“the name of the game is survival!” · re-entry in us market for alfa romeo postponed to 2011...

Bank AM Bellevue Investor Seminar 1

“The name of the game is survival!” *

Bank AM Bellevue Investor SeminarFlims – January 17, 2009

* Martin Bisang


Casting an eye over Fiat ’s performance in 2008An intense but difficult year

Despite unprecedented challenges...

...we are expecting to post the best annual profitability ever... 15 consecutive quarterly year-over-year improvements since 2004 at Sep YTD

...we continued to work hard over the year to improve our competitiveness and efficiency... Rejuvenating our product portfolio

Improving industrial processes

Strengthening image of our brands

Enlarging our network of alliances

Accelerating international expansion

...we gained market share in most sectors and regions... FGA: Italy at 31.9% (+0.6 p.p.); WE at 8.2% (+0.2 p.p.) increasing penetration in some key

markets; market leadership maintained in Brazil; LCV gaining shares both in Italy and WE

CNH: gains in both tractors & combines in a strong Brazilian market, in North America for 40+hp tractors and in many Rest-of-World markets for tractors

...we quickly and decisively implemented a variety of organizational and operational measures to contain impact of slowdown in demand in most of our sectors


...and we are prepared for an uncertain 2009


Car demand forecasts are sliding...

2009 global automotive sales revised down to -15% (from -10%); Western European sales expected to decline 20% (previously 15%)


...durable goods suffer the most in downturns...

Non durables do worse in the downturn but better in the recovery. Exception, food and beverages do better in the downturn and worse in the recovery; apparel does worse all round

Durables do worse in the downturn and move with GDP in the recovery. Notable exception, motor vehicles: much worse in the downturn, but much better in the recovery

Downturn (Avg growth: 1980,1982, 1991, 2001)

Rec

over

y (A

vg g

row

th:

1981, 1983, 1992, 2002)

US: Average Annual Growth by industry, downturns vs. recoveriesBased on value added by industry

Motor vehicles

Mining

ArtsInformation

Primary metals

Machinery

Nonmetallic minerals

Retail trade

Food & beverages

Wholesale

Air transport

UtilitiesApparel and leather

Chemicals

Paper

Publishing

Hotels, rest

Real estateHealth careDurables

Nondurables

GDP

-10%

-5%

0%

5%

10%

15%

20%

25%

-20% -15% -10% -5% 0% 5%

Source: Global Insight


Global Commodity PricesGlobal Stocks-to-Use Ratios (in $/MT)

Source: IHS Global Insight (2008)

...but AG industry drivers don’t look so bad

$50

$100

$150

$200

$250

$300

$350

$400

$450

$500

'97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08F '09F '10F '11F '12F '13F

Corn Soybeans Wheat

10%

15%

20%

25%

30%

35%

40%

'97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08F '09F '10F '11F '12F '13F

Corn Soybeans Wheat

US AG Commodity Exports US Net Farm Income(US$ bn)

Average of last 10 Years

Net Income Farm 2008 Forecast $87bn

$0

$20

$40

$60

$80

$100

'97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08F '09F '10F '11F '12F$30

$40

$50

$60

$70

$80

$90

$100

'97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08F '09F '10F '11F '12F


-6

-5

-4

-3

-2

-1

0

1

2

3

4

5

2007 2008 2009

-6

-5

-4

-3

-2

-1

0

1

2

3

4

5

2007 2008 2009

Quarterly % change, annualized

Source: US BEA, CBO, Eurostat, GS, Fondazione Giovanni Agnelli

2008: 1.2%

2009: -2.2%

2008: 0.8%

2009: -1.7%

GDP forecasts US and Euro Area


2009 market developments

Uncertain financing environment and lack of customer confidence make it difficult to shape demand curve for 2009

“Normal” trading conditions are not expected in 2009, especially H1

Substance of 2007-10 plan not impacted by temporary deviations expected in 2009 except for

Re-entry in US market for Alfa Romeo postponed to 2011

Postponement of 300k sales target in China (50k units expected in 2010)

If “normality” restores by the end of 2009, Group confirms its 2010 objectives


Fiat’s response for 2009

Disciplined approach to balance supply with demand

Temporary production shutdown as required by market conditions

Non-renewal of temporary workers upon contract maturity

Continued push on technical & purchasing savings

Expected net savings in 2009 vs. 2008

Continuous improvement to maximize competitiveness through World Class Manufacturing

Governance cost reduction to match market conditions

~15% cut in SG&A

Capex reduction through postponement of selected initiatives without penalizing priority of strengthening market positioning

Intensifying inventory management to right-size levels


Brands unbundled and image

strengthened across the board

Product diversification

Geographic diversification

Key functions at Group level

Philosophy constant change

The power of Fiat Group


Powerful, great tradition, strong American heritage

Innovative, application specialist in harvesting,

value-for-money equipment

American, traditional, full-line provider

EU full-liner, NA light-to-mid specialist, providing

solid value for money

CNH – Recapturing brand spirit


Product range fully rejuvenated

Gaining ground in historically weak heavy segment

Quality in line with best competitors

Brand enhancement leveraging on communication initiatives

Iveco – Targeting core customers & segments


FPT – Leading-edge technologies for a decade

Pioneering introduction of Common rail & AMT

1997-99

New LCV 2.3 & 3.0LFlex engine in Brazil

2002-04

Tetra-fuel engineCNG engine1.4 T-Jet

2006-07

1.8 GDI1.9 JTD Turbo Twin-Stage

2008

...and new products ready in ‘09

50% emissions reduction

CO2 consumption down ~25% with greatly improved fun-to-drive

Multiair technologyon Fire Engine

0.9 liter twin-cylinder

Naturally aspirated & turbocharged Multiair engines (65-110hp range)

New Small Engine (SGE)


2008-10

Distinctiveness

Affordability

2004

(Europe)

2010

2004 2008

2010

2004 2008

Distinctiveness

Distinctiveness

Affordability

Affordability

FGA – Distinctive market positioning


Rethinking model to reverse trend


A quality-of-life discussion for the auto industryA draconian view

Sub-critical “stand-aloners” no longer sustainable

A “shared machine” crucial to survive

At least 5.5-6.0mn units a year needed to make money

Maximum expansion of volume base for each architecture

Accelerating pace of new partnerships within a couple of years

A 3-layer industry expected

“Wal-Mart” players grouped into 6 clusters

Limited number of upscale players

Few “Neiman Marcus” exclusive players


New emerging consumer trends show 3 main characteristics

Focus to simplicity and sustainability

Search for genuine substance

Technology expressed in terms of freedom of action

These trends involve up to 80% of WE consumers and influence car demand

Simple, no frills and low consumption cars

Adaptability and customization

Non conventional expression of personality

Expected market trend*

Compact cars: 10+% growth driven by A & Small MPV segments

“Low-cost” middle cars: 20+% growth

* Global Insight estimates (2015 vs. ‘07)

New consumer trends


The low-cost brandA natural extension of our market coverage

This generation will be the first to live not as well than previous one

We have to offer hyper-accessible products even in mature markets

What does “low-cost” mean for us

A fresh, simple, stylish, and sustainable brand

Three key needs to meet: urban mobility, space for family and space for work

Rethinking product but also whole value chain (from material procurement to vehicle scrappage)

Mid-term volume target: 300k units a year

A compact car as first model to hit the streets


Sustainability becoming increasingly important


“Fiat is quite well positioned within the automotive sector in terms of overallsustainability performance and is in the process of emerging as a sustainabilityleader although the competition within the sector remains tough” Sam Research (DJSI rating agency) – Sep 2008

Sustainability for Fiat Group is a strategic choice integrated in the core business and a pillar of our long-term success

Areas of excellence

Fiat Brand had the lowest emissions in EU (among the 10 top selling brands in 2007) and is committed to have the lowest CO2 emissions in 2012

Environment Management System at all Group plants; more than half of our plants involved in WCM program (12 now at bronze level)

Fiat 500: the first 3.6 m vehicle in the world with 5 Euro NCAP stars

The biggest Customer Services Centre in EU

Autonomy: since 1995 a complete range of models for people with driving constraints

Values add value


We are a meritocracy

Leadership is a function of leading change and leading people

We embrace and relish competition

We aim to achieve best-in-class performance

We deliver what we promise

Fiat’s 5 core principles...


...will allow us to emerge stronger in 2009

Toughest year ever

Will test all our leadership skills

Will require interplay of industry and governments with shared objectives

Will significantly change landscape of automotive sector, forever

And Fiat will play a (significant) role


Certain information included in this document is

forward looking and is subject to important risks and

uncertainties that could cause actual results to differ

materially. The Company's businesses include its

automotive, automotive-related and other sectors,

and its outlook is predominantly based on its

interpretation of what it considers to be the key

economic factors affecting these businesses.

Forward-looking statements with regard to the

Group's businesses involve a number of important

factors that are subject to change, including: the

many interrelated factors that affect consumer

confidence and worldwide demand for automotive

and automotive-related products; factors affecting

the agricultural business including commodities

prices, weather, and governmental farm programs;

general economic conditions in each of the Group's

markets; legislation, particularly that relating to

automotive-related issues, agriculture, the

environment, trade and commerce and infrastructure

development; actions of competitors in the various

industries in which the Group competes; production

difficulties, including capacity and supply constraints

and excess inventory levels; labor relations; interest

rates and currency exchange rates; political and civil

unrest; and other risks and uncertainties. Any

forward-looking statements contained in this

document are referred to the current date and,

therefore, any of the assumptions underlying this

document or any of the circumstances or data

mentioned in this document may change. Fiat S.p.A.

expressly disclaims and does not assume any liability

in connection with any inaccuracies in any of these

forward-looking statements or in connection with

any use by any third party of such forward-looking

statements. This document does not represent

investment advice or a recommendation for the

purchase or sale of financial products and/or of any

kind of financial services. Finally, this document does

not represent an investment solicitation in Italy,

pursuant to Section 1, letter (t) of Legislative Decree

no. 58 of February 24, 1998, or in any other country

or state.

Safe Harbor Statement


Fiat Investor Relations team

Marco Auriemma phone: +39-011-006-3290 Vice President

Vincenzo Torrisi phone: +39-011-006-2749Federico Donati phone: +39-011-006-2756Maristella Borotto phone: +39-011-006-2709

fax: +39-011-006-3796email: [email protected]

website: www.fiatgroup.com

Contacts

“the name of the game is survival!” · re-entry in us market for alfa romeo postponed to 2011...

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