
 54,038
(*) Includes restructuring costs and other unusual income/(expense) (**) Includes capitalized R&D and R&D charged directly to the income statement

COMMERCIAL PERFORMANCE

The European passenger car market (EU27+EFTA) experienced a decrease of 4.9% over 2009 levels to approximately 13.8 million vehicles. Demand in the first part of the year continued to be positively influenced by government incentive programs. However, beginning in the second quarter, registrations fell significantly with a year-on-year decline of approximately 11% for the second half.

 

In Germany, the first European market to completely phase out incentives, demand was down 23.4% for the year. In Italy, the market declined 9.2%, with the fall off in demand being particularly pronounced in the second half (-22.7%). The decrease in France was more contained (-2.2%), as incentives were phased out progressively throughout the year. There was modest growth in the United Kingdom (+1.8%) and Spain (+3.1%) and in Brazil passenger car demand increased 6.9%, despite the phase out of incentives during the first part of the year.

 

For 2010, Fiat Group Automobiles’ European market share was impacted by the decision to reschedule new product launches for the second half of 2011, in view of the contraction in market demand expected for the second half of 2010 and first half of 2011.

 

In Europe, FGA closed 2010 with a market share of 7.5% (down 1.1 percentage points over 2009). In Italy, share was 30.1%, a decrease of 2.7 percentage points. Excluding the effect of the sharp reduction in demand for CNG/LPG vehicles (-25%), where FGA is market leader, share would have been in line with 2009. At 3.0% (-1.7 percentage points), share performance in Germany was impacted by the significant decline in demand (over 40%) in FGA’s core market segments. Modest share decreases were experienced in France (-0.3 percentage points to 4.0%) and the United Kingdom (-0.5 percentage points to 3.0%). By contrast, market share in Spain was up 0.5 percentage points to 3.0%. Elsewhere in Europe, notable performance was achieved in the Netherlands, where FGA’s eco-performing product range benefited from CO2 emissions-based incentives, resulting in a 44% increase in registrations and a 0.8 percentage point gain in market share to 6.4%.

 

The Fiat brand’s market share decreased to 6.0% in Europe (-1.0 percentage point over 2009) and the Fiat Panda and Fiat 500 retained the top two positions in the A segment, with the latter achieving a net share gain of 2.5 percentage points. The Lancia brand’s European market share was 0.7% (-0.1 percentage points), while Alfa Romeo maintained registration levels steady (with a 0.8% share), despite the contraction in the market, due to the positive contribution of the new Giulietta in the second half.

 

Demand in the European light commercial vehicle market was up 9.2% for the year, reflecting a partial recovery over the extremely low levels experienced in 2009. Increases were recorded in all major markets, with France up 10.7%, Italy 6.2%, Germany 14.0%, the UK 18.7% and Spain 9.5%. Growth in LCV demand was particularly significant in Brazil (+29.5% over 2009), driven by the strong performance of the domestic economy.

 

In Italy, Fiat Professional achieved a 44.0% market share, gaining approximately 3 percentage points over 2009, primarily due to the brand’s expanded product offer. The success of the CNG-powered Fiorino in the first part of the year, the contribution of the new Doblò (Van of the Year 2011) for the full year and excellent performance for the Ducato all underpinned the brand’s continued strong competitive position in Europe, where it recorded a 12.8% share (stable vs. 2009).

 

Passenger Car Market
 (units in thousands)    2010  2009  % change
 France   2,251.7
 2,302.4
 -2.2
 Germany   2,916.3
 3,807.2
 -23.4
 UK   2,030.8
 1,995.0
 1.8
 Italy   1,960.3
 2,159.5
 -9.2
 Spain   982.0
 952.8
 3.1
 Poland   333.5
 320.3
 4.1
 Europe (EU27+EFTA)    13,785.7
 14,499.1
 -4.9
 Brazil   2,695.4
 2,520.2
 6.9

 

Sales Performance Passenger Cars and Light Commercial Vehicles
(units in thousands)    2010  2009  % change
France   120.9
 114.8
 5.3
Germany   107.8
 179.5
 -39.9
UK   66.4
 75.1
 -11.5
Italy   625.6
 721.9
 -13.3
Spain   37.3
 25.2
 48.1
Poland   34.7
 42.4
 -18.3
Rest of Europe    172.8
 145.6
 18.7
Europe (EU27+EFTA)    1,165.5
 1,304.5
 -10.7
Brazil   761.4
 749.5
 1.6
Rest of World    154.9
 96.7
 60.3
Total Sales   2,081.8
 2,150.7
 -3.2
Associate companies    140.5
 126.9
 10.6
Grand Total   2,222.3
 2,277.6
 -2.4  

 

During 2010, FGA delivered a total of 2,081,800 passenger cars and light commercial vehicles, down 3.2% over the prior year. In Europe, deliveries totaled 1,165,500 units (-10.7%).

 

For passenger cars only, FGA delivered 1,691,400 vehicles, an 8.2% decrease over 2009. In Europe, deliveries were down 15.1% to 963,000 vehicles, with the reduction also reflecting measures to realign dealer inventory levels to market demand. Deliveries in Italy (-16.3%) and Germany (-53.2%) were heavily impacted by the significant decline in demand for smaller and CNG/LPG vehicles following the phase-out of eco-incentives.

 

Deliveries were also down in the United Kingdom (-17.5%), but remained stable in France (+0.9%) and were up in Spain (+48.3%), against particularly low 2009 volumes. Notable results were achieved in several of the sector’s smaller markets including the Netherlands (+59.3%), Belgium (+40.9%), Portugal (+35.1%) and Denmark (+78.7%).

 

For 2010, deliveries also included some 13,500 Chrysler, Jeep® and Dodge vehicles. The rollout of distribution of these brands through FGA’s European network – implemented gradually during the year – is now complete.

 

For light commercial vehicles, a total of 390,400 units were delivered, representing a 27.1% year-on-year increase. In Europe, where there was an overall recovery in the market, Fiat Professional increased deliveries 19.7% to 183,300 units, achieving double-digit growth in all major markets: Italy (+14.5%), France (+21.7%), Germany (+24.9%), the UK (+66.1%) and Spain (+46.9%).

 

Outside the European Union, Fiat Group Automobiles strengthened its presence in markets where it is already well-established, such as Brazil, Argentina and Turkey, while pursuing development opportunities in other emerging markets in collaboration with local partners.

 

In Brazil, Fiat Group Automobiles maintained its leadership position, delivering a total of 761,400 passenger cars and light commercial vehicles, representing a year-on-year increase of 1.6%. With the overall market growing 10.6%, FGA achieved a 22.8% share for the year (-1.7 percentage points). The Novo Uno enjoyed significant success, with some 110,000 units being delivered between launch in the second quarter and yearend.

 

For light commercial vehicles, the Strada was once again the most sold model in the Brazilian market and, in December, the Ducato was no. 1 in its segment.

 

In Argentina, overall market demand was up 28.8% (27% for passenger cars; 36% for light commercial vehicles) and FGA increased its share 0.3 percentage points to 10.4%. A total of 69,100 vehicles were delivered, representing a 44% increase over 2009.

 

The Turkish market for passenger cars and light commercial vehicles grew significantly, with demand up 36.6% over the previous year. Through Tofas (a local joint venture in which FGA holds a 37.9% interest), FGA’s performance was essentially in line with the market, with share down to 14.6% from 15.3% in 2009. Although share decreased in the light commercial vehicle segment, share for passenger cars was up one percentage point to 9.1%.

 

STRATEGIC ALLIANCES

At the end of November, FGA signed an agreement with Opel for the supply of a light commercial vehicle based on the Fiat Doblò. The vehicles will be produced at the Tofas plant in Bursa (Turkey) with sales beginning in January 2012 through Vauxhall and Opel dealers in Europe and in other markets outside the NAFTA region.

 

Total supply is expected to exceed 250,000 units over the life of the model.

 

Fiat and Chrysler Group LLC continued the process of integration and collaboration in all business areas as per the agreements signed in 2009 establishing the global strategic alliance. With regard to vehicle and spare parts distribution in Europe, in April FGA commenced commercial activities to support the sale and service of Chrysler, Jeep® and Dodge branded products in several European markets and in May the two companies began reorganization of the dealer network for Chrysler and Lancia brand products, including integration of Chrysler’s European distributors into the Fiat organization. Preparatory activities were also initiated for the integration of importers during 2011 and activities to extend Chrysler Group’s access to the Fiat distribution network in Latin America also continued.

 

Finally, in Serbia – where the sector operates through Fiat Automobiles Serbia Doo Kragujevac (held 66.7% by FGA and 33.3% by the Republic of Serbia) – work started on refitting and renovation of the former Zastava plant, which will produce the replacement model for the Multipla and Idea. Government incentives to promote development of a supply network in the area around the plant were also finalized.

 

INNOVATION AND PRODUCTS

During the year, FGA was very active in renewal of its product portfolio and introducing particularly innovative technological solutions. With regard to the European market, in view of expected demand trends, new product launches were rescheduled for the second half of 2011 with the one major exception being Alfa Romeo’s introduction of the Giulietta.

 

In 2010, the Fiat brand introduced several major product updates, including the 500 and 500C equipped with the 85 hp 2-cylinder TwinAir. Developed for FGA by Fiat Powertrain, this engine offers up to a 30% reduction in CO2 emissions with equivalent performance. Also unveiled was the Fiat 500C by Diesel, a convertible developed in collaboration between Fiat and the well-known fashion house, as well as the “500 thousandth” show car created to celebrate the first 500,000 units of the Fiat 500 produced in Tychy (Poland) in just 31 months (from commercial launch to May 2010).

 

Other product launches in 2010 included: the Doblò Natural Power equipped with 1.4 16v T-JET CNG/gasoline engine; the 2011 model year Fiat Qubo, featuring numerous enhancements; and new versions of the Fiat Bravo equipped with the Euro 5 140 hp 1.4 MultiAir Turbo and Start&Stop as standard. Fiat also expanded the Fiat Panda offering with the Panda Anniversary, a special edition released in celebration of the model’s 30th anniversary, and the 2011 model year Panda available with a choice of two Euro 5 engines: the 75 hp 1.3 16v MultiJet diesel (with DPF as standard), the 69 hp 1.2 8v gasoline, and the Panda with 69 hp 1.2 LPG/gasoline engine. Finally, at the end of November the new MyLife versions of the Punto were launched: a 77 hp 1.4 liter and a 69 hp 1.2 liter, both Euro 5 with Start&Stop as standard.

 

Also of note was the launch of the Novo Uno in Brazil. Four versions of this model were presented in May, and the vehicle has enjoyed excellent sales volumes in addition to winning a number of awards, including the coveted “Carro do Ano 2011”.

 

Fiat also made its return to the North American market in 2010 with the debut of the Fiat 500 at the Los Angeles Auto Show, where it was enthusiastically received with 500 vehicles sold in just 2 hours.

 

In March 2010, for the third year running, JATO Dynamics (the world’s leading provider of business intelligence to the automotive industry) named Fiat as having the lowest CO2 emissions levels among Europe’s top 10 selling brands with an average 127.8 g/km per vehicle sold in 2009.

 

The brand was also recognized as the most ecological in Europe again for the first half of 2010, with average CO2 emissions per vehicle sold coming in at just 123.5 g/km. Added to these were two other significant achievements for the Group and its models: the Fiat 500, with CO2 emissions of 116.0 g/km, was ranked best among the top 20 selling cars, and Fiat Group Automobiles retained its position as the leading group.

 

For Abarth, product developments in 2010 included the release of the Abarth Punto Evo with 165 hp MultiAir and the Abarth 500C, the first convertible released by the brand since its relaunch. And in competitive racing, Abarth took first place in the 2010 European Rally Championship.

 

For Alfa Romeo, 2010 was the year of the Giulietta, which was premiered at the Geneva Motor Show and was progressively rolled out to all the major markets from May. The Alfa Romeo Giulietta, released on the brand’s 100th anniversary, offers the maximum in performance and technology: from its engines, which represent the state-of-the-art in technology, performance and respect for the environment, to its new compact architecture complete with sophisticated suspension systems, active dual-pinion steering, high-quality materials and advanced production technologies. In September, two new versions of the Giulietta were also presented: one powered by a 140 hp 2.0 JTDM turbo-diesel, offering low fuel consumption and emissions levels, and the other by a 170 hp 1.4 MultiAir combined with the innovative automatic Alfa TCT (the latest generation dual dry clutch transmission), available from the beginning of 2011. The Giulietta was awarded 5 stars for safety by Euro NCAP (scoring 87/100) and the Unione Italiana Giornalisti dell’Automotive (UIGA) named the car “Auto Europa 2011”.

 

During the year, Alfa Romeo also offered the “Alfa TCT” transmission on the MiTo and launched the new Blackline Collection of the MiTo, as well as the 2011 model year 159, with restyled interior and an expanded selection of options packages. In June, the brand celebrated its 100th anniversary with 4 days of celebrations that involved the City of Milan, Fiera Milano, the Monza race circuit and the Alfa Romeo museum. Attending the event were some 3,000 classic cars from 45 countries.

 

In anticipation of the major new product launches scheduled for 2011, in 2010 Lancia enriched its existing product line-up with the presentation of the special series Hard Black Delta, featuring several style and content enhancements, a Delta equipped with a highly responsive Euro 5 MultiAir Turbo and Start&Stop as standard, the limited edition LPG/gasoline Ypsilon ELLE and the Musa “5th Avenue” with elegant trim and interior styling.

 

Fiat Professional completed the launch of the new Doblò Cargo both inside and outside of Europe, expanding the model’s range to offer two new versions: a 120 hp 1.4 liter Turbo Natural Power and a 90 hp 1.6 liter with MTA transmission. In September, the model was awarded “International Van of the Year 2011” at the Hanover International Motor Show by a panel of automotive sector journalists from 24 countries. Fiat Professional also expanded the Fiat Scudo line-up to include the new Euro 5 165 hp 2.0 MultiJet and launched the 2011 model year Fiorino.

 

There were major developments in the environmental arena during the year including introduction of the eco:Drive software for Natural Power (CNG/gasoline) vehicles, which utilizes the Blue&Me system to quantify the environmental and cost benefits of using CNG fuel. Also of note was the Fiat 500 EV project (in alliance with Chrysler Group). Following its debut at the Detroit Motor Show at the beginning of 2010, the prototype vehicle was also exhibited in the pavilion for electric vehicles at the Bologna Motor Show. This zero-emissions vehicle will be launched in the United States at the end of 2012.

 

During the year, research and innovation activities focused on further improving leadership in time-to-market through the application of numerical simulation tools and methodologies to models currently in development.

 

There were several important initiatives to increase proprietary know-how in specific aspects of ergonomics and Noise Vibration Harshness (NVH) with the objective of also acquiring leadership positions in these areas to complement the Group’s recognized position in passive safety and CO2 emissions. Additionally, there was continued focus on standardization of vehicle systems and components aimed at reducing costs, improving quality and reducing the technical complexity of products, on the introduction of latest generation active safety systems (i.e., on the Alfa Romeo Giulietta) and on new configurations for sensors and climate management systems to improve detection of conditions in the vehicle interior.

 

Also of note was the sharing of certain vehicle architectures with Chrysler Group. Initial activity relating to the principal mechanical elements of vehicles, such as the chassis and suspension systems, and certain components, including seating and on-board telematics, was extended during the course of the year to also include minor components and systems.

 

SERVICES

In 2010, actions were taken to improve customer response capabilities and contribute to the success of the sales and service networks. A customer satisfaction monitoring system was also completed.

 

In the maintenance area, Technical Services carried out a comprehensive review of service standards and processes and updated procedures, roles, responsibilities and tools with a view to continuous improvement of the customer experience through competent, effective and up-to-date technical service. Product support services for dealers and service centers were upgraded and expanded, as well as being extended geographically to new markets outside of Europe. Technical documentation was also enhanced with new content and delivery platforms, and Owner and Maintenance manuals were produced in electronic format, enabling improved content access. In addition, IT support systems for the service network were upgraded and expanded.

 

For warranty service, in Europe introduction of the new operating model in partnership with leading third party service providers continued and the expected cost benefits were achieved.

 

The Customer Service Center at Arese represents one of the sector’s most important customer relationship tools and serves customers, prospective customers and employees in 20 markets throughout Europe. In 2010, the number of contacts handled by the Center was up 29% over the prior year.

 

Customer Mobility Support provides assistance to customers at the most critical moments – when their cars are in for service or they need roadside service – with rapid and effective support to ensure their mobility needs are met. During the year, a new customer mobility program was launched through the official dealer network, which contributed to a 7% increase in customer satisfaction. A similar program was developed for corporate-owned dealerships aimed at ensuring service excellence and improving profitability and very positive results were achieved in Italy.

 

Within the Customer Service Center, Customer Relations (which handles customer complaints and information requests) registered improvements in its performance indexes, which were achieved through increased involvement of dealers, use of centrally-integrated IT systems and operating processes, and introduction of new communication and service platforms (e.g., mobile-based tools introduced through the Fiat Ciao Mobile Project).

 

During 2010, Customer Relations was also involved with the Chrysler integration process and established the framework for alignment of operating procedures for the Chrysler, Jeep® and Dodge brands.

 

Fiat Group Automobiles offers financial services in Europe, Latin America and China.

 

In Europe, this activity is managed by FGA Capital, a 50/50 joint venture with the Crédit Agricole group (accounted for under the equity method).

 

FGA Capital supports the European sales activities of Fiat Group Automobiles through dealer financing, end-customer financing and medium and long-term rental. The collaboration with Crédit Agricole continued to perform effectively throughout 2010, meeting the sector’s expectations and commercial needs. In 2010, these activities were extended to include support for Chrysler’s European distribution network and end customers.

 

New loans to the dealer network totaled €16,676 million (€16,963 million in 2009). Retail financing was provided on 427,429 vehicles, representing a financed value of €5,670 million and a penetration rate of 25.8% on sales of FGA brands (2009: 513,591 vehicles, financed value of €5,921 million and 29.3% penetration rate).

 

There were new medium and long-term rental agreements on 40,447 vehicles, representing a financed value of €493 million and a penetration rate of 2.9% on sales of FGA brands (2009: 57,586 vehicle rentals, financed value of €793 million and 3.9% penetration rate).

 

In Latin America and China, financial services are provided by Banco Fidis in Brazil, Fiat Credito Compania Financiera in Argentina and Fiat Automotive Finance in China. All these companies are subsidiaries of Fidis S.p.A. In Brazil, Banco Fidis achieved particularly strong growth. In 2010, financing support to the sector also covered the Chrysler distribution network and end customers in China, Argentina and Brazil.

 

In Italy, Fidis S.p.A. (a wholly-owned subsidiary of Fiat Group Automobiles S.p.A.) manages a factoring portfolio and issues guarantees. During 2010, the company further reduced its supplier factoring activities, with managed receivables dropping to €271 million (€430 million in 2009).

 

With regard to short-term rental activities, FGA sold its entire interest in Targa Rent S.r.l. to third parties on 1 February 2010.

© 2011 FIAT S.p.A - P.IVA 00469580013