HIGHLIGHTS
(E million) 2009 2008 Net revenues 26,293 26,937 Trading profit/(loss) 470 691 Operating profit/(loss) (*) 217 460 Investments in tangible and intangible assets 1,495 2,288 of which capitalised R&D costs 446 641 Total R&D expenditure (**) 669 843 Cars and light commercial vehicles delivered (no. of units) 2,150,700 2,152,500 No. of employees at year end 54,038 52,634
(*) Including restructuring costs and other unusual income/(expense). (**) Includes capitalised R&D and R&D charged directly to the income statement.
COMMERCIAL PERFORMANCE
After a particularly negative start to the year, the scrapping incentives introduced in several major markets led to a gradual recovery in demand in Western Europe, where the passenger car market closed the year with volumes slightly higher than 2008 (+0.5%).
These incentives had a very positive impact in Germany, where demand increased 23.2%, and in France, where the market grew 10.7% over 2008. In Italy, government incentives helped maintain demand substantially in line with 2008 (-0.2%). In both the UK and Spain, however, where incentives were introduced towards the end of the first half, demand was down 6.4% and 17.9%, respectively.
Outside of Western Europe, performance in the Sector’s key markets was mixed. In Poland, demand remained stable (+0.1%), while in Brazil there was a further increase (+12.6%) over the positive performance in 2008 underpinned by government purchase incentives and a generally favourable economic environment.
FGA’s strong offering of environmentally-friendly cars enabled the Sector to fully benefit from eco-based government incentives. Fiat Group Automobiles continued to make positive share gains in the passenger car market, reaching 32.8% in Italy (+0.9 percentage points over 2008) and 8.8% in Western Europe (+0.6 percentage points). FGA’s relative performance was particularly strong in Germany (+1.5 percentage points to 4.7%) and positive also in the UK (+0.6 percentage points to 3.5%). Market share for the Fiat brand increased to 7.1% in Western Europe (+0.5 percentage points over 2008) and 25.5% in Italy (+0.4 percentage points). Lancia and Alfa Romeo also increased market share in Western European, each gaining 0.1 percentage points to 0.9% and 0.8%, respectively.
The light commercial vehicle market in Western Europe declined 27.4% over 2008. Demand fell in all major markets: France (-18.8%), Italy (-21.4%), Germany (-24.8%), the UK (-35.5%) and Spain (-35.6%).
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Fiat Professional’s market share for light commercial vehicles in Italy was 39.9%, down 3.4 percentage points over 2008, driven by the phase out of the Doblò (with market supply of the new Doblò beginning in early 2010) and the sharp drop in demand in the camper segment, where Fiat Professional has the lion’s share of the market. In Western Europe, share was up slightly to 12.6% (+0.3 percentage points).
In Brazil, FGA maintained its leadership of the market, recording an overall share of 24.5% (-0.1 percentage points over 2008). Share for passenger cars only was 24.6% (-0.3 percentage points). This was, however, offset by an increase in market share for light commercial vehicles, which was up 1.1 percentage points to 24.1%.
Fiat Group Automobiles delivered a total of 2,150,700 passenger cars and light commercial vehicles for the year, in line with 2008 (-0.1%).
In Western Europe, total deliveries were unchanged at 1,238,100 units. Performance was positive in Italy (+0.5%) and the UK (+5.2%) and very strong growth was achieved in Germany (+46.2%). There was a decrease in France (-7.3%) and a sharp decline in Spain (-48.3%), which was also impacted by measures to realign dealer inventory levels to market demand.
In Poland, volumes increased 1.8% over the 2008 level.
Passenger Car Market
(units in thousands) 2009 2008 % change France 2,268.7 2,050.3 10.7 Germany 3,807.2 3,090.0 23.2 UK 1,995.0 2,131.8 -6.4 Italy 2,158.0 2,161.7 -0.2 Spain 952.8 1,161.2 -17.9 Western Europe 13,632.9 13,561.2 0.5 Poland 320.1 319.9 0.1 Brazil 2,520.2 2,237.3 12.6 Sales Performance
Passenger Cars and Light Commercial Vehicles
(units in thousands) 2009 2008 % change France 114.8 123.8 -7.3 Germany 179.5 122.8 46.2 UK 75.1 71.4 5.2 Italy 721.9 718.1 0.5 Spain 25.2 48.7 -48.3 Rest of Western Europe 121.6 153.1 -20.6
Western Europe 1,238.1 1,237.9 - Poland 42.4 41.6 1.8 Brazil 749.5 665.6 12.6 Rest of World 120.7 207.4 -41.8 Total Sales 2,150.7 2,152.5 -0.1 Associate companies 126.9 76.5 66.0 Grand Total 2,277.6 2,229.0 2.2
For passenger cars only, FGA delivered a total of 1,843,400 units (an increase of 5.7% over the prior year). In Western Europe, passenger car deliveries rose 8.9% to 1,085,100 units, with the level of demand increasing slightly (+0.5%) over 2008. Deliveries were up 6.2% in Italy, 17.7% in the UK, and doubled in Germany (+96.6%), significantly outpacing overall growth in those markets. Deliveries increased 1% in France, but were down 43.9% in Spain.
The Panda and 500 continued to hold the top two positions in the A segment and the Punto was also one of the most sold models in Western Europe.
A total of 307,300 light commercial vehicles were delivered in 2009, representing a 24.8% decrease over 2008. In Western Europe, where the overall market declined sharply, deliveries were down 36.5% to 153,000 units. This was partially due to measures implemented to realign dealer inventory levels to the significant slowdown in market demand. Deliveries for the Sector decreased in all major markets: Italy (-33.2%), France (-28.9%), Germany (-35.1%), the UK (-55.7%) and Spain (-62.9%).
Outside of the European Union, Fiat Group Automobiles strengthened its presence in those markets where it is already well-established, such as Brazil, Argentina and Turkey, while also pursuing development opportunities in other emerging markets in collaboration with local partners.
In Brazil, where the Sector delivered a total of 749,500 passenger cars and light commercial vehicles, sales increased 12.6% over 2008, confirming the Sector’s leading position for the market overall.
In Argentina, the passenger car market declined 12% over 2008 and Fiat Group Automobiles recorded a 10.4% market share (down 1.5 percentage points). Deliveries of passenger cars and light commercial vehicles decreased 27% to 47,900 units.
In Turkey, the automobile sector staged a recovery with the passenger car and light commercial vehicle market growing 12.8% over the previous year to reach 557,000 units. Tofas (a local joint venture in which Fiat Group Automobiles holds a 37.9% interest) saw a 40.5% increase in sales with market share up 2.9 percentage points year-on-year to 15.3%.
STRATEGIC ALLIANCES
In 2009, the Group took a major step forward in its strategy of international strategic alliances through its agreement with Chrysler.
On 10 June 2009, Chrysler Group LLC and Fiat finalized an agreement to establish a global strategic alliance and the new Chrysler became operational on the same date. The agreement grants the US automaker access to Fiat technology, platforms and powertrains for small and medium-sized cars, which are amongst the most innovative and advanced in the world. This will enable Chrysler to expand its product offering with the addition of low environmental impact models. Chrysler will also have access to Fiat’s international distribution network. The alliance represents an important step toward positioning both Fiat and Chrysler among the next generation of leaders of the auto industry globally. As consideration, Fiat received an initial equity interest of 20% in the newly-formed Chrysler Group LLC, which could increase up to a total of 35% upon achievement of specific pre-established targets. The agreement does not contemplate any cash investment in Chrysler by Fiat or commitment to fund Chrysler in the future. Fiat will also have the right to acquire a majority interest in Chrysler once all government loans have been fully repaid. The alliance is expected to bring enormous benefits to both companies by giving them the critical mass necessary to compete at a global level. Fiat will also be able to expand its geographical footprint by leveraging new market opportunities such as a return to the US market and introduction of new models in Europe. Fiat’s presence and experience in the smaller car segments combined with Chrysler’s presence and experience in the medium and larger segments will enable the Group to offer a full range of products.
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Chrysler’s strategic business plan, presented at the beginning of November 2009, projects the launch of 21 new models over the next five years with sales volumes increasing to 2.8 million cars by 2014 (40% higher than in 2008 and more than double 2009 volumes). Approximately 60% of those vehicles are to be based on Fiat platforms. By 2014, Chrysler expects to have annual revenues of approximately USD 68 billion and operating income of USD 5 billion, with its current debt level halved and loans from the American and Canadian governments fully repaid.
To further strengthen its position in terms of both products and distribution capability in international markets, Fiat signed a framework agreement in July with GAC (Guangzhou Automobile Group Co. Ltd.) for the creation of a 50/50 joint venture in China to produce engines and passenger cars for the Chinese market. GAC, a state- owned company and one of the largest passenger car manufacturers in China, operates in both the domestic and international markets. The agreement calls for the construction of a new plant and total investment by the joint venture is projected to be in excess of €400 million. The joint venture will initially have a production capacity of up to 140,000 passenger cars and 220,000 engines a year, which may be increased to 250,000 cars and 300,000 engines. Start of production is planned for the second half of 2011. The joint venture was approved by the National Development and Reform Commission in November 2009, and final approval is expected in the first quarter of 2010.
INNOVATION AND PRODUCTS
In 2009, despite the global economic crisis that had a severe impact on the automobile industry, Fiat Group Automobiles was very active in launching new models with highly innovative technological solutions. Upgrades to and expansion of the range across all brands enabled Fiat Group Automobiles to best respond to difficult market conditions and also resulted in several major international awards being received for its products. For the Fiat brand, 2009 was the year of the Punto Evo, a companion to the Grande Punto that sets a new standard in innovation, safety and style in the B segment. The “Evo” in the name underscores the technological progress and excellence that this model embodies, above all with its extensive range of Euro 5 engines including the second-generation 1.3 MultiJet, 1.4 MultiAir and CNG/gasoline engines.
Other products launched during the year include the Fiat 500C cabriolet with a sophisticated, electrically controlled soft-top. Toward the end of the year, the new Euro 5 1.3 MultiJet II engine, equipped with the Start&Stop system as standard, was made available on both the Fiat 500C and Fiat 500. In October, sale of the Fiat 500 began in Brazil. The vehicle was equipped with modified injection and suspension system to adapt it to the requirements of the local market. As further evidence of the success of the Fiat 500, it was named “2009 World Car Design of the Year“ in New York by a panel of 59 automotive sector journalists from 25 countries around the world.
December saw the launch of the “family space” Fiat Doblò, with new styling, range of engines and upgraded technical specifications. Fiat also expanded its offer of bifuel cars (LPG/gasoline and CNG/gasoline), which now includes the Punto Classic, Idea, Qubo, Panda, Grande Punto and Bravo. In addition, the Sedici underwent styling and engine upgrades, and there was the unveiling of the Panda Panda Cross, the first low environmental impact City SUV, the special edition Bravo MSN Edition, the result of a collaboration with Microsoft, and the special edition Fiat Panda 4x4 Adventure. The Trekking version of the Qubo also made its debut.
Finally, already leader two years running, in September 2009 the Fiat brand was once again confirmed by JATO Dynamics as having the lowest average CO2 emissions amongst the top 25 selling brands in Europe.
Abarth unveiled two brand new models: the Abarth 695 Tributo Ferrari and the Abarth 500 R3T, which will feature in a dedicated promotional street racing trophy.
In 2009, Alfa Romeo launched the 105 hp and 135 hp MiTo 1.4 MultiAir, the first vehicle to be equipped with this new technology for gasoline engines. Also new was the 170 hp “Quadrifoglio Verde” version. The range of engines available on the MiTo was further expanded to include the 120 hp 1.4 Turbo gasoline, the first bifuel (LPG/gasoline) turbo produced directly by the Group, and the 95 hp 1.3 JTDM-2 diesel engine with Start&Stop system as standard. During the year, Alfa Romeo also launched two new Euro 5 engines: the 170 hp 2.0 JTDM diesel and the 200 hp 1750 Turbo gasoline (TBi) which are available on the Brera, Spider and 159 nameplates.
Lancia released the new Delta Executive, equipped with a number of advanced technological features and the new 200 hp 1.8 Bi TurboJet, a Euro 5-compliant direct injection gasoline engine which offers more power and lower emissions. The brand also introduced the low environmental impact ECOchic Ypsilon and Musa which are equipped with a bifuel LPG/gasoline engine. In October, Lancia presented the Delta Turbo LPG which, with its 120 hp 1.4 LPG/gasoline TurboJet engine, is the first car ever to receive Legambiente’s climate seal of approval.
Fiat Professional released the Ducato 140 Natural Power early in the year and then in the autumn launched the CNG/gasoline-powered Fiorino Natural Power, the only one of its type in the segment. Capping off the year was the arrival of the new Doblò Cargo, the professional version of a model that has so far sold over one million units.
FGA made several major achievements in the development of environmentally-focused products during the year. These resulted in the addition of several new eco-friendly, CNG/gasoline-powered models to the Natural Power range. The Start&Stop system, already offered on the Fiat 500 in 2008, was also made available on a further six models.
Development also continued on new models which will be presented in 2010, including the Alfa Romeo Giulietta. This vehicle’s world debut will be at the Geneva Motor Show in March and it will be progressively rolled out to all major European markets during the spring, relaunching the brand’s presence in one of the most important product segments. The Alfa Romeo Giulietta will be based on a new platform that represents a significant step forward in technological content in terms of materials, flexibility and potential applications.
SERVICES
In 2009, actions were taken to improve customer response capabilities and a customer satisfaction monitoring system was completed which will further contribute to the success of the sales and service networks.
Technical Services made operational improvements to its maintenance and repair services throughout Europe. New information tools were rolled out to all markets which will provide faster, more effective support to the service network. In addition, service levels were improved through implementation of databases available on- line in 19 languages to provide additional support in the area of diagnostics and repair to the service network. For warranty service, a new management model was introduced in Europe in partnership with leading third party service providers which achieved the expected benefits in terms of cost reduction.
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In Italy, further investment was made in support for the network through establishment of new communication channels and management of dealer requests using the same methods and service level offered to end customers.
The Customer Service Centre at Arese represents one of the Sector’s most important customer relationship tools. It currently manages over 25 different services and covers 18 European markets. In 2009, the number of customer contacts handled by the Centre was up 18% 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 are in need of roadside service, with rapid and effective support to ensure that their mobility requirements are met. In 2009, activity focused on monitoring in the major markets, improving services and managing agreements with providers that were approaching expiry or renewal. In the first half of 2009, a new model was implemented in all markets through a pan-European roadside assistance policy which offers a more comprehensive range of services.
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 Sector’s European sales activities through dealer financing, end-customer financing and medium and long-term rental. The collaboration with Crédit Agricole continued to prove its effectiveness throughout 2009, in line with expectations, and successfully supported sales and new product launches. In addition, in the second half of 2009 the joint venture began working with Chrysler to provide financial services to its distribution networks and end customers in Europe.
In 2009, new loans to the dealer network totalled €16,963 million (€11,850 million in 2008). A total of €5,921 million (€5,184 million in 2008) was provided to retail customers to finance 513,591 vehicles (441,304 in 2008), representing a penetration rate of 29.3% (25.5% in 2008).
There were new rental agreements on 57,586 vehicles (74,665 in 2008), representing a financed value of €793 million (€1,114 million in 2008) and a penetration rate of 3.9% (5.6% in 2008).
In Latin America, financial services are provided by Banco Fidis de Investimento in Brazil and Fiat Credito Compania Financiera in Argentina. In China, financial services are provided by Fiat Automotive Finance. All three companies are subsidiaries of Fidis S.p.A., (whose principal activities in Italy are the provision of factoring and guarantees), a wholly-owned fully-consolidated subsidiary of FGA.
In addition, in the second half of 2009 Fidis S.p.A. began collaboration with Chrysler to provide financial services to dealers and end customers outside of Europe through direct solutions in Brazil, Argentina and China and development of partnership agreements with external financial providers in other non-European markets. During 2009, Fidis S.p.A. continued to reduce its supplier factoring activities, with managed receivables dropping from €505 million to €430 million at year end.