iveco annual report 2001

Str

alis

Act

ive

Sp

ace

Dai

ly

Un

iJet

HP

I

EuroCargoTector

Iveco Group Consolidated Financial Statements

2001

DIRECTORS

Paolo CantarellaChairman

Giancarlo Boschetti Managing Director (*)

Michel de Lambert Managing Director (**)

Damien ClermontDirector

Bernhard KappDirector

Georg KruppDirector

Otto Graf LambsdorffDirector

Francesco Paolo MattioliDirector

Umberto QuadrinoDirector

Lucio RondelliDirector

Sir Hugh RossiDirector

Abdulla SaudiDirector

Giancarlo VezzaliniDirector

(*) to 31/12/2001

(**) from 1/01/2002

Foreword 2

Report on Operations 6

Markets and economic context 6

Activities of the Iveco Group in 2001 7

Business Unit Light 12

Business Unit Medium 14

Business Unit Heavy 16

Business Unit Engines 18

Specialties 20

Operations in the Strategic Areas 24

Operations in Other Countries 25

Financing and Service Activities 26

Customer Service 28

Information Technology 30

Human Resources 31

Events occurring after the close of the year 33

Consolidated Financial Statements 34

CONTENTS

99 00 010

100,000

200,000

300,000

400,000

500,000

ENGINES PRODUCTION

(UNITS)

99 00 010

60

120

180

240

RESEARCH ANDDEVELOPMENT EXPENSES(MILLION EUROS)

99 00 010

40,000

80,000

120,000

160,000

200,000

VEHICLES SOLD

(UNITS)

The launch of theStralis range powered

by the Cursor 10 and Cursor 13

and completed by the 540 Hp version isthe crowning moment

in the evolution ofIveco’s heavy on-road

vehicles begun in 1998with the launch of thefirst Cursor 8 engine.

1

99 00 010

150

300

450

600

OPERATING INCOME

(MILLION EUROS)

99 00 010

2,500

5,000

7,500

10,000

NET SALES

(MILLION EUROS)

99 00 010

1.5

3.0

4.5

6.0

7.5

OPERATING INCOME/NET SALES(%)

HIGHLIGHTS

1999 2001

Commercial data

Sales of trucks, buses and special vehicles (units) 149,903 164,776 160,397

Engines production (units) 404,917 457,745 413,222

Western European truck market share GVW >= 3.5 tonnes (%) 16.6 17.8 17.0

Financial data (million euros)

Net sales 7,386.2 8,610.7 8,650.1

Operating income 311.1 489.1 270.7

Net profit 162.7 146.2 (124.6)

Cash flow (net profit plus depreciation and amortization) 415.8 569.2 285.5

Tangible fixed assets as of December 31 2,305.2 2,278.9 2,286.7

Net financial position (indebtedness) as of December 31 (402.2) (222.6) (210.9)

Stockholders’ equity of the Group as of December 31 1,817.5 1,913.7 1,702.7

Ratios (%)

Operating income / Net sales 4.2 5.7 3.1

Net profit / Net sales 2.2 1.7 (1.4)

Cash flow / Net sales 5.6 6.6 3.3

Other data

Gross additions to tangible fixed assets (million euros) 359.5 655.8 718.3

of which: vehicles on operating leases (million euros) 60.7 306.1 348.3

Gross additions / Net sales (%) 4.9 7.6 8.3

Research and development expenses (million euros) 214.6 226.5 214.9

Research and development expenses / Net sales (%) 2.9 2.6 2.5

Number of employees as of December 31 36,217 35,852 35,340

2000

CASH FLOWGROSS ADDITIONSVEHICLES ON OPERATING LEASES(EURO MILLION)

99 00 010

150

300

450

600

750

In Western Europe, the expansionary trend that characterized the transportation industry and the

market for commercial vehicles in recent years came to an end in 2001. Overall, demand held at

about the same level as in the previous year, but conditions varied widely among the different

market segments. New registrations of light commercial vehicles increased by a further 4.0% to

an all-time high of 359,000 units, but demand for medium range vehicles fell by 5.6% to 87,400

units. In the heavy truck market segment, where the slowdown that started in the last quarter of

2000 continued through 2001, new vehicle registrations declined by 3.1% to 236,300 units.

With the exception of Poland, the Central European countries where Iveco operates enjoyed

buoyant demand for commercial vehicles. In Latin America, the crisis in Argentina brought to a

halt the expansionary trend that all markets in that region had enjoyed.

Overall, Iveco sold 160,400 vehicles, or 2.5% less than in 2000, including 128,400 in Western

Europe (-1.9%), 9,700 in Eastern Europe (+14%) and 22,300 in markets outside Europe (-12%).

Iveco’s share of the Western European market for vehicles with a GVW of 3.5 tons or more

decreased to 17.0% (17.8% in 2000), due mainly to a sales fall off in the light-vehicle segment,

where Iveco’s share fell to 19.0%, or 1.7 percentage points less than in 2000. However, there

were encouraging signs of a turnaround during the second half of the year ; with the specific

reference to the segment between 2.8 - 3.49 GVW, the units sold increased from 4,900 of 2000

to 6,340, equal to +30%.

On the other hand, Iveco increased its penetration of the medium vehicle market to 25.0% (+1

percentage point over 2000), owing in part to the successful introduction of the "EuroCargo

Tector" and to the good performances of the Daily medium, and held its share of the heavy truck

segment relatively steady at 11.0%, or just 0.2 percentage points less than in 2000.

In Latin America, sales of the different Iveco vehicles totaled more than 7,800 units (+26%). In

Brazil, sales of the Daily surged to 3,258 units (2,818 units in 2000), pushing Iveco’s share of the

local market to 25.5%, or 4 percentage points more than in 2000.

In Argentina, where demand was severely depressed by the country’s economic crisis, Iveco’s sales

fell by 30% (1,430 units, compared with 2,060 in 2000), but the overall market contracted by

more than 50%.

In China, Naveco, a 50% joint-venture with the Yueijin Group, produced and sold about 13,100

vehicles, or 25% less than in 2000. An increase in local competition and order postponements

caused by the upcoming introduction of a new light vehicle are the main reasons for this decline.

In Turkey, where demand was down sharply, Otoyol, a 27% affiliate, sold about 3,600 vehicles, or

about half the number sold in 2000.

In the bus market, Irisbus sold about 9,500 vehicles, or 3% less than in 2000. This modest

decrease was due mainly to delays in the awarding of contracts following calls for tenders by

public transportation departments, particularly in Italy and Spain.

In 2001, Iveco produced 413,300 diesel engines, or about 9% fewer than in 2000. This decrease

2

FOREWORD

Paolo CantarellaMichel de Lambert

3

is due to a reduction in the output of small and medium engines that mirrored declining sales of

Iveco vehicles in those segments and lower shipments to non-captive customers.

During the year, the Company continued to pursue its product innovation and development programs,

focusing primarily on repowering its line of medium vehicles with new "Tector" engines and designing

a new range of V-shaped engines for electric power generation and rail transport applications.

In addition, it proceeded with plans to expand its engine line. This included rounding out the family

of Cursor Heavy range engines, introducing new lines of Medium and Light range engines, and

developing a cab for a new Heavy road vehicle.

Irisbus continued to invest in product innovation, placing particular emphasis on the development

of the "Civis", a new mass transit vehicle with an electric or hybrid drive system.

Substantial resources were devoted to increasing the pool of rental vehicles. Of the total

investment of 348 million euros (306 million euros in 2000), about 302 million euros (277 million

euros in 2000) were allocated to the fleet operated by the Fraikin Group.

During the year, Iveco and the Changzhou Bus Company, a Chinese group, signed an agreement

establishing a 50% joint-venture that will manufacture and distribute urban and long-distance

busses. With a market share of 16.0%, CBC ranks third in the Chinese urban transit market. China

is the largest bus market in the world, with annual demand of over 50,000 units.

The finance companies of the Transolver Finance Group, which provide financing and leasing

services to support the sales of Iveco products, enjoyed strong growth in 2001.

The portfolio of financed vehicles grew from 85,000 units in 2000 to 99,100 units of financed

vehicles in 2001, for a total net value of 2,020 million euros a the end of 2001.

The biggest increases occurred in Italy, Germany and Great Britain. Transolver Finance provided

financing for a rising share (30.0%) of the vehicles sold by Iveco in Western Europe.

During the year, Transolver started finance companies in Great Britain, Switzerland and Brazil.

These new units, which are already producing gratifying results, expanded the Company’s reach

beyond Iveco’s four main markets : Italy, France, Germany and Spain.

The Company’s leasing operations, which are run by Fraikin and Transolver Service, increased their

park of leased vehicles to 37,000 units at December 31, 2001, for a gain of 9.7% compared with

the end of 2000. Some of the best improvements occurred in France, Great Britain and Spain.

During the year, Iveco continued to successfully integrate the operations of the Fraikin Group.

Fraikin, which retained its position as the unchallenged leader of the French market, brings to the

Company invaluable expertise in the contract hire of commercial vehicles and the management of

large fleets.

In 2001, Iveco continued to expand its portfolio of maintenance and repair services, signing up

11,900 new customers, with a total portfolio of 33,800 contracts at December 31, 2001.

In 2001, Iveco’s net revenues increased by 0.4% to 8,650 million euros, up from 8,611 million

euros in 2000.

4 I V E C O N V C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

Operating income amounted to 271 million euros (489 million euros in 2000). The return on

sales was 3.1%, or 2.6 percentage points less than the 5.7% reported in 2000. This decline is the

combined result of lower unit sales for all products distributed by Iveco and, to a lesser extent,

modest across-the-board price decreases, coupled with a reduction in gains earned on

divestitures.

In 2001, Iveco laid out an important restructuring plan due to produce important operating

efficiencies. However, this plan required the Company to aside reserves for 105 million euros

related to extraordinary charges, which had a significant negative impact on the bottom line.

For the year as a whole, Iveco reported a consolidated net loss of 123 million euros (consolidated

net income of 147 million euros in 2000). In 2001, depreciation and amortization totaled 410

million euros (423 million euros in 2000) and research and development expenditures amounted

to 215 million euros (227 million euros in 2000).

The market outlook for 2002 is not encouraging, as demand is expected to show a significant

decline, especially in Western Europe.

Despite this environment, Iveco is committed to closing the year in the black and to reduce its

financial needs. A key prerequisite for achieving this goal and minimizing the negative impact of

unfavorable market conditions is the effort in implementing the Company’s restructuring program.

This restructuring effort, which must focus on achieving an optimum balance between quality and

cost, cannot be limited to just one year and has to be projected over a medium- to long-term

horizon.

Iveco can face the challenges of the market with confidence, particularly in view of the fact that

it has completed the capital investments needed to broaden its engine lines, which now

encompass power plants for every possible application, and not just in the automotive industry.

Another positive factor is the launch of the Stralis. The introduction of this new heavy on-road

vehicle marks the completion of a product investment program that started in 1996.

The Stralis offers a number of important innovations. Its aerodynamic design, modular interior

configurations that can accommodate different transport missions, highly innovative cab interior,

high-performance power train, and extensive use of electronic control units that interface with

each other to provide a wide range of diagnostic information place it at the top of the heavy

vehicle segment.

In 2002, the Company will complete the acquisition of the 50% interest in Irisbus held by

Renault, thereby gaining full control of this bus manufacturer.

The total integration of Irisbus into Iveco’s organization and the opportunities created by the

agreement with CBC in China will transform Iveco into one of the major players in the global bus

market.

Iveco is ready to face the challenges posed by the difficult economic conditions that are expected

to characterize the world economy in 2002 with the certainty that it will be able to capitalize on

I V E C O N V C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S 5

the opportunities it has created by successfully implementing major product development and

capital investment programs.

We are confident that every person in our Company, at every level of the organization, will

continue to pursue these opportunities with unflagging determination.

At the end of 2001, Giancarlo Boschetti, who had been the Company’s CEO since 1991, was

asked to assume the post of Chief Executive Officer of Fiat Auto.

While at Iveco’s helm, Giancarlo Boschetti provided an invaluable contribution in helping the

Company consolidate its position and grow its businesses. It was precisely during this past decade

that Iveco strengthened its role as a global player and adopted an innovative organization based

on Business Units, which provided it with a more direct interface with its customers and enabled it

to focus its efforts on improving its products and services.

Iveco’s Chairman and new CEO are well aware of this contribution and, speaking on behalf of the

entire Board of Directors, thank Mr. Boschetti for these achievements.

April, 2002Michel de LambertManaging Director

Paolo CantarellaChairman

6 R E P O R T O N O P E R A T I O N S

REPORT ON OPERATIONS

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

Western Europe 441.9 347.9 378.5 454.9 475.0 488.8 567.5 629.4 681,7 682.7

France 71.6 56.7 63.0 78.6 79.1 74.4 89.3 100.3 117.0 123.1

Germany 129.4 94.7 92.7 100.8 100.9 107.1 131.4 149.3 150.5 140.4

UK 58.1 62.7 78.3 92.7 93.8 96.1 108.5 105.6 113.5 118.6

Italy 63.6 47.2 46.8 61.2 69.6 63.1 68.1 85.1 94.8 94.5

Spain 39.4 22.7 26.1 35.0 36.7 45.5 52.6 65.8 72.4 72.8

Rest of Western Europe 79.8 63.9 71.6 86.7 94.8 102.6 117.6 123.5 133.6 133.2

COMMERCIAL VEHICLE DEMAND TREND IN WESTERN EUROPE GVW >=3.5 T (THOUSANDS OF UNITS)

(1999 data revised)

NEW REGISTRATIONS TREND IN WESTERN EUROPE(BY BUSINESS UNITS)

3.5-6.0 t GVW 6.1-15.9 t GVW >=16.0 t GVW Trend

Markets and economic context

2001 brought the most serious slowdown in the world

economy since 1982, although the intensity and timing

differed. All the world's main economic areas were

affected simultaneously.

The first signs of a slowdown in the U.S. economic

situation, induced by the deceleration of industrial

output and of employment, emerged in the early

months of 2001 and were aggravated by the events of

September 11th, bringing to an end an economic boom

that had lasted 10 years. However, just a few months

later, the first signs of a recovery are already

perceptible.

The Euro area was affected by the situation in America,

GDP growth faltered, and major countries recorded

balance of payments deficits. In the first half of 2001

the inflation rate was above 3%, but in the second half

of the year there was a widespread reduction in

interest rates, partly as an effect of falling oil prices.

During 2001 the Japanese economy entered its third

recession in 10 years, and GDP fell a further 0.5% on

2000.

In South America, Argentina reached financial collapse

in the final days of the year, following an economic

crisis lasting more than three years: the country had to

declare that it was unable to service its foreign debt.

The Brazilian economy was also sluggish as a result of

political instability, a strict monetary policy and the

energy crisis, but was only marginally affected by the

Argentine crisis.

The events in America had a significant influence on

economic results in the NAFTA area, the world's

largest market, where total demand for haulage

vehicles with GVW above 6 tonnes, plummeted to

409,000 units, 24% down on 2000, which was already

on the downturn.The contraction in the heavy class 8

92 93 94 95 96 97 98 99 00 01

units/1000 350

300

250

200

150

100

50

M A R K E T S A N D E C O N O M I C C O N T E X T 7

vehicle segment was particularly strong, to 179,000

units, while the market for medium class vehicles was

more stable, absorbing 230,000 units.

The global crisis impacted differently on the

commercial vehicle markets in the various Asian

countries; the worst hit countries were those, such as

Malaysia, Singapore and Taiwan, where development is

sustained by exports of technological products. On the

other hand, countries like South Korea, which have

succeeded in diversifying their manufacturing

structure, were less affected by the negative trend.

The commercial vehicle market in Japan continued the

contraction begun in 2000, and sales totalled 83,000

vehicles (down 1.9% on 2000) in the segment above 6

tonnes gross vehicle weight.

In the Eastern European countries of interest to Iveco,

we should mention the strong growth of the Russian

market for the third consecutive year. In 2001 this

growth was sustained primarily by domestic demand,

whereas in 2000 the growth in GDP had been fuelled

mainly by exports.

In Poland, 2001 was one of the worst years since the

end of Communism; the growth rate was the lowest in

the last ten years and unemployment reached record

levels. The main cause of this situation lay in a very

restrictive monetary policy, caused by a huge public

sector deficit.

After two consecutive financial crises in a short space

of time, Turkey was also hit by a strong economic

recession caused by very high inflation, but it avoided

financial collapse thanks to the promise of new loans

from the International Monetary Fund.

In 2001 demand for commercial vehicles in Western

Europe totalled 682,700 units, substantially in line with

2000, breaking the growth trend of the last seven

years.The market began to show signs of weakness in

the last part of the year.

Analysis by segment shows positive growth of +4%

over the previous year for light commercial vehicles

(gross vehicle weight from 3.5 to 6 tonnes) which

reached an all-time high of 359,000 registrations.

The situation in the medium vehicle segment (gross

vehicle weight from 6.1 to 15.9 tonnes) was less

positive, falling by 5.6% (87,400 registrations), while

the heavy segment (gross vehicle weight from 16

tonnes up) contracted by 3.1% on 2000 (236,300

registrations).

The stability of European demand (gross vehicle

weights above 3.5 tonnes) is the result of varying

trends on the different markets: from continued

growth in France (+5.2%) and the United Kingdom

(+4.5%), to substantial stability in Italy (-0.3%) and a fall

in Germany (-6.7%) justified by the momentary

recession in that country, while the Spanish market

was stable (+0.6%).

Activities of the Iveco Group in 2001

In 2001 Iveco sold a total of 160,400 vehicles on world

markets, 2.7% down on 2000 (164,800 units). This

breaks down into 154,060 units in segments above 3.5

tonnes GVW (159,900 in 2000), and the remaining

6,340 vehicles in the 2.8 to 3.49 tonnes segment

(4,900 in 2000).

If we include sales by associated licensees, which

totalled approximately 34,300 units (42,700 in 2000),

overall sales reached 194,700 units.

Iveco sold 128,400 vehicles in Western Europe, a

marginal decrease of approximately 1.9% on 2000 sales

(130,900 units).

Sales were particularly affected by the contraction of

the German market, where Iveco sales volumes fell by

12% on 2000, and by lower sales in Italy (-14%), the

result of aggressive marketing initiatives by the

competition, particularly in the light vehicle segments.

These falls were counterbalanced by a strong increase

in sales in the United Kingdom (+17.6%) due to the

positive effects of increased demand for light vehicles.

Iveco's share of the Western European market (for

vehicles with GVW over 3.5 tonnes) decreased from

17.8% in 2000 to 17% in 2001, mainly as a result of the

contraction in the light vehicle segment, where Iveco


1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

Western Europe 19.4 20.1 19.8 19.1 20.0 18.4 17.0 16.6 17.8 17.0

France 18.1 18.7 18.6 17.4 18.9 18.6 17.1 16.7 19.3 18.6

Germany 11.5 13.5 13.5 11.4 13.2 12.3 11.2 10.8 11.0 9.8

UK 12.7 14.4 13.6 14.4 15.4 14.5 14.0 12.1 11.7 11.9

UK (GVW >=3.51t) 23.4 24.8 22.2 21.4 21.8 21.5 20.5 18.3 17.1 16.1

Italy 54.6 55.1 56.0 51.8 48.0 45.9 44.0 41.3 42.4 40.0

Spain 22.7 22.5 21.8 22.2 22.6 20.4 19.4 19.3 20.4 20.0

Rest of Western Europe 8.6 10.0 11.3 10.1 10.8 10.3 9.4 9.0 10.3 9.8

TREND OF IVECO'S MARKET SHARE IN WESTERN EUROPE (GVW >= 3.5T)

IVECO MARKET SHARE TREND IN WESTERN EUROPE(BY QUARTERS AND GVW SEGMENT)

I qtr II qtr III qtr IV qtr I qtr II qtr III qtr IV qtr2000 2001

m.s. %

6.1-15.9 t GVW>=3.5 t GVW 3.5-6.0 t GVW >=16.0 t GVW Trend

25

20

15

10

achieved a 19% share, down 1.7 percentage points on

2000, but there were significant signs of a recovery in

the second half of the year.

What is more, competition from new models was

particularly aggressive in Spain and Italy.

In 2001, Iveco's share of the medium vehicles market

reached 25%, up one percentage point on 2000.

Market share improved in the United Kingdom, Spain

and Germany in particular, thanks to the success of the

new EuroCargo Tector, while it was substantially stable

in the other European markets.

In the heavy vehicle segment, Iveco's share in 2001

remained stable at 11% (11.2% in 2000), with an

improvement in the second half, due partially to the

success of the new 480 Hp model, in spite of the effect

induced by the expectation for the new Stralis heavy

vehicle that was launched on the market early in 2002.

Iveco sales in Eastern Europe exceeded 9,700 units,

14% up on 2000 (8,500 units). Results were

particularly good in Romania, where sales increased by

7.9% on 2000 to 1,964 units, allowing Iveco to achieve

a market share of 34.3%.

In non-European markets, Iveco sold a total of 22,300

vehicles, down 12% from the 25,400 units sold in 2000.

In particular we should mention the good sales results

in Latin America, where Iveco passed the 7,800 mark

with its overall range, a 26% increase on 2000 (6,200

units). Light vehicle sales were particularly good in

Brazil (3,258 units compared to 2,818 in 2000), where

the Iveco Daily accounted for 25.5% of the market (up

3.8 percentage points on 2000). Sales also increased in

Venezuela (up 25% to 1,801 vehicles). This was offset

by a significant slowdown in sales in Argentina because

of the economic crisis besetting the country: in a

market which plummeted by more than 50%, Iveco

managed to curb the fall in sales to 30% (1,430 vehicles

registered in 2001 compared to 2,060 in 2000).

In China, the Naveco company, a 50-50 joint-venture

A C T I V I T I E S O F T H E I V E C O G R O U P I N 2 0 0 1 9

with the Yuejin group, manufactured and sold about

13,100 vehicles (17,500 vehicles in 2000). This 25%

reduction can be attributed primarily to fiercer local

competition, and to expectation prior to the launch of

a new light vehicle.

The Irisbus joint-venture sold about 9,500 units (9,800

in 2000).The modest 3% decrease in sales on 2000 was

due in part to delays in the awarding of public

transport tenders, particularly in Italy and Spain.

Diesel engine output in 2001 totalled 413,300 units,

down about 9% on 2000 (458,000 units).This decrease

is related to output of light and medium duty engines,

to a decrease in vehicle output by Iveco, and above all

to a drop in sales to third parties. During the year,

production of the new Tector engine for applications

on EuroCargo vehicles came on stream, and the range

of heavy Cursor engines was also completed. Sales to

external customers accounted for 61% of total

production, in line with the previous year.

Where India and Turkey are concerned, sales by

licensed affiliates decreased, reflecting demand trends

for commercial vehicles in the two countries:

- in India, Iveco manufactured and sold a total of

30,700 units through Ashok Leyland (in which it has a

15.28% share), approximately 3,800 less than the

previous year, because of the general economic

slowdown in the country, and the company's market

share decreased marginally;

- in Turkey, Otoyol (owned 27%) sold approximately

3,600 units, approximately half the sales in the previous

year, because of the marked contraction in the

domestic market.

The finance companies in the Transolver Finance

group, which manage financing and leasing activities for

Iveco products, expanded strongly in 2001.

The portfolio of vehicles financed grew during the year

from 85,000 to 99,000 units, with total loans of

approximately Euro 2,100 million granted.

Growth was particularly strong in Italy, Germany and

the United Kingdom. The percentage of Iveco vehicle

sales financed by Transolver Finance in Western Europe

increased to 29.8% (30.3% for light vehicles, 23.3% for

medium vehicles and 34.4% for heavy vehicles).

During the year, new finance companies were launched


and operated successfully in the United Kingdom,

Switzerland and Brazil, joining the companies already

operating in four major Iveco markets (Italy, France,

Germany and Spain).

In the field of contract hire activities conducted by the

Fraikin and Transolver Service companies, the rental

vehicle fleet increased to 37,000 vehicles at year end

(up 9.7% on 2000). During the year there was a

marked growth of business in France (an increase of

1,100 units, or 4%) and in the United Kingdom (an

increase of 982 vehicles, or 23%), following the

integration of the fleets of large customers, as well as

a significant increase in Spain (825 units, an increase of

more than 50%), the result of the strong development

of long-term contract hires.

During 2001, the Fraikin group acquired 9,993 new

vehicles, while it sold 6,701.

The process to integrate the activities of the Fraikin

group with those of Iveco continued successfully; the

company confirmed its position as undisputed leader

of the French market, with unique expertise in the

field of long-term commercial vehicle contract hires

and the management of large fleets.

In 2001, Iveco also continued to develop its range of

maintenance and repair services: the portfolio of these

activities totalled 33,800 contracts at year-end, with

11,900 new contracts stipulated during the year.

Innovation and product development activities focused

primarily on the repowering of the medium range of

vehicles EuroCargo Tector and the development of the

new range of V-shaped engines for application in the

fields of power generation and rolling stock.

The investment programme to support the engine

development plan progressed in 2001; it regarded the new

families of light and medium diesel engines in particular,

the plant for light and medium duty crankshafts, and the

new cab for the new Stralis heavy vehicle.

Irisbus continued to invest in product innovation, focusing

in particular on the definition of a new mass transport

vehicle, the Civis, with electric or hybrid drive.

At the end of the year, an agreement was signed with

Renault to purchase the remaining 50% of the Irisbus

group; the operation will be completed in 2002 and

will give Iveco total control of the company.

A C T I V I T I E S O F T H E I V E C O G R O U P I N 2 0 0 1 11

Market Change2001 vs 2000

(thousands) (%)

By quarter

1st 181.0 3.3

2nd 183.5 2.7

3rd 163.1 0.7

4th 155.1 -6.6

682.7 0.1

By Business Unit

>=16.0 t GVW (heavy) 236.3 -3.1

6.1 to 15.9 t (medium) 87.4 -5.5

3.5 to 6.0 t (light) 359.0 4.0

682.7 0.1

By country

France 123.1 5.2

Germany 140.4 -6.7

UK 118.6 4.5

Italy 94.5 -0.3

Spain 72.8 0.6

Other European countries 133.2 -0.3

682.7 0.1

WESTERN EUROPE 2001DEMAND FOR COMMERCIAL VEHICLES (GVW >=3.5T)

WESTERN EUROPE 2001IVECO: REGISTRATIONS AND MARKET SHARES (GVW >= 3.5 T)

Iveco registrations Iveco shareUnits Change Value Change

(thousands) vs 2000 (%) (%) vs 2000 (%)

By quarter

1st 29.9 -6.7 16.5 -1.8

2nd 30.2 -1.1 16.5 -0.6

3rd 28.6 1.0 17.5 0.0

4th 27.4 -9.1 17.7 -0.5

116.2 -4.1 17.0 -0.8

By Business Unit

>=16.0 t GVW (heavy) 26.1 -4.6 11.0 -0.2

6.1 to 15.9t (medium) 21.9 -1.5 25.0 1.0

3.5 a 6.0t (light) 68.2 -4.7 19.0 -1.7

116.2 -4.1 17.0 -0.8

By country

France 22.9 1.6 18.6 -0.7

Germany 13.7 -17.3 9.8 -1.2

UK 14.1 6.1 11.9 0.2

Italy 37.8 -6.0 40.0 -2.4

Spain 14.6 -1.5 20.0 -0.4

Other European countries 13.1 -4.5 9.8 -0.5

116.2 -4.1 17.0 -0.8

Capital spending by Iveco during the year amounted to

approximately Euro 718 million (Euro 656 million in

2000). One area of significant investment was the

development of the contract hire for which Euro 348

million were earmarked (Euro 306 million in 2000),

approximately Euro 302 million of which (Euro 277

million in 2000) was invested in the fleet by the Fraikin

Group.

During the year an agreement was signed with the

Chinese group CBC for the creation of a new joint-

venture (to be 50-50 by the end of 2003), for the

manufacture and marketing of town and out-of-town

buses.

CBC is one of the leading manufacturers of passenger

transport vehicles in China, and leader in the urban

transport field.

12

BUSINESS UNIT LIGHT

R E P O R T O N O P E R A T I O N S

In 2001, first rate performances in terms

of sales enabled theDaily City Truck

to confirm its success in Western Europe.

In 2001, the European light commercial vehicle market

continued to expand satisfactorily, in spite of the

weaker economic climate.

In Western Europe the 2.8 to 6 tonne GVW segment

continued to grow, reaching a total of 666,000

registrations, a 2.6% increase on 2000.

The strongest growth was recorded in France, the United

Kingdom and Germany, which increased by 6.3%, 5.9%

and 4.3% respectively on the previous year. Market

growth was strongest in the 3.5 tonne GVW segment,

which recorded over 325,800 registrations (a 4.3%

increase on 2000); this performance confirmed that the

segment has overtaken the Light Commercial segment

(2.8 to 3.49 tonnes GVW), historically the largest.

In this context, Iveco's sales performance showed an

improvement on the previous year: approximately

78,300 vehicles were sold in Western Europe (77,800

in 2000), and 105,000 throughout the world (over

90,000 in 2000).

These results enabled the Daily City Truck to maintain

its joint lead (with the Mercedes Sprinter) of the 3.5

tonne GVW segment of the Western European market

with 18.9%, in spite of fierce competition from other

brands which launched aggressive commercial

initiatives, particularly in the final part of the year.

One outcome of this trend are the good results

achieved in Italy, France and Spain, where Iveco took

37.2%, 24.7% and 20.5% of the market respectively.

Its performance on the British and Portuguese markets

is also worthy of note because of the ground gained:

market share increased by 2.4% and 1.3% to 8.2% and

13% respectively.

Outside Western Europe, we should underline the

excellent market results achieved in Central and

B U S I N E S S U N I T L I G H T 13

WESTERN EUROPE2001 REGISTRATIONS IN ABC CURVE ON MARKET UNITSFROM 3.5 TO 6.0 T GVW (LIGHT)

Units Change Units Change Value Change(thousands) vs 2000 % (thousands) vs 2000 % (%) vs 2000 %

UK 67.0 7.4 6.2 19.4 9.2 0.9

Germany 60.7 2.2 5.7 -28.7 9.4 -4.1

France 66.2 10,9 16.4 4.4 24.8 -1.5

Italy 59.6 0,3 23.1 -6.3 38.8 -2.7

Spain 39.4 -1.8 7.9 -7.3 19.9 -1.2

Portugal 14.8 -2.8 2.1 22.2 14.1 2.9

Holland 9.8 -1.5 1.6 -18.8 16.1 -3.4

Belgium 10.4 13.4 1.0 -9.3 10.0 -2.5

Switzerland 8.2 10.4 1.9 -9.3 23.5 -5.1

Ireland 5.9 9.9 0.3 150.8 5.5 3.1

Austria 5.0 -6.2 0.8 -16.4 15.8 -1.9

Sweden 4.6 11.2 0.4 -15.2 7.6 -2.4

Denmark 2.3 -17.3 0.5 -27.3 20.8 -2.8

Finland 2.4 1.3 0.1 -37.7 4.0 -2.5

Norway 1.8 0.7 0.3 -19.9 15.7 -4.1

Luxembourg 1.0 22.5 0.1 45.2 6.4 1.0

Total 359.0 4.0 68.2 -4.7 19.0 -1.7

WESTERN EUROPEIVECO MARKET SHAREFROM 3.5 TO 6.0 T GVW (LIGHT)

97 98 99 00 01

24

18

12

6

0

Iveco shareMarket Iveco registrations

Eastern European countries, and in countries in the

Mediterranean basin, where sales increased by about

29%. In the segment for vehicles with GVW from 3.5

to 6 tonnes, we should underline the success obtained

in Romania and the Slovak Republic, where the Daily is

now absolute market leader, with 42% and 35% of the

respective markets.

Iveco's globalisation process, and more specifically its

manufacturing and marketing activities in South America,

achieved excellent results in 2001; market share was

boosted in the 3.5 to 6 tonne GVW segment in Brazil,

where the Daily leads the market with 33.2% (little more

than a year after the inauguration of the Brazilian plant of

Sete Lagoas), in Argentina, with 21.4%, and in Venezuela,

where it achieved 17.7%.

Product development activities in 2001 regarded the

market launch of the new 65C15 and the new version

of the Vendor, which extended the range.


BUSINESS UNIT MEDIUM

The new EuroCargo Tector

range was gradually distributed on all

European markets in the course of 2001

and obtained highlyfavourable comment

from specialised pressand Iveco

customers alike.

Demand for commercial vehicles in the 6 to 16 tonne

GVW segment weakened in 2001, after reaching an all-

time high in 2000.

Competition on the market was heightened by the

introduction of a number of new models by other

manufacturers, but also by action taken by

manufacturers to comply with the acoustic and gassy

emissions standards that were enforced during the year.

In Western Europe, the market accounted for 87,400

vehicles, a 5.5% decrease on 2000.The most significant

variations were recorded on the German market,

where registrations were 5,000 lower than the

previous year (-14.5%).The Spanish, French and British

markets went against the trend, growing by 7.9%, 5.8%

and 0.6% respectively.

In this market context, Iveco succeeded in raising its

Western European market share to 25% (up 1% on

2000), maintaining its position of leader in Italy, Spain

and the United Kingdom. Iveco also recorded brilliant

results in the markets of Central and Eastern Europe,

taking the lead in Hungary, Romania and Slovenia.

Invoicing for the EuroCargo line was buoyant in 2001.

In general, and including Western and Central Europe and

the other business areas, a total of 28,330 units were

invoiced, a marginal fall from 2000 levels (28,814 units).

2001 was a very demanding year for the Business Unit,

particularly because of the normalisation of

manufacturing and logistic processes after the floods

that devastated Northern Italy in the Autumn of 2000,

and of the restructuring of the Brescia plant, which was

completed as part of the gradual phasing out of the

EuroCargo (to Euro2 standards) in favour of the new


Germany 29.7 -14.5 5.3 -8.6 17.8 1.1

UK 18.7 0.6 5.5 4.7 29.3 1.2

France 10.8 5.8 2.6 3.8 23.6 -0.5

Italy 9.0 -4.4 5.1 -5.3 56.8 -0.5

Spain 7.1 7.9 1.9 12.9 26.4 1.2

Holland 2.2 -6.6 0.3 -24.5 11.4 -2.7

Portugal 1.8 -17.7 0.2 -7.1 12.2 1.4

Belgium 2.3 5.7 0.3 12.9 11.7 0.8

Austria 1.0 -19.9 0.1 -38.8 12.3 -3.8

Ireland 0.9 -26.7 0.2 -16.3 18.9 2.4

Norway 0.7 -14.2 0.1 2.7 15.5 2.6

Switzerland 0.9 6.9 0.1 -24.0 10.5 -4.3

Sweden 0.9 10.4 0.1 50.8 10.5 2.8

Denmark 0.6 7.0 0.1 39.8 24.3 5.7

Finland 0.6 3.9 0.1 35.1 8.9 2.0

Luxembourg 0.2 0.7 0.0 51.7 29.1 9.8

Total 87.4 -5.5 21.9 -1.5 25.0 1.0

B U S I N E S S U N I T M E D I U M 15

WESTERN EUROPE2001 REGISTRATIONS IN ABC CURVE ON MARKET UNITSFROM 6.1 TO 15.9 T GVW (MEDIUM)

WESTERN EUROPEIVECO MARKET SHAREFROM 6.1 TO 15.9 T GVW (MEDIUM)

97 98 99 00 01

32

24

16

8

0

Market Iveco registrations Iveco share

EuroCargo Tector, which respects the dictates of Euro

3 standards.

Iveco was able to meet its obligations related to this

legislation, guaranteeing suitable delivery levels to its

dealer network and its customers.

Distribution of the new EuroCargo Tector range was

gradually extended to all European markets during

2001, with extremely favourable reactions from both

the specialist press and our customers. The technical

features and performance of the new family of Tector

engines in particular were received enthusiastically, and

there are grounds for considering this result an

important starting point on which to build continued

success and to achieve new market share.

16

BUSINESS UNIT HEAVY


During the year,recognition by

the Network and byour customers of the quality level

attained by Iveco'sheavy duty range

was reinforced.

In 2001, the Western European heavy vehicle market

contracted by 3% compared to 2000, with 236,335 vehicle

registrations.This still represents an excellent result, if we

remember that 2000 reached an all-time high with

243,920 registrations.Trends differed from one market to

another.The sharpest contraction was in Germany (11.3%

compared to 2000), while the other major markets were

relatively stable: registrations were unchanged in Italy,

there was a slight fall in France (-2.1%) and Benelux

(1.8%), and an increase in Spain (+2.5%) and the United

Kingdom (+1.3%).

The fall in registrations was particularly strong in the

last quarter and this leads us to expect that the

negative trend will continue into 2002.

The competitive pressure on selling prices that we had

already noted in 2000 was even stronger in 2001,

especially in the markets where registrations

contracted. This was also the result of the fierce

competitiveness in the transport sector, which forces

customers to try to achieve efficiency upstream of the

process, in other words when they buy their vehicles.

The high renewal rates of the vehicle fleet seen in

recent years also continue to exert considerable

pressure on prices of second-hand vehicles, the supply

of which exceeds the absorption capacity of the

European market.

In this market scenario, Iveco held its market share in

Western Europe stable at 11%. The result achieved in

Germany was particularly satisfactory, and market share

increased in spite of fierce competitive pressure, and

continues to grow. Good results were also achieved on

the Spanish market, where our market share bucked the

trend, increasing by 0.3 points to 18.4%.

In general, and in Italy in particular, the monthly market

share improved in the last quarter of 2001, when the

share was on the upswing and actually above that of

2000. The launch of a powerful product and the

normalisation of output after the floods late in 2000


Germany 50.0 -11.3 2.7 -2.4 5.5 0.5

France 46.2 -2.1 3.9 -9.9 8.5 -0.8

UK 32.9 1.3 2.5 -15.0 7.5 -1.5

Italy 26.0 -0.1 9.6 -5.9 36.9 -2.3

Spain 26.3 2.5 4.8 4.0 18.4 0.3

Holland 13.7 -2.6 0.3 -15.5 2.2 -0.3

Belgium 8.7 1.7 0.3 -9.3 3.6 -0.4

Austria 7.0 -6.2 0.3 -28.9 4.8 -1.5

Portugal 4.5 -7.8 0.4 16.8 8.4 1.8

Sweden 4.3 -9.0 0.0 -72.0 0.2 -0.3

Denmark 3.8 -1.4 0.3 -3.9 7.7 -0.2

Switzerland 4.4 32.4 0.5 149.5 11.5 5.4

Ireland 2.8 -11.6 0.2 13.3 7.8 1.7

Norway 2.3 -7.5 0.0 20.0 1.6 0.4

Finland 2.4 -1.7 0.1 -5.7 3.4 -0.2

Luxembourg 1.1 -17.2 0.0 -46.6 4.3 -2.4

Total 236.3 -3.1 26.1 -4.6 11.0 -0.2

B U S I N E S S U N I T H E A V Y 17

WESTERN EUROPE2001 REGISTRATIONS IN ABC CURVE ON MARKET UNITS>= 16.0 T GVW (HEAVY)

WESTERN EUROPEIVECO MARKET SHARE>= 16.0 T GVW (HEAVY)

97 98 99 00 01

16

12

8

4

0

Market Iveco registrations Iveco share

both contributed to this improvement, particularly in

the Italian and Spanish markets, which are traditionally

interested in this segment of the range.

The Eastern European markets continued to grow,

except for Poland. The volumes sold by Iveco were

good, especially in the markets of the former USSR,

with strong growth in Lithuania, and noteworthy sales

in Romania, Bulgaria and the Slovak Republic. Iveco's

share of the Polish market remained stable.

Sales of heavy Iveco vehicles in the Middle East and

Africa were very satisfactory, increasing by 36% overall

on 2000. In the Middle East, performance was

particularly good in Saudi Arabia, but volumes increased

significantly in many African markets too. Recognition of

the quality level attained by Iveco heavy range vehicles

gained ground during the year. Both the Network and our

customers acclaimed their superb working efficiency

considered to be on a par with the very best competition

in terms of fuel consumption and, more generally, in terms

of productivity.Where product innovation is concerned,

the most important event in the first half was the

introduction of the new Cursor 13 engine on the heavy

road range, which means that the entire European on-

road and construction site range is now equipped with

the Cursor engine. This product, which forms part of

the high power output (480 Hp) segment, generated a

significant increase in orders from this demand area as

reflected in the share recorded in the second part of

2001, as mentioned earlier.

All the activities for the launch of the new Stralis

vehicle were concentrated in the second half of the

year: the completion of the technical definition, the

start of mass production at the end of October, pre-

sale initiatives for large customers, and preparation of

the market launch envisaged for early 2002.

During the start-up phase and timing decisions great

care was dedicated to product quality; only after a fleet

of 25 vehicles dedicated to the field test had covered a

total of more than 5 million kilometres and only after

the defects found during the test had been eliminated,

was it decided to hold the market launch at the end of

January 2002.

The pre-sale activities for large customers marked a

new departure from traditional market launches; the

marketing and product personnel put a great deal of

commitment into the organisation of special meetings

with each potential customer. This made it possible to

spread awareness of the new product even before the

official launch, and above all to collect a large number

of orders. By the official launch at the end of January,

contracts for about 2000 vehicles had already been

stipulated, representing almost one quarter of the

expected total annual volumes.

Good foundations were therefore laid for 2002, and

Iveco heavy vehicles have what it takes to be

competitive in all segments of the market in terms of

performance and quality, in spite of the expected

downturn in demand in Europe.

18

The slowdown of the economy in Western

countries in 2001 also had a negative effect on

the diesel engine market, particularly as regards

products destined to goods transport,

construction machinery and energy generation.

In spite of the resulting slowdown in its growth

trend, in 2001 the Business Unit Engines managed

to limit the effects of the fal l in volumes,

defending its manufacturing levels and its sales.

During the year, 413,200 new engines were built

(416,500 sold), a 9% reduction on the previous

year, while sales of Euro 1,630 million were

recorded, 1.8% up on the Euro 1,600 million

recorded in 2000.

39% of the units sold met Iveco's requirements

for its own vehicle output (38% in 2000); 35%

(33% in 2000) was supplied to other Fiat Group

companies (CNH, Hitachi, Sevel), and the

remaining 26% (29% in 2000) went to external

customers.

If we consider the various areas of application,

the automotive sector sold 333,000 units

(367,000 in 2001); this 9% reduction is

attributable primarily to the widespread fall in

BUSINESS UNIT ENGINES


The NEF plant in Turin where

the 4- and 6-cylinderTector engine is produced.

B U S I N E S S U N I T E N G I N E S 19

demand for commercial vehicles, and was offset

by the more favourable product mix, which made

it possible to increase the value of sales.

In the power generation sector, 16,500 units

were sold (19,500 in 2000), a drop of 15% in

volume; this sector was conditioned by the

slowdown in demand for power generator units,

which began at the end of 2000, after years of

uninterrupted growth.

The fall in the agricultural mechanisation and

building sector was more limited, and 67,000

units were sold (approximately 70,000 in 2000)

with a 4% contraction.

The most significant events in the manufacturing

sector during the year, were:

- production of the 3,500,000th 8140 engine in

the Foggia plant.

This milestone crowned over twenty years of

success for this engine, which is now

manufactured not only in Italy, but also in China

and Brazil. The quality and performance of the

engine continue to drive the Iveco Daily, Fiat

Ducato and Renault light commercial vehicles;

- the radical transformation and extension of the

Foggia plant to produce the new F1 range of light

engines and the crankshafts for all Iveco's light

and medium duty Diesel engines;

- the start of construction of the new 2H Energy

plant in Fecamp (France) to assemble electric and

cogeneration units, with rated power outputs

above 500 KVA; the new plant will be operative

before the end of 2002.

Where product development is concerned, in

2001 manufacture of the following new engine

models got underway:

The light F1A engine (2.3 l itres and 110 Hp),

which wil l gradual ly be introduced on Fiat

Ducato and Iveco Dai ly l ight commercia l

vehicles during 2002;

The Cursor 13 (12.9 litres and 540 Hp) which

completes the new range of engines for heavy

Cursor applications, gradually introduced over

the previous three years; this new engine is now

being fitted on the Iveco heavy Stralis vehicle;

The new "Horizontal" version of the Cursor 8

engine (from 245 to 352 Hp) to power Irisbus

low-floor buses;

Industrial versions of the Cursor 8, 10 and 13

(from 330 to 480 Hp) to power CNH combine

harvesters and forage harvesting equipment.

Strategies to develop engine business resulted in

the signature of a contract to supply 336 20-litre,

760 Hp V8 engines to Ansaldo Breda.

These engines, complete with transmission,

cooling system and electric generator for

onboard auxiliary equipment, will equip 83 trains

to be supplied to the Danish Railways from 2003.

International developments by the Business Unit

Engines included the consolidation of industrial

ventures in Brazil to manufacture the 8140 engine

for the Fiat Ducato and Iveco Daily light vehicles

(approximately 10,000 units manufactured in

2001), and in India to build 8000 series engines

for CNH India.

The engine range

wil l be further

e x t e n d e d a n d

revamped during

2002. Work wil l

begin on new models

i n c l u d i n g :

- 3, 4, and 6 cylinder

engines, from 50 to

220 Hp for CNH

agricultural and

construction

machinery;

- the Cursor 8

engine for port

applications with

500 Hp maximum

power output;

- the 760 Hp V8

engine for ra i l

The Foggia enginesplant: manufacture of the 3,500,000thengine of the 8140series confirms themore than twentyyears of success of this engine.

ACTIVITIES OF THE DIVISIONS


UNITS SOLD(%)

41%

20%

39%

Iveco

Fiat Group

Third Parties

ENGINE APPLICATIONS(%)

79.9%

11.6%

3.9%0.4%Automotive

Agricolture andConstructionEquipment

Industrial

Power Generation

Marine

4%

Irisbus

In a Western European market that accounted for

approximately 22,500 sales in 2001, Irisbus, the joint

venture created by Iveco and Renault, maintained second

place among bus makers, with 26.7% of the market.

Specifically, it consolidated its leadership in the French

market with 51.6%, and in the Italian and Spanish markets

where it achieved 45.1% and 26.2% respectively.

In 2001 Irisbus sold 9,517 vehicles; of these, 4,025

were long distance coaches, 3,923 town buses, and

1,569 minibuses and derived versions.

On the marketing front, Irisbus received important

orders during the year, winning public tenders for the

supply of town buses to the cities of Rome, Milan,

Turin, Madrid, Paris, Lille and Grenoble. It also won an

important tender to supply 300 methane driven buses

to the city of Athens, in preparation for the Olympic

games. The city of Lyons ordered the new Cristalis,

while the cities of Clermont Ferrand, Rouen and Las

Vegas chose the new Civis urban transport system.

The success of the EuroRider, MyWay, EuroClass,

Recreo, Iliade and Ares ranges in the long distance

coach market continued, the latter now also available

in a 15 metre version.

Activities linked to the development of new

maintenance and repair contracts were pursued in all

European markets. Measures to integrate the two

product ranges, from the design of new vehicles to

product quality, were intense, as were activities linked

to the application of the new Euro3 approved engines.

Important capital spending programmes got underway

regarding the implementation of the Civis project, an

innovative mass urban transport vehicle with

conventional, electric and hybrid drive, featuring low

emissions, excellent access, interior mobility, quiet

operation and outstanding comfort.

In January 2002, as established by the agreements

signed at the end of 2001 with Renault, Iveco acquired

propulsion and power generation. These are

extremely important models which will extend

the Iveco product range , increasing its

competit iveness and opportunit ies for

penetration in the free market and to non-Fiat

original equipment manufacturers.

21S P E C I A L T I E S

The new Civis transport system has been chosen bythe cities of Clermont Ferrand,Roven and Las Vegas.

a further 15% share in the company, thus gaining

control of Irisbus with 65% of the share capital.

Defence vehicles

In 2001, a total of 1,665 vehicles were manufactured

for the Italian Army and the export market, including:

569 model 40.10 WM, 28 model 90.17 WM and other

special vehicles, spare parts and various industrial

components.

The new generation tactical trucks designed to meet the

latest operational requirements of the armed forces, have

progressed from the study stage to the prototype stage.

Prototypes of the Light Multirole vehicle (LMV) are

currently being tested and evaluated by a number of

armies, including the Italian Army, while the Medium

Multirole vehicle (MMV) is undergoing homologation.

Production of the above vehicles is expected to start

next year, on the basis of contract deadlines.

During 2001, maintenance and repair activities were

performed for a significant portion of the Italian

Army's fleet of trucks.

Deliveries of the heavy and light armoured vehicles

manufactured by the Iveco Fiat – Oto Melara

Consortium under ongoing contracts continued

regularly: 33 Ariete tanks were invoiced to the Italian

Army out of a contract for 200 units, to be joined by a

further 12 units in 2002, and the final 15 Centauro

vehicles of a contract for 22 units were delivered to

the Spanish Army.

The industrialisation projects begun in 2000 were

completed and the assembly line for another two long-

term contracts for the Italian Army also got underway:


In the course of 2001,Eurofire confirmed its

position as leadingmanufacturer of

fire-fighting vehicles in Europe and a world

leader for ladders.

the Puma light armoured vehicle (560 units, 180 of

which of the 4x4 version and 380 of the 6x6 version),

and the Dardo crawler troop carrier and fighter

vehicle (total of 200 units).

After homologation of the pre-production runs, both

products will progress to mass production during

2002.

In the field of light and heavy armoured vehicles, we

should mention the acquisition of an important second

contract with the Spanish army for the supply of a

further 62 Centauro vehicles to Spain, confirming the

customer's satisfaction with this product.

The U.S. Army has asked for the operational tests in

Washington State of 16 Centauro armoured vehicles

lent by the Italian Army to be extended from 2 to 3

years; at the same time the Iveco Fiat – Oto Melara

Consortium extended its global service contract to

maintain the efficiency of this fleet of armoured vehicles.

The order book of the Defence Vehicles Division

guaranteed work for the next 4 years, particularly in

the area of light and heavy armoured vehicles and

related parts.

Astra

Astra production is divided into three product lines:

heavy quarry and construction site vehicles, high

mobility heavy tactical military vehicles, and dump

trucks (12, 28 and 40 tonne rigids and 25 and 30 tonne

articulated vehicles).

2001 was a year of consolidation and development for

the division, with the launch of new products such as

the new Dumper range with Euro 3 engines.

A total of 1,602 vehicles were invoiced in 2001 (1,870

in 2000, a 14.3% decrease), and sales totalled Euro 187

S P E C I A L T I E S 23

million (Euro 214 million in 2000).

This contraction was due primarily to the lower sales

of military vehicles and the slowdown in demand for

articulated dump trucks from the U.S. market.

Astra maintained its share of the Italian market for

heavy construction vehicles at 17%, while exports

accounted for approximately 21% of sales,

consolidating the growth in exports in recent years. In

2001, the production of articulated dump trucks begun

in 2000 progressed successfully with the sale of 107

vehicles, 75 of which were distributed through the

Case New Holland international network.

The company's strongpoint continues to be the quality

and reliability of its products and its ability to meet

customers' requirements, with regard to both the

HD7/c civilian line and the SM military range

(marketed in 4x4, 6x6 and 8x8 versions).

Where the latter was concerned, a total of 85 vehicles

was successfully exported through the Iveco Defence

Division to the Spanish and Irish armies.

Manufacture of the new HD7/c civilian range was

begun in 2001; the vehicles are powered by the new

Iveco Cursor engines which meet Euro 3 emissions

standards, and they feature significantly higher

technological performance levels which the market has

clearly appreciated.

In December the company's fibreglass cab production

was outsourced to a technological partner, a leader in

the plastic processing field, to allow the company to

focus more consistently on its core business.

Fire-fighting vehicles

The Iveco Eurofire company heads up all Iveco's

production and marketing activities in the fire-fighting

field. In 2001 Eurofire confirmed its position as leader of

the European fire-fighting market and world leader of

the ladder market. Four companies co-exist in the

Eurofire group, all renowned for their top performance

and long, successful manufacturing tradition:

- Iveco Magirus Brandschutztechnik GmbH (Germany)

- Camiva SA (France)

- Iveco Mezzi Speciali (Italy)

- Lohr Magirus (Austria)

In 2001, sales totalled Euro 208.1 million, a 6% increase

on the previous year. A total of 1,235 units were sold,

including outfitted vehicles and outfits.

Orders received by all the sub-segments reflected a

consistent 20% increase on the previous year, to

underline the progress made by the Eurofire group in

the international fire-fighting market.

Significant projects and orders, particularly from the

export markets, reflect the growth of the export

sector which accounted for 50% of the total volumes

invoiced.

Renault VI's withdrawal from Eurofire made it possible

to speed up the process of integration, and the

achievement of structural synergies and efficiencies.

Particular importance was attributed to the

exploitation of potential synergies between design,

purchasing and manufacturing activities, to generate

greater efficiency, designed to reduce product costs

and speed up the definition of product development

programmes.

The start of industrialisation of the new range of

automatic ladders and pumps for fire-fighting applications,

both contributed to the achievement of ambitious cost

cutting targets.

Product development activities focused on the

completion of the airport range with new versions of

the Dragon range and the extension of the 6x6 Impact

range.

A special fire-fighting vehicle designed specifically for

tunnel rescues was studied using the most innovative

technologies.

The introduction of Euro 3 engines on the Iveco Chassis

range was studied as part of the general cost reduction

programme as a means of maximising efficiency.

For 2002, a significant level of orders is expected as

well as a significant growth in sales and good

profitability from sales.

24

Iveco's globalisation strategy is concentrated primarily in

four areas with a high growth potential: the Mercosur area,

China,Turkey and India. Some of these areas, such as China

and the Mercosur area, are already very important

markets, where Iveco has undertaken significant

investments, directly or through joint-ventures.

Brazil

In 2001, the Brazilian economy, which began the 1st quarter

with great optimism, became significantly weaker in the two

central quarters, affected by the worsening crisis in Argentina,

electricity rationing, and the slowdown of the world economy.

In spite of the negative influence of events abroad, GDP grew

by 1.5% in 2001. The surplus of US$ 2.6 billion and direct

investments worth US$ 23 billion made it possible to stabilise

the rate of the Real against the Dollar and to improve the

country's risk rate. The austerity applied to management of

public sector accounts also enabled the country to meet the

targets agreed with the IMF for 2001. Inflation stood at 7.7%,

marginally above the target of 6% set by the Government. In

the last part of the year economic activities began to recover

and this trend seems to be confirmed in 2002: a slowdown of

inflation, forecast at 5.5%, GDP growth of approximately 3%,

the suspension of electricity rationing, a reduction in interest

rates, better exploitation of installed industrial capacity, a

record harvest and a further improvement in public finances

(in line with the agreements with the IMF). In 2001 the

commercial vehicle market in Brazil maintained its positive

trend (4.2% the light range and 1.9% the heavy range), while

total volumes stabilised at 73,000 vehicle registrations.

In this context Iveco sold over 4,600 vehicles (15.2% up on

2000), with a significant improvement in the Daily range, built

in Sete Lagoas, 3,200 of which were sold (+15.6%),

consolidating its position as new leader in the 3.5 to 6 tonnes

GVW segment.

Argentina

In 2001, the Argentine economy recorded a strong

recession for the third consecutive year. GDP contracted

by 4% and the situation is expected to worsen in 2002.

The economic and financial crisis exploded at the end of

the year with the collapse of the Government, the formal

declaration of default on its foreign debt and the

substantial devaluation of the Peso by about 100%.

The Argentine commercial vehicle market continued to

feel the effects of the country's difficult economic

situation, and registrations in 2001 totalled 8,500 units,

50.6% down on the previous year (in December alone it

recorded a fall of over 80%). Iveco sales totalled 1,160

units (down 45.8%), while market share increased for all

the ranges, from 11.9% in 2000 to 16.8% in 2001.We must

underline the performance of the Daily range, which

climbed from 14% in 2000 to 21.4% in 2001.

Venezuela

In Venezuela, 2001 was, like 2000, a good year in terms of

economic growth, which increased by 2.7%. Carefully

controlled devaluation (approximately -9% against the U.S.

Dollar) and falling inflation (12.3% compared to 13.4% in

2000), helped to create a positive economic environment. In a

strongly growing market (+31.5% for a total of 9,600 units)

Iveco sold 1,800 vehicles, a 34% increase on 2000, for 18.7% of

the market (18.4% in 2000).To this we must add 240 vehicles

sold to countries in Central America and the Caribbean.

Turkey

The Turkish economy in 2001 suffered its worst crisis of

the last twenty years brought on by an 8% decline in Gross

National Product, devaluation of the local currency by

105% against the Euro, and inflation of 70%. In spite of this,

the International Monetary Fund, the World Bank and the

European Union showed their faith in the country with a

massive loan plan, linked to a series of structural reforms

which are now being implemented. The market for light

commercial vehicles with GVW above 3.5 tonnes

contracted in 2001 to 25,000 units, and the partners in the

Otoyol joint venture increased their market share to 9.7%,

selling 2,425 vehicles, 343 of which were imported. Exports

sales were buoyant, totalling 1,421 units. In 2001, Iveco

Otomotiv Ticaret A.S., a full-range dealership owned entirely

by Iveco, and a centre of excellence for technical service to

heavy vehicles, began operations.

China

Chinese Gross Domestic Product expanded in 2001 by

over 7% which, although marginally lower than in 2000, was

still one of the best performances in Asia, in line with the

average growth rate of recent years. This growth was

substantially sustained by the continuous flow of direct

foreign investments and by the Government's commitment

OPERATIONS IN THE STRATEGIC AREAS


O P E R A T I O N S I N T H E S T R A T E G I C A R E A S 25

to invest in infrastructure. At the end of 2001 China finally

entered the WTO, and succeeded in its bid for the Olympic

Games of 2008. The country confirmed its substantial

solidity in the face of the economic troubles hindering the

development of other countries in the area. The

automotive market confirmed its growth of previous years,

and expanded by over 13 percentage points to 2,363,665

units. The commercial vehicle market expanded by more

than 5 points to 818,500 units.The heavy industrial vehicle

segment accounted for much of this growth, totalling

147,000 units and increasing by over 75 points on 2000;

this impressive market growth was sustained by the

expansion of demand in the sector of heavy transport and

public works. Medium duty vehicles, on the other hand,

remained stable at the previous year's levels (162,750

units), while the market for light vehicles contracted

marginally, primarily as a result of the fall in the demand for

vehicles in rural areas. The bus market grew by over 17%

to about 824,000 units. The best performance was in the

large bus (11,400 units, +48%) and medium bus (47,900

units, +34%) segments. In the light bus segment, where

Naveco (the 50-50 joint venture between Iveco and the

Yuejin Group) operates, the market grew by over 11%,

accounting for 276,000 vehicles. Sales by Naveco were

13,511 units (including 2,200 chassis cabs and vans), which

represents a downturn on the previous year, due to

increasingly aggressive competition both in terms of new

products and of cost cutting. The passenger transport

sector is also favouring larger vehicles (30 seats) than

those in the Daily range. CBC-Iveco, a new joint venture

set up in China in May 2001 (25.2% Iveco and 74.8% CBC

Group at the end of 2001), has sold 3,560 units since its

creation (2,833 complete buses and 727 CKD chassis kits),

with sales totalling Reinmimbi 645 million from May to

December. CBC-Iveco operates in the medium (7 to 10

metres) and large (over 10 metres) bus segments, and

market demand for town and out-of-town vehicles in

China in 2001 totalled 59,000 units, an increase of

approximately 36% on the previous year.The joint venture

controls a 10.4% share of the total market. Output of

gearboxes by Haveco (33% Iveco, 33% Yuejin Group, 33%

Hangzhou) increased significantly to 23,000 units (15,000

units in 2000), thanks in part to the acquisition of orders

for two family car programmes which will raise output to

60,000 gearboxes in 2002.

India

Indian market demand for commercial vehicles, regarded

as a leading indicator of economic activity, showed a

declining trend for year 2001 as for 2000. Overall, sales

dipped by 6.2% to around 144,900 vehicles in 2001

(154,400 vehicles in 2000). The demand slowdown was

particularly significant in the light commercial vehicle

segment (GVW from 3.5 to 7.5 tonnes).This segment saw a

decline of 10.5% in 2001 and was reduced to 56,000 vehicles

from 62,200 units in 2000. The market for medium and

heavy weight commercial vehicles (GVW above 7.5

tonnes), which is of particular interest to Iveco business,

was also affected slightly by this economic slowdown.This

segment fell by 3.3% in 2001, a decrease in sales from

92,000 vehicles in 2000 to approximately 89,000 vehicles

in 2001. Ashok Leyland Ltd, Iveco's Indian partner company,

also recorded a fall in overall sales to 30,700 units in 2001

(34,500 in 2000). Fierce competition from the market leader

Tata Engineering (Telco), to grab the reduced market, also saw

a 3% dip in Ashok Leyland's market share to 34% in the

medium and heavy vehicle segment.

OPERATIONS IN OTHER COUNTRIES

In 2001, Iveco sold 1,061 vehicles in Australia, where the

market totalled 18,100 units, taking 5.9% of the market

(4.8% in 2000). The recovery was particularly significant in

the heavy vehicle segment (GVW above 15.5 tonnes),where

Iveco achieved 13.9% of the market (11.8% in 2000).

In South Africa, Iveco sold over 600 vehicles in 2001, in line

with forecasts. During the year the new Daily was launched,

taking its place in a market segment where Iveco increased

its share from 6% in 2000 to 9% in 2001, and immediately

winning an important public tender for 104 ambulances, 80

of which were invoiced during the year.Where exports are

concerned, sales were stable in spite of a sluggish market,

and there are signs of a recovery during 2002.

Where medium and heavy vehicles are concerned, in 2002

the new electronic engines will be introduced and the new

6x4 range for on-road applications will also be launched.

And finally, Ethiopia was hit by a serious economic crisis in

2001. In this context, and in spite of a fall in sales to 122

units (200 fewer units considering direct sales as well),

Amce maintained its market share.

26

Financial services (Transolver Finance)

The Transolver Finance group of companies manage

both financing activities for the distribution network,

and financing and leasing activities for end customers

on the major markets.

In 2001, Transolver Finance considerably expanded its

activities in all the markets in which it is present with

its own operating structure: France, Germany, Italy,

Spain, Switzerland and the United Kingdom. A

Transolver organisation also finances sales in Brazil.

The portfolio of financing and leasing contracts for end

customers amounted to 99,091 units at December 31,

2001 (86,000 units at the end of the previous year) for

a total value of approximately Euro 2,100 million.

During 2001, 43,225 new financing and leasing

contracts were stipulated, up 30% on 2000.

A total of 34,441 contracts were stipulated for new

Iveco vehicles, a 24.8% increase on the previous year,

bringing the level of vehicles financed to 30% of the

total of Iveco sales.

A further 8,784 contracts provided financing for

second-hand vehicles, buses, trailers and semitrailers.

There were also significant increases in this sector of

activity over the previous year.

The highest percentage of Iveco vehicle sales financed

was recorded in Germany, where over 42% of sales

were financed by the local Transolver Finance company.

In France this percentage was about 29% on average, with a

particularly good performance in the heavy vehicle segment.

In Italy and Spain there was a significant increase in the

volumes financed compared to the previous year (an

increase of 30%).

The first full year of operations of the Transolver

companies in the United Kingdom and Switzerland

achieved satisfactory levels.

In Brazil the system set up to finance local sales became

fully operative during the year, and stipulated 1,588

contracts, a 28% increase on 2000 (1,245 contracts).

In January 2002 the companies in the Transolver

Finance group changed their name to Iveco Finance.

Rental services (Fraikin and Transolver Service)

In 2001, there was significant growth in business

volumes and in the fleet of commercial vehicles

managed by Fraikin and Transolver Service in Europe.

More generally, on the major markets, the acquisition

of new long-term rental contracts was very much in

line with the previous year, with 6,681 new contracts

and 2,831 renewed contracts.

By the end of 2001, the fleet of vehicles rented by

Transolver Service and Fraikin had reached about

37,000 units, a 9.7% increase on 2000, due in part to

the implementation of important long-term rental and

fleet management contracts signed at the end of 2000

with 3 large operators in the food and postal sectors

(Agrigel, La Poste and Geodis).

On December 31, 2001, the fleet was made up of:

28,669 vehicles in France, 5,173 in the United

FINANCING AND SERVICE ACTIVITIES

1999 2000 2001

Retail 12,907 12,720 14,301

Leasing 8,672 14,372 20,140

Contract Hire 984 8,732 9,512

Total 22,563 35,824 43,953

NEW CONTRACTS BY PRODUCT (*)

(*) renewals included


99 00 01

20,000

16,000

12,000

8,000

4,000

0

Con

trac

ts (

unit)

NEW CONTRACTS BY PRODUCT

F I N A N C I N G A N D S E R V I C E A C T I V I T I E S 27

Kingdom, 1,290 in Spain, 1,184 in the Benelux, 383 in

Italy, 150 in Germany and 120 in Portugal.

Without considering the important French fleet, which

expanded by a further 4% on 2000, the remainder of

the European fleet amounts to 8,305 vehicles, a 35%

increase (6,132 vehicles at the end of 2000), thus

underpinning the development of Iveco's services

activities on all European markets, reflecting the

deregulation and maturity of these markets.

During the year there was significant growth in the

United Kingdom (+23%), a huge increase in Spain (over

50%) as a result of the strong growth of the long-term

rental concept, and the acquisition of the new

important contracts mentioned above.

Transolver Service also launched its rental activities in

Germany together with the Iveco network, but it had

to limit its development in Italy because the existing

law making it impossible to rent vehicles with a gross

vehicle weight above 6 tonnes remains in place.

On the other hand, acquisitions of new short-term

rental contracts, where Fraikin France is the most

important supplier, contracted significantly, the sign of

an economic slowdown noted in the second half of

the year.

For its part, LEV, the Fraikin subsidiary that leads the

French market for short-term rentals of vehicle

accessories (telescopic accessories, mechanical booms,

lifts, etc.), with a fleet of 1,517 units, had to face fierce

competition from new operators in a developing market,

and this translated into a significant fall in prices.

1999 2000 2001

Light 12,401 19,396 25,524

Medium 3,687 7,359 8,181

Heavy 6,475 9,069 10,248

Total 22,563 35,824 43,953

NEW CONTRACTS BY RANGE (*)

1999 2000 2001

Italy 8,271 9,749 12,514

France 4,912 12,286 14,285

Germany 5,610 7,703 6,343

Spain 2,858 3,409 4,672

UK 912 2,251 3,306

Other — 426 2,833

Total 22,563 35,824 43,953

NEW CONTRACTS BY COUNTRY (*)



99 00 01

27,500

22,000

16,500

11,000

5,500

0

99 00 01

15,000

12,000

9,000

6,000

3,000

0

Con

trac

ts (

unit)

NEW CONTRACTS BY RANGE

Con

trac

ts (

unit)

NEW CONTRACTS BY COUNTRY


CUSTOMER SERVICE

In 2001, the main trends in the market for after-sales

service to Iveco vehicles were: increased attention to

vehicle productivity on the part of the customer and

shorter average ownership times, the stability of the

fleet on the road, and technological improvements on

the latest generations of vehicles which allow the

customer to spend less on maintenance.

As a result, in 2001 the mix of spare parts sales focused

increasingly on maintenance and repair work, which

caused heightened competitive tension on these

products.

In collaboration with its dealer network, Iveco anticipated

this market trend by developing a range of products that

was more suited to the customer's new expectations:

maintenance contracts, specialist service, extension of the

range towards "Full Service", e-Service, etc.

In 2001, the extension of Iveco's collaboration with

Hays Logistics made it possible to reach the set targets

in terms of the level of service to customers and of

efficiency related to distribution costs; what is more, the

transfer of the Madrid distribution centre to a new site

in Azuqueca de Henares will bring a significant reduction

in warehouse overheads.

This collaboration with Hays has also led to a drastic

redesign of the spare parts distribution system which

will involve all aspects of the logistic chain, from

suppliers to plants, the five spare parts distribution

centres and dealers, right down to the vehicle repair

workshops.

The goal of this project is to anticipate the new

distribution scenarios that will develop in Europe and to

achieve efficiency in terms of global logistic costs.

In the context of the Ramses project, which is intended

to strengthen Iveco's partnership with its network and

to develop parts sales and services to end customers,

the commercial and logistic integration of nearly all the

dealers was concluded in 2001.

On the Italian and Spanish markets, nearly all sales by

local dealers (respectively 83% and 97%) were

managed by this integrated system, while 54% of sales

by Germany dealers and 15% of those in the Benelux

were also included in the system.

The Ramses system also regards the issue of all-

inclusive service offers at set prices and the

management of promotional packages, allowing the

customer to access the promotional catalogue via the

Internet and to book maintenance appointments at any

participating Iveco workshop.

In 2001, approximately 70 promotional ventures were

launched through the system in all European markets,

with the participation of over 2000 service centres.

What is more, instruments were distributed and

perfected to support decision-making processes in the

commercial area of the Business Unit.

This made it possible to increase the margin on more

high tech and replacement products by 8.5%, and to

increase the effectiveness of the Iveco commercial

resources in the field, in order to create greater

efficiency between the partnership and the network,

and to boost its share of the Customer Service market.

Technical activities primarily regarded the evolution of

diagnostic instruments.

From a technological viewpoint we should underline the

improved diagnostic capabilities of the instruments and

the use of teleprogramming on electronic control units,

both made possible by the collaboration of Eltrac, our

traditional supplier in this field.

In January 2001 the operative launch of the Customer

Support Centre in Turin was completed; its goal is to

increase the network's capacity for repairs and, more in

general, to improve after-sales services by close

contacts with customers.

This pole of excellence can boast the very best

professional skills in the field of diagnosis, technical

training and workshop methods.

The main activities performed at the Centre include:

- Technical training: technical and service training for the

whole network, adopting the latest technologies (Virtual

Simulator);

- Diagnostics: two divisions which interface respectively

with the engineering, design and development

structures, and with the BU Customer Service, to

29R E P O R T O N O P E R A T I O N S

meet a growing demand for technologically advanced

diagnostic instruments for the electronic control units

on Iveco vehicles;

- Client Centre: the multifunctional centre in Turin

which acts as a single operational centre for Iveco Non-

stop Assistance services.

The new technical training centre for the French service

network was inaugurated in Trappes at the end of June.


Early in 2001, activities to modify central and outlying

systems were completed to allow the Euro to be used

in all internal management processes and for the

exchange of information with dealers and suppliers.

In the field of infrastructure, procedures to design the

communications network for interaction between Iveco

premises and those of its partners got underway. It will be

introduced in Europe during 2002 and will subsequently

be extended to the rest of the world.

The policies for the security of information were also

defined; a methodology was developed to define the

protection plan which will be applied in full in 2002,

and projects to develop the safety and control

infrastructure were also defined and launched.

In view of the fact that the main I.T. systems to

support company processes are now functionally and

technologically dated, and therefore costly,

preliminary inquiries were begun related to the

introduction of ERP and CRM software products in

the company, and they will be implemented in the

coming years.

Other management and computer systems were also

developed and implemented, and we should mention:

PRP (Product Representation Process)

The various functions in the Product Definition,

Technology and Commercial areas were consolidated.

In addition to this, the commercial function was

launched on the Benelux market and will be extended

to other European markets during 2002.

NEXT Programme

Important activities were performed regarding Lean

Production. In the context of the "Programme Stability"

Project, as part of the extended value chain, the

processing logics related to the sourcing of bought out

materials were reviewed.

And to rationalise the use of information regarding

product structure, the question of the "Reduction of

Product Complexity" was analysed.

INCAS (Iveco New Cost Accounting System)

Following a review of the process of Industrial

Accounting Control, which saw the introduction of ABC

(Activity Based Costing) in its Core processes, the new

INCAS system of Industrial Accounting was introduced,

based on Business Intelligence instruments.

REMOS (REMarketing Operational System)

The second-hand vehicle management system was

completed, with new functions regarding the logistic

process to manage vehicles becoming available at the

Hildesheim second-hand centre (Germany).The system will

be extended to the other European markets during 2002.

RAMSES

The Customer Service support system (RAMSES) was

consolidated with introduction of new functions making

it possible to determine the market's potential for

absorption (Potential) and the different attribution of

sales targets to dealers (European Commercial System),

and to monitor the level of the service supplied to the

end customer (Commercial Monitoring). The system

was implemented in the major European markets, a

process that will be concluded in 2002.

HRMS

During 2001 the HRMS system to support the

processes of human resources development and

management incorporated the assessment functions

known as Management Review, Management by

Objectives, Assessment of Work results and the

Assessment Programme for new graduates.

e-BUSINESS

In the field of e-business, in 2001 Iveco developed and

launched the "Human resources portal", the "Iveco.com

Corporate Portal", the "Marketplace of Second-hand

vehicles" and five "professional communities". And the

launch of the new Stralis heavy vehicle was also

supported by the Internet.

INFORMATION TECHNOLOGY

31

2001 saw both the implementation of the new method

to develop professional skills, and a particular

commitment on the training front, sustained by the

activities of the Change Management Platform. This

initiative, in which the company has invested the energy

and enthusiasm of a group of ten Professionals occupied

full time (Change Agents), was launched with the aim of

supporting the cultural change with which Iveco is

tackling the growing demands for product quality and

operating profitability. The most significant activities of

the Platform included the first stage of the Q3200

training programme in the last quarter of the year; it

addressed the questions of the improvement and re-

engineering of processes, and involved over 2,300

Professionals. The Q320000 programme is destined to

affect the company's entire workforce. Still on the topic

of training, the "Iveco: Building a Leading Company"

programme involved 300 managers and focused on the

acquisition of a clearer, more extensive vision of the

company's strategies and priorities.

Besides training activities, several initiatives reflected

the growing attention that Iveco pays to its personnel

and, in particular to specific groups of the company's

workforce. One significant example is that of young

graduates, in favour of whom several initiatives were

launched, including assessment and guidance related to

their professional development, backed up by

personalised feedback (the Feedback Intensive

Programme), and a dedicated convention, the 2001

edition of which focused on projects to re-engineer

some of the company's key processes (Graduates

Convention).

As part of activities organised by the Fiat Group to

obtain feedback regarding the internal climate, the

People Satisfaction Survey 2001 monitored the level of

satisfaction on the job (ISL) and the level of

identification with the company (ILA) of over 3,000

Professionals. In the majority of cases, the results of the

survey confirmed the effectiveness of improvement

measures that emerged from the 2000 edition. Analysis

of 2001 data revealed a significant improvement on the

results of 2000, which were already good (+5.9% for ISL,

+2.8% for ILA), laying the foundations for further action,

the goal being to encourage a spiral of continuous

improvement.

A huge organisational and methodological effort

accompanied the Next programme promoted by the Fiat

Group to re-engineer company processes.Where Iveco is

concerned, Next was combined with the existing Cost

Quality Plan, applying the Business Process Re-engineering

method (BPR) to the company's core activities, with the

dual aim of cutting the operating costs of the Iveco

"system" and raising the quality of its products.

2001 was also a year of intense development in the field

of I.T. systems, starting with those dedicated to human

resources, like the Human Resources Management

System and Data Warehouse, thanks to which line

managers are gradually being involved directly and

systematically in the evaluation and auditing of

personnel working for Iveco.The purpose of this project

is to make fully operative an organisational model based

on the principle of "self service", thanks to which line

managers really manage their own resources. In parallel

with these systems, the new Iveco Intranet system,

known as the e-Portal, was launched in 2001, thanks to

which a considerable mass of information is now shared

and accessible by all users of the company network.The

e-Portal also provides access to company applications

and is a significant step towards the development of a

computer support shared by the whole of Iveco.

In the area of collective management, the use of

instruments designed to increase the flexibility of labour

continued in 2001. During the year, use of these

instruments was mainly positive, except for the final

part of the year when there was a turnaround caused by

a contraction in demand.

In Italy in particular, tried and tested forms of flexibility for

new employees (part-time, weekends) were combined

with extensive recourse to forms of temporary work

(with peaks of over 1,000 workers in the various

manufacturing centres in the first half of the year).

There was significant turnover among the workforce. If

on one hand outsourcing operations continued at a

slower rate than the previous year (about 260 people in

HUMAN RESOURCES



Europe), the number of personnel leaving the company

remained high, and involved over 3,100 employees.

More than 3,000 people were taken on during the year

at various levels; of these 1,158 were hired under short-

term contracts, while changes to the consolidation

perimeter due to acquisitions accounted for another

160 people. As a whole, the total number of Iveco

employees stabilised at 35,340 (down 512 on the

previous year).

Where labour costs are concerned, the increase in

inflation rates in Italy and Germany, and particularly

Spain, proved to be higher than expected. This made it

difficult to put a brake on wage increases which grew by

an average of 3% over the year for Europe as a whole.

R E P O R T O N O P E R A T I O N S 33

In January 2002, the Iveco Group acquired a further 15%

of the share capital of the Irisbus Holding, raising its

stake to 65%, under the terms of the agreement reached

with Renault at the end of 2001, which will enable Iveco

to acquire full control of Irisbus by the end of the year.

Also in January, as part of the agreement with a Chinese

partner, Iveco Spa paid the second instalment of $10

million into the joint venture CBC-Iveco Ltd. in the

form of a capital increase.

The complete incorporation of Irisbus into the Iveco

organisation and the new business opportunities arising

from the agreement with CBC in China, will enable

Iveco to become the most important manufacturer in

the world bus market.

In order to strengthen the dealer network in Spain,

and to control the Barcelona area in particular, on

January 15, Iveco Pegaso acquired control of Zona

Franca Alari Sepauto S.A. from a third party.

As for new products, the launch of the Stralis range

powered by Cursor 10 and Cursor 13 engines rounded

off by the 540 Hp version, crowns the development

process concerning Iveco heavy on-road vehicles that

began in 1998 and introduces equally essential novelties

in terms of operating economy, and reduction in costs

of maintenance, operating flexibility, comfort and safety.

Market prospects for 2002 are not good, in fact a

significant downturn of demand is expected, particularly

in Western Europe.

In spite of this scenario, the company remains

committed to guaranteeing positive levels of profitability

and to reducing its financial requirements, and as a

result the enormous effort that will go into the

restructuring plan in order to limit the impact of this

negative trend, will be of fundamental importance.

EVENTS OCCURRING AFTER THE CLOSE OF THE YEAR

34 C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

CONSOLIDATED FINANCIAL STATEMENTS

Analysis of operating results and financial position 35

Consolidated balance sheets 40

Consolidated statements of operations 44

Consolidated statements of cash flow 46

Notes to the consolidated financial statements 47

Report of the indipendent auditors 78

Ten-year highlights 79

The companies in the Iveco Group 80

CONTENTS

35C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

In 2001, the consolidation perimeter of the Iveco Group was modified by the line-by-line consolidation of the

following:

- Iveco Otomotive Ticaret A.S.: Turkish dealer owned 100% by Iveco Spa which provides after-sales service for

Iveco heavy vehicles and sales activities as part of the Otoyol network;

- Transolver Lease GmbH and Transolver Finance E.F.C. SA (the latter was consolidated on a proportional basis

of 50% in 2000);

- Transolver Services GmbH;

- Mediterranea de Camiones SL: a former Iveco Pegaso dealer and now a marketing company based in Valencia

(Spain);

and by the line-by-line consolidation of Irisbus Australia Pty Ltd. in the Irisbus Holding.

The operating results for the year are summarised in the brief Income Statement and the Notes that follow:

ANALYSIS OF OPERATING RESULTS AND FINANCIAL POSITION

Summary of the consolidated Income Statement (Euro million)

2001 2000 % Change

Revenues from sales 7,627.6 7,819.7 (2.5)

Revenues from sales of services 1,022.5 791.4 29.2

Net revenues 8,650.1 8,611.0 0.5

Other revenues 531.1 648.3 (18.1)

Value of production 9,181.2 9,259.3 (0.8)

Cost of materials 4,995.2 5,130.2 (2.6)

Cost of services 1,367.1 1,220.8 12.0

Cost of labour 1,336.9 1,359.0 (1.6)

Other expense 1,211.3 1,060.1 14.3

Cost of production 8,910.5 8,770.2 1.6

Operating profit 270.7 489.2 (44.7)

Financial income and expense (145.5) (144.5) 0.7

Adjustments to financial assets (3.0) (6.4) (54.1)

Extraordinary income and expense (233.9) (61.4) n.s.

Income tax (11.2) (130.2) (91.4)

Minority interest (1.7) (0.3) 427.4

Net profit (124.6) 146.3 (185.2)


Total net revenues for 2001 came to Euro 8,650 million, more or less in line with the previous year. This item

takes in revenues from sales of vehicles and spare parts amounting to Euro 7,627.6 million, down Euro 192 million,

or 2.5% compared to the year before, offset by an increase of 29.2%, or Euro 231.1 million with respect to 2000

in the item “revenues from services and financial and leasing activities” which shows a total of Euro 1,022.5

million. Like-on-like, total net revenues are in line with 2000.

The “other income and revenues item” shows a total figure for the year of Euro 531 million compared to Euro

648 million of the year before. In detail, variations are due to the item “Change in work in progress, semi-finished

and finished products inventories” which varies from Euro –3.9 million to Euro –35.6 million for the current year,

to “internal production” of vehicles destined for intercompany sale to leasing companies which shows a total

amount of Euro 270 million with an increase of 30% compared to 2000 and the item “other income and revenues”

for a total amount of Euro 297 million.Total costs of production came to Euro 8,911 million, an increase of 1.6%

over the year before. More specifically, the costs of raw materials, supplies and merchandise show a fall of 2.6%

on the year before, consistently with the decline in sales, with a percentage of production costs on sales of 58%;

a fall of 1.6% was also recorded in the labour cost item and an 8.3% decline in the item other charges. Research

and development costs incurred during the year were entirely charged to the Statement of Operations and

amounted to Euro 215 million. A sharp rise in the item “Expenses in financial services companies” of 93% was

recorded compared to the previous year, the total being Euro 83 million compared to Euro 43 million in 2000.

This change is due to an increase in the turnover of the finance companies.

The Operating profit amounted to Euro 271 million (Euro 489 million in 2000) and represented operating

profitability of 3.2% of net revenues, lower than in 2000 (5.7% of net revenues).

This contraction was determined primarily by the combined effect of:

- the fall in sales volumes of all the products marketed and, to a lesser degree, a marginal reduction in prices for

the vehicle ranges;

- and the lesser impact of income from the disposal of assets compared to the previous year, which included the

significant profit from the sale of the Urbanitas real estate company.

Net financial expense amounted to Euro 145.5 million (Euro 144.5 million in 2000); if we ignore the positive effect

of the Euro 11.9 million tax credit on dividends (Euro 11.7 million of which related to dividends which Iveco Spa

received from Astra), a phenomenon that was absent the previous year, net financial expense came to Euro 157.4

million, an increase of Euro 12.9 million on 2000, primarily the result of a higher level of indebtedness during the

second half of the year, the dramatic increase in interest rates which impacted on the indebtedness of American

companies (mainly in Argentina and Brazil) and consequently on financial expense, and the emergence of

commercial and financial exchange rate differences payable related to the Sterling and Dollar exchange to the

Euro (albeit to a lesser degree than in 2000, thanks to more efficient hedging of exchange rate risks).

Income from non-consolidated investments was negative for Euro 3 million (negative for Euro 6 million in 2000),

and was influenced by the alignment of a number of affiliated investments to their equity values.

During the year, the balance between extraordinary income and expense was negative for Euro 234 million, a

deterioration of approximately Euro 173 million on the previous year. The cause of this deterioration is to be

found in the important restructuring plan that affected Iveco's activities in Argentina during the year and, more

generally, in the implementation of important operating efficiencies, and as a result Euro 105 million was allocated

to cover extraordinary expense. This item includes extraordinary expense related to changes in the accounting

of certain expenses related to personnel, and to extraordinary costs met to limit production losses due to the

interruption in supplies of essential components caused by the floods that hit Northern Italy in the second half

of October 2000, the effects of which continued into 2001, as we mentioned earlier.

C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S 37

Income tax amounted to Euro 11.2 million; this breaks down into Euro 29.6 million for IRAP (on a par with 2000),

Euro 30.8 million for other taxes and Euro 49.2 million for deferred tax credits. The net balance resulting from

the sum of other taxes and deferred taxes is positive for Euro 18.4 million as a result of the reduction in current

taxes due to the pre-tax loss.

Financial trends during the year are described briefly in the Balance sheet and Notes that follow:

Net tangible fixed assets increased by Euro 8 million, from Euro 2,279 million to Euro 2,287 million, primarily as

a result of:

- new capital spending totalling Euro 718 million (Euro 656 million in 2000), of which Euro 370 million for

industrial investments (Euro 350 million in 2000), primarily related to the completion of the plant to produce light

vehicles in Brazil, a new plant to produce shafts for light and medium duty engines, the restyling of the new Stralis

heavy vehicle and the development of new engine families (the new F1A engine for light vehicles), and Euro 348

million (Euro 306 million in 2000) to expand the contract hire vehicle fleet;

- depreciation of Euro 344 million (Euro 364 million in 2000), of which Euro 132 million (Euro 159 million in 2000)

related to Contract Hire vehicles;

- the negative effect (Euro 12 million) of the conversion of investments in companies with currencies of account

other than the Euro, at year-end exchange rates;

- disposals and other changes totalling Euro 355 million (Euro 320 million in 2000), deriving primarily from

Summary of the consolidated Balance sheet (Euro million)

31/12/2001 31/12/2000 % Change

Fixed assets

Tangible fixed assets 2,286.7 2,278.9 0.3

of which vehicles under operating lease 397.5 449.0 (11.5)

Assets under financial lease 770.0 568.0 35.6

Other fixed assets 671.8 714.2 (5.9)

Current assets

Inventories 1,530.1 1,555.1 (1.6)

Trade receivables 1,009.1 1,129.8 (10.7)

Financial receivables 2,816.9 1,860.2 51.4

Cash and cash equivalents, securities and bonds 405.3 246.5 64.4

Other assets 515.0 456.8 12.7

Total assets 10,004.9 8,809.4 13.6

Stockholders' equity 1,768.4 1,983.8 (10.9)

Liabilities

Reserves for risks and charges 880.9 812.4 8.4

Trade payables 2,239.2 2,266.0 (1.2)

Financial payables 4,129.0 2,766.9 49.2

Other liabilities 987.4 980.2 0.7

Total liabilities and stockholders' equity 10,004.9 8,809.4 13.6


structured leasing operations on the Fraikin fleet for Euro 267 million (Euro 200 million in 2000).

Other fixed assets amounted to Euro 672 million (Euro 714 million in 2000), decreasing by Euro 42 million; this

change is primarily the effect of the disposal of the investment in Fidis Spa in January, the alignment of investments

in associated companies to their equity value, and capital spending during the year.

Working capital decreased by Euro 143 million, from Euro 125 million to Euro (18) million, as result of the Euro

121 million decrease in trade receivables due to increased discount and securitisation operations undertaken

during the year and to measures taken to reduce overdue accounts, and of the Euro 25 million decrease in

inventories; current liabilities (trade payables and other net payables) gave rise to a hedge of Euro 83 million.

Shareholders' equity decreased from Euro 1,984 million at 31 December 2000 to Euro 1,768 at 31 December

2001; the shareholders' equity pertaining to Iveco totalled Euro 1,703 million (down Euro 211 million), primarily

as a result of the extraordinary expense and charged to the year.

This decrease in Shareholders' equity was primarily the result of the loss for the year (Euro 125 million), dividends

paid (Euro 64 million) and exchange rate differences from the conversion of financial statements in currencies

other than the Euro (loss of Euro 21 million).

The net financial position at 31/12/2001 revealed net indebtedness of Euro 211 million (Euro 223 million in 2000),

an improvement of Euro 12 million during the year.

The following table illustrates the main financial flows that produced this change:

Summary of Cash Flow (Euro million)

Net Financial Position at 31/12/2000 (223)

Cash flow generated/absorbed by operating activities

Net profit plus depreciation and amortisation 284

Net income from non-consolidated investments 3

Net change in provisions 75

Change in current assets and liabilities 143

505

Cash flow generated/absorbed by investment activities

Investment in tangible fixed assets and vehicles under operating lease (718)

Investment in intangible fixed assets (65)

Disposal of tangible fixed assets and vehicles under operating lease 355

(428)

Changes in consolidation area (1)

Dividends paid (64)

Net Financial position at 31/12/2001 (211)


The net financial position showed a marginal improvement on 2000 due to the joint effect of cash flow (net

income plus amortisation and depreciation) generated during the year, amounting to Euro 284 million, and to

efforts to reduce operating capital (Euro 143 million).

Funds generated by the year's operations (Euro 505 million) exceeded the cash absorbed by investment activities

(Euro 428 million, net of disposals), the demand generated by the changes to the consolidation area (Euro 1

million), and payment of the dividend to shareholders (Euro 64 million).

The structure of the net financial position at 31 December 2001 is illustrated in the following table, and compared

with that at 31 December 2000:

Structure of the net financial position (Euro million)

31/12/2001 31/12/2000 Change

Liquid assets and marketable securities 405.3 246.5 158.8

Short and medium/long-term financial receivables 2,867.6 1,887.2 980.4

Assets granted in leasing 770.0 568.0 202.0

Accrued income and prepaid expenses 15.1 6.0 9.1

Total financial assets 4,057.9 2,707.6 1,350.3

Short-term financial payables 2,511.9 1,523.5 988.3

Medium/long-term financial payables 1,616.5 1,334.8 281.7

Accrued expenses and deferred income 140.5 71.8 68.6

Total financial payables 4,268.8 2,930.2 1,338.6

Net Financial position (210.9) (222.6) 11.6

Analysis of the financial position reveals a higher percentage of financial receivables against the total invested,

which increased by Euro 980 million on 2000, primarily as a result of the increase in sales financing activities by

Transolver finance companies.

Assets granted in leasing at 31 December 2001 represented a net value of Euro 770 million, having increased by

Euro 202 million; this was the result of new loans granted for Euro 466 million, net of amortisation and

depreciation for Euro 193 million and reimbursements for Euro 71 million.

The increase in financial indebtedness, related partly to the refinancing of increased investment in financial assets

(hedged by medium-term indebtedness with rate structures consistent with the assets financed) and partly to the

increased indebtedness arising from the greater funding requirements and the worsening financial situation in

Latin America, but also to the effects of the crisis in Argentina.


ASSETS

(THOUSAND EUROS)

CONSOLIDATED BALANCE SHEETS AS AT DECEMBER 31, 2001 AND 2000

Notes December 31, 2001 December 31, 2000Amounts due from stockholders’for shares subscribed but not called — —

Fixed assetsIntangible fixed assets 1Start-up and expansion costs 23,023 32,680 Research, development and advertising expenses — — Industrial patents and intellectual property rights 9,516 11,167 Concessions, licenses, trademarks and similar rights 47,750 50,491Goodwill 17,633 19,515 Intangible assets in progress and advances 24,847 22,013 Other intangible assets 24,624 3,753Differences on consolidation 341,256 354,299 Total 488,649 493,918

Property, plant and equipment 2Land and buildings 651,568 701,390Plant and machinery 674,558 645,874 Industrial and commercial equipment 200,019 209,262Other assets 471,949 533,775 Construction in progress and advances 288,607 188,601Total 2,286,701 2,278,902

Financial fixed assets 3Investments in:

Unconsolidated subsidiaries 18,803 24,740 Associated companies 69,812 57,963 Other companies 38,596 105,805

Total Investments 127,211 188,508

Receivables from:Unconsolidated subsidiaries:

Due within one year Total Receivables from unconsolidated subsidiaries — —Associated companies:

Due beyond one year Total Receivables from associated companies — —Parent companies:

Due beyond one year 2,953 908Total Receivables from parent companies 2,953 908Others:

Due within one year 40,019 12,348Due beyond one year 7,719 13,753

Total Receivables from others 47,738 26,101Total Receivables 50,691 27,009Other securities 5,227 4,719Treasury stock — —Assets leased 769,987 568,000 Total 953,116 788,236 Total fixed assets 3,728,466 3,561,056

Current assetsInventories 4Raw materials and supplies 367,004 391,644 Work in progress and semifinished products 204,804 207,360 Contract work in progress 5,910 1,787 Finished goods and merchandise 946,880 949,713 Advances to suppliers 5,454 4,577 Total 1,530,052 1,555,081


ASSETS

(THOUSAND EUROS)

Notes December 31, 2001 December 31, 2000Receivables 5Trade receivables:

Due within one year 1,003,357 1,126,655Due beyond one year 5,702 3,179

Total Trade receivables 1,009,059 1,129,834Receivables from unconsolidated companies:

Due within one year 1,713 — Due beyond one year

Total Receivables from unconsolidated companies 1,713 —Receivables from associated companies:

Due within one year 8,319 12Due beyond one year

Total Receivables from associated companies 8,319 12 Receivables from parent companies:

Due within one year — 61 Due beyond one year

Total Receivables from parent companies — 61 Other receivables:

Due within one year 360,335 287,965 Due beyond one year 112,972 133,062

Total Other receivables 473,307 421,026 Total 1,492,398 1,550,933

Financial assets not held as fixed assets 6Investments in

Other companies — —Total Investments — — Other securities 49,696 9,853 Financial receivables

Receivables from unconsolidated subsidiaries:Due within one year 2,455 448 Due beyond one year — —

Total Financial receivables from unconsolidated subsidiaries 2,455 448Receivables from associated companies:

Due within one year 28,932 29,879 Due beyond one year

Total Financial receivables from associated companies 28,932 29,879 Receivables from parent companies:

Due within one year 33,284 44,551 Due beyond one year 689 —

Total Financial receivables from parent companies 33,973 44,551 Receivables from others:

Due within one year 1,772,768 1,254,494Due beyond one year 978,738 530,782

Total financial receivables from others 2,751,505 1,785,276 Total financial receivables 2,816,866 1,860,154 Total 2,866,562 1,870,007Cash 7Bank and post office accounts 351,310 233,265 Checks 774 814 Cash on hand 3,491 2,526 Total 355,575 236,605Total current assets 6,244,587 5,212,627

Accrued income and prepaid expenses 8Other accrued income and prepaid expenses 31,863 35,739 Total accrued income and prepaid expenses 31,863 35,739

Total assets 10,004,916 8,809,422


LIABILITIES AND STOCKHOLDERS’ EQUITY

(THOUSAND EUROS)

Notes December 31, 2001 December 31, 2000Stockholders’ equity 9Stockholders’ equity of the GroupCapital stock 1,179,440 1,179,440 Additional paid-in capital 13,067 13,067 Legal reserve — —Treasury stock valuation reserve — —Retained earnings and other reserves 634,735 574,941Net result (124,578) 146,257 Total 1,702,664 1,913,705Minority interest 65,777 70,123 Total stockholders’ equity 1,768,441 1,983,828

Reserves for risks and charges 10Reserve for pensions and similar obligations 149,293 158,332 Income tax reserves 175,955 196,912 Other reserves 555,633 457,186 Consolidation reserve for future risks and charges — —Insurance policy liabilities and accruals — —Total reserves for risks and charges 880,881 812,430

Reserve for employee severance indemnities 11 213,349 225,431

Payables 12Bonds :

Due within one year — 3,632 Due beyond one year — —

Total bonds — 3,632 Convertible bonds — —Borrowings from banks :


Total borrowings from banks 1,290,348 442,169 Other financial payables :

Due within one year 1,678,311 1,082,787Due beyond one year 1,149,551 1,238,345

Total other financial payables 2,827,862 2,321,132Advances :

Due within one year 58,264 40,283Due beyond one year 82 63

Total advances 58,347 40,346 Trade payables :

Due within one year 2,192,889 2,238,827 Due beyond one year 19,827 27,179

Total trade payables 2,212,717 2,266,006Notes payable :

Due within one year 19,490 17,406 Due beyond one year 36 242

Total notes payable 19,526 17,648 Payables to unconsolidated subsidiaries :

Due within one year 2,449 141 Due beyond one year

Total payables to unconsolidated subsidiaries 2,449 141 Payables to associated companies :

Due within one year 11,648 4,016 Total payables to associated companies 11,648 4,016 Payables to parent companies :

Due within one year 5,356 7,166Total payables to parent companies 5,356 7,166

43

LIABILITIES AND STOCKHOLDERS’ EQUITY

(THOUSAND EUROS)

MEMORANDUM ACCOUNTS 14

(THOUSAND EUROS)

C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

Notes December 31, 2001 December 31, 2000Taxes payable :


Total taxes payable 164,554 153,534 Social security payable :


Total social security payable 56,856 57,641 Other payables :


Total other payables 125,691 164,254 Total payables 6,775,353 5,477,685Accrued expenses and deferred incomeOther accrued expenses and deferred income 13 366,892 310,048 Total accrued expenses and deferred income 366,892 310,048 Total liabilities and stockholders’ equity 10,004,916 8,809,422

December 31, 2001 December 31, 2000Guarantees grantedUnsecured guaranteesSuretyships :

On behalf of unconsolidated subsidiaries — —On behalf of associated companies — —On behalf of others 226,288 220,095

Total suretyships 226,288 220,095 Guarantees of notes:

On behalf of others 107,879 19,022 Total guarantees of notes 107,879 19,022 Other unsecured guarantees:

On behalf of unconsolidated subsidiaries — —On behalf of associated companies — —On behalf of others 571,681 660,504

Total other unsecured guarantees 571,681 660,504 Total 905,848 899,621 Secured guarantees:

On behalf of unconsolidated subsidiaries — —On behalf of associated companies — — On behalf of others 86,923 108,036

Total 86,923 108,036 Total guarantees granted 992,772 1,007,657 CommitmentsCommitments related to off-balance-sheet instruments 772,270 428,933 Commitments to purchase property, plant and equipment 333,835 412,665 Commitments for contracts in progress 13,616 12,896 Commitments for buy back 653,628 610,428 Other Commitments 28,281 62,074Total Commitments 1,801,630 1,526,996Third-Party assets held by the Group 112,995 113,351 Group assets held by third parties 848,802 349,860 Other memorandum accounts 37,368 43,810 Total memorandum accounts 3,793,567 3,041,674


CONSOLIDATED STATEMENTS OF OPERATIONS(THOUSAND EUROS)

Notes December 31, 2001 December 31, 2000Value of production 15Revenues from sales and services 8,646,349 8,610,682Change in work in progress, semi-finished and finished products inventories (35,599) (3,929)Change in contract work in progress 3,741 333Additions to internally produced fixed assets 269,541 207,402 Other income and revenues:

Revenue grants 5,352 6,074Other 291,789 438,748

Total other income and revenues 297,141 444,822Total value of production 9,181,174 9,259,310

Costs of production 16Raw materials, supplies and merchandise 4,995,237 5,130,204Services 1,367,070 1,220,803Leases and rentals 174,872 97,017 Personnel:

Salaries and wages 1,000,225 1,016,045Social security contributions 253,369 268,169 Employees severance indemnities 33,064 40,239 Employees pensions and similar obligations 23,706 16,555 Other costs 26,561 18,018

Total personnel costs 1,336,925 1,359,026 Amortization, depreciation and writedowns:

Amortization of intangible fixed assets 66,213 58,534 Depreciation of property, plant and equipment 343,829 364,369 Writedown of fixed assets — 850 Writedown of receivables among current assets and liquid funds 48,946 26,745

Total amortization, depreciation and writedowns 458,988 450,498Change in raw materials, suppliesand merchandise inventories (21,393) (23,080)Provisions for risks 305,626 264,029Other provisions 349 209 Other charges 209,862 228,723Expenses of financial services companies 82,970 42,723Insurance claims and other costsTotal costs of production 8,910,506 8,770,152Difference between the value and costs of production 270,668 489,158Financial income and expenses 17Investment income:

Unconsolidated subsidiaries 11,746 —Associated companies — —Other companies 225 109

Total investment income 11,971 109Other financial income

From long-term receivables:From others 651 383From securities held as fixed assets other than equity investments 261 25 From securities held as current assets other than equity investments 193 637 Other income from:Unconsolidated subsidiaries 33 —Associated companies — — Others 158,789 199,485 Total other income 158,822 199,485

Total other financial income 159,927 200,530


(THOUSAND EUROS)

Notes December 31, 2001 December 31, 2000Interest and other financial expenses

Unconsolidated subsidiaries 8 4Associated companies 44 12Parent companies 268 39Others 317,050 345,054

Total interest and other financial expenses 317,369 345,109Total financial income and expenses (145,471) (144,470)Adjustments to financial assets 18Revaluations of:

Equity investments 5,249 7,981Financial fixed assets other than equity investments — —Securities among current assets other than equity investments — —

Total revaluations 5,249 7,981 Writedowns:

Equity investments 8,197 14,362Financial fixed assets other than equity investments 2 9Securities among current assets other than equity investments — — Financial receivables — 35

Total writedowns 8,199 14,406 Total adjustments to financial assets (2,950) (6,425) Extraordinary income and expenses 19Income:

Gains on disposals 339 464Other income 2,692 26,973

Total income 3,031 27,437 Expenses:

Losses on disposals 1,252 4,693 Taxes relating to prior years 551 1,269Other expenses 235,108 82,890

Total expenses 236,912 88,852 Total extraordinary income and expenses (233,880) (61,415)Result before taxes (111,634) 276,848Income taxes 20 11,186 130,250 Result before minority interest (122,820) 146,598 Minority interest 1,758 341 Net result (124,578) 146,257


CONSOLIDATED STATEMENTS OF CASH FLOW(THOUSAND EUROS)

2001 2000

A) Cash at January 1 1,051,710 812,834B) Cash flows provided (used) by operating activities:

Net income before minority interest (122,820) 146,598

Amortization and depreciation 410,042 423,753

Change in reserve for employee severance indemnities (21,121) (25,961)

Net change in restructuring provision 31,070 (7,998)

Net change in other provisions 67,377 (2,952)

Result from non-consolidated investments 3,073 23,416

Change in current assets and liabilities:

Trade receivables 110,816 232,614

Inventories 25,029 (50,416)

Accounts payable (53,290) 34,760

Other 8,122 71,854

Reserve for income taxes and other reserves (20,957) 37,341

Changes in the scope of consolidation (566) (56,930)

Total 436,775 826,079

C) Total cash flows provided (used) by investing activities:

Investment in:

Fixed assets (718,271) (655,777)

Intangible assets and deferred charges (58,107) (76,819)

Proceeds from the sale of fixed assets 333,057 331,569

Change in financial receivables (835,932) (854,060)

Other (including effects of acquisitions and other changesin the composition of the scope of consolidation) (165,796) (142,552)

Total (1,445,048) (1,397,639)

D)Total cash flows provided (used) by financing activities:

Changes in long-term borrowings 284,094 914,174

Changes in short-term borrowings 1,067,183 (39,639)

Dividends paid (64,100) (64,100)

Total 1,287,176 810,435

E) Total change in cash 278,904 238,875

F) Cash at December 31 1,330,614 1,051,709

The detail of cash is as follows:

(thousand euros)

Cash on hand 355,575 236,605

Temporary investment of liquidity 925,343 805,251

Securities 49,696 9,853

Total 1,330,614 1,051,709


Form and Content of the Consolidated Financial Statements

The 2001 consolidated financial statements have been prepared in accordance with the rules introduced by the

Italian Legislative Decree No. 127 dated April 9, 1991, which fulfilled the Fourth and Seventh EC Directives.

The subsequent events described in the Report of Operations are an integral part of the notes to the

consolidated financial statements.

The consolidated financial statements include the financial statements of Iveco NV, the parent company, and of

all subsidiaries that constitute the Iveco Group, in which Iveco NV holds directly or indirectly more than 50% of

the voting capital or has de facto control. Also included are joint ventures in which the parent company holds

control directly or indirectly with other partners, consolidated using the proportional method.

Main changes from the previous year are summarized below:

Consolidation Line by Line in Iveco Group of:

- Iveco Otomotive Ticaret A.S.

- Transolver Lease GmbH

- Transolver Services GmbH

- Mediterranea de Camiones SL

- Transolver Finance E.F.C. SA (this Company was consolidated in 2000 with a proportional method 50%)

Consolidation Line by Line in Irisbus Holding of:

- Irisbus Australia Pty Ltd.

Principles of consolidation and significant accounting policies

The consolidated financial statements have been prepared from the statutory financial statements of the Group’s

single companies or subconsolidated financial statements of certain subsidiaries approved by the Boards of

Directors and adjusted, where necessary, by the Directors of the companies to conform with Fiat Group

accounting principles and to eliminate tax-driven adjustments. The Fiat Group’s accounting policy respects the

requirements set forth by Legislative Decree No. 127 of April 9, 1991, interpreted and supplemented by the Italian

accounting principles issued by the National Boards of Dottori Commercialisti and of Ragionieri and, where there

are none and not at variance, by those laid down by the International Accounting Standards Committee (I.A.S.C.).

In order to obtain a true and correct representation of the financial position and results of operations of the

Group, taking into account their functional integration, the financial subsidiaries have been consolidated on a line-

by-line basis. As a result, adjustments to the balance sheet and statement of operations format have been made

in applying Article 32 of Legislative Decree No. 127/91, which provides for changes to be made to obtain a more

clear, true and correct representation of the financial position and results of operations.

Principles of consolidation

Assets, liabilities, revenues and expenses, of subsidiaries consolidated on a line-by-line basis are included in the

consolidated financial statements, regardless of the percentage of ownership. Carrying values of investments are

eliminated against the subsidiaries’ related stockholders’ equity. The portion of stockholders’ equity and results

of operations attributed to minority interests are disclosed separately.

In accordance with Legislative Decree No. 127, differences arising from the elimination of investments against the

related stockholders’ equity of the investments at the date of acquisition are allocated, where applicable, to assets

and liabilities of the company being consolidated. The residual value, if positive, is capitalized as an asset

“Differences on consolidation”, and is amortized on the straight-line method over the estimated period of

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2001


recoverability. Negative residual amounts are recorded as a component of stockholders’ equity “Consolidation

reserve” (or as a liability “Consolidation reserve for future risks and charges”, when due to a forecast of

unfavorable economic results).

Unrealized intercompany profits, losses, and related tax effects are eliminated, together with all intercompany

receivables, payables, revenues and expenses arising on transactions between consolidated companies which have

not been realized with third parties.

The gross margin on intercompany sales is eliminated, with the exception of plant and equipment produced and

sold at prices in line with market conditions, in which case such eliminations would be effectively irrelevant and

not cost-beneficial. Also subject to elimination are guarantees, commitments and risks relating to companies

included in the area of consolidation.

The balance sheets of foreign subsidiaries are translated into Euro by applying the exchange rates in effect at year

end.The statements of operations of foreign subsidiaries are translated using the average exchange rates, except

for those subsidiaries operating in high-inflation countries (cumulative inflation in excess of 100% in three years),

in which case accounting principles for high inflation accounting are used.

Exchange differences resulting from the translation of opening stockholders’ equity at current exchange rates and

at the exchange rates used at the end of the previous year, as well as differences between net income expressed at

average exchange rates and that expressed at current exchange rates, are reflected in the stockholders’ equity

caption “Foreign exchange translation differences”. Such reserves relating to investments in subsidiaries or

associated companies are included in the statement of operations upon the sale of the investments to third parties.

Accounting principles

Balance sheet

Fixed assets

Intangible fixed assets

Intangible assets and deferred charges expected to benefit future periods are recorded at cost, adjusted by

amortization calculated on a straight-line basis over the period to be benefited. In particular, goodwill and

differences on consolidation are amortized over a period of not more than 20 years, taking into account their

expected period of recovery.The costs of researching and developing new products and/or processes are mainly

Major exchange rates versus Euro

2001 2000

Average End Average End

US Dollar per unit 0.896 0.881 0.924 0.930

Pound Sterling per unit 0.622 0.609 0.610 0.624

German Mark per unit 1.956 1.956 1.956 1.956

French Franc per unit 6.560 6.560 6.560 6.560

Italian Lira per unit 1,936.270 1,936.270 1,936.270 1,936.270

Spanish Peseta per unit 166.386 166.386 166.386 166,386

Netherlands Guilder per unit 2.204 2.204 2.204 2.204

Brasilian Real per unit 2.107 2.045 1.690 1.819

Argentine Peso per unit 0.895 1.472 0.924 0.929

Australian Dollar per unit 1.731 1.728 1.589 1.677

Swedish Krona per unit 9.252 9.301 8.446 8.831


included in the results of operations in the period in which such costs are incurred.

Goodwill represents the contractual amount paid for goodwill resulting from the acquisition of a company or investment.

Property, plant and equipment

Property, plant and equipment are recorded at purchase or construction cost. These values are adjusted where

specific laws of the country in which the assets are located allow or require revaluation, in order to reflect, even

if only partially, changes in the purchasing power of the currency. Cost also includes internal and external financing

expenses incurred up to the time the tangible assets are ready for use.

Depreciation is provided on a straight-line basis with rates that reflect the estimated useful life of the related

assets. Ordinary repairs and maintenance expenses related to property, plant and equipment are charged to the

statement of operations in the year in which they are incurred, while maintenance expenses which increase the

value of property, plant and equipment are capitalized.

Capital investment grants related to investments in property, plant and equipment are recorded as deferred

income when collection becomes certain and credited to income over the useful life of the related asset.

Financial fixed assets

Financial fixed assets include investments in unconsolidated subsidiaries, financial receivables held for investment

purposes and other securities.

Companies in which Iveco NV directly or indirectly holds from 20% to 50% of the voting capital are valued in

accordance with the equity method or recorded at cost when it approximates the value of stockholders’ equity,

when it would not have been practicable to obtain the necessary information for their consolidation on a timely

basis without disproportionate expense or because their activities are not significant.

Less significant investments in which Iveco NV directly or indirectly holds less than 20% of the voting capital are

valued at cost, corresponding to the cost of acquisition increased by direct charges or any amounts paid for the

value of additional shares purchased. In cases of permanent impairment, a valuation allowance is provided as a

direct reduction of the corresponding asset.

Financial receivables are recorded at estimated realizable value.

Securities are recorded at cost, including additional direct charges. In cases of permanent impairment, a valuation

allowance is provided as a direct reduction of the securities.

The investment in equipment leased is recorded at cost.The related depreciation is generally calculated based on

the life of the lease and the related risk in managing such contracts.

Current assets

Inventories are valued at the lower of cost or market, cost being determined on a First In First Out (FIFO) basis.

The valuation of inventories includes the direct costs of materials and labor and variable and fixed indirect costs.

Work in progress on long-term contracts is valued based on the stage of completion and is recorded gross of

advance payments received from customers. Eventual losses on such contracts are fully recorded when they

become known. Provision is made for obsolete and slow-moving raw materials, finished goods, spare parts and

other supplies based on their expected future use and realizable value.

Receivables are recorded at estimated realizable value. Unearned interest included in the nominal value of

receivables has been deferred to future periods. Receivables denominated in foreign currency are translated at the

exchange rate in effect at year end. Resulting exchange gains and losses are included in the statement of operations.


Reserves for risks and charges and employee severance indemnities

The reserve for risks and charges include provisions to cover losses or liabilities likely to be incurred but

uncertain as to the amount or as the date on which they will arise.

The reserve for pensions and similar obligations include provisions for long-service or other bonuses payable to

employees and former employees under contractual agreements or by law, determined on an actuarial basis

where applicable. In particular, pension funds are accounted for in accordance with IAS 19. Starting from 2001, in

order to improve the presentation of the effects deriving from actuarial gains or losses relating to Pension Plans,

the Group shifts to the "corridor" approach, allowed by IAS 19, from the "immediate recognition" methodology

applied in previous years.

The reserve for employee severance indemnities includes the liability for severance indemnities for Italian

companies accrued at year end for each employee and determined in accordance with labour legislation. In

particular, the liability includes a portion of the employee’s annual salary and is indexed for inflation in accordance

with Italian rules.

Restructuring reserves include the costs to carry out corporate reorganization and restructuring plans and are

provided in the year the Management formally decides to commence such plans, to the extent that such costs can

be reasonably estimated.

Payables

Payables are recorded at face value; the portion of interest included in the nominal amount is deferred until future

periods in which it is paid.Accounts payable denominated in foreign currency are translated at the exchange rate

in effect at year end. Resulting exchange gains and losses are included in the statement of operations.

Taxes payable includes the tax charge for the current year recorded in the statement of operations.

Accruals and deferrals

Accruals and deferrals are determined using the accrual method based on the income and expense to which they relate.

Memorandum accounts

Off-balance sheet financial instruments

Financial instruments used to hedge exchange and interest rate fluctuations and, in general, changes in the assets

and liabilities, are presented in Note 14. Off-balance sheet financial instruments are recorded at inception in the

memorandum accounts at their nominal contract value. Instead, financial instruments used for trading purposes

are valued at year-end market value and the difference compared to the nominal contract value is recorded in

the statement of operations under Financial income and expenses.

Statement of Operations

Revenue recognition

Revenues from sales of products are recognized at the moment title passes to the customer, which is generally at the

time of shipment. Revenues from long-term contracts are recognized using the percentage of completion method.

51

Revenues also include amounts received from financing leases, net of depreciation, and income from company

assets on operating leases.

Costs

Costs are recognized on an accrual basis.

Research and development costs are mainly charged to the statement of operations in the period in which they

are incurred. Research-related revenue grants provided by the Government or the EU are credited to the

statement of operations when collection becomes certain. The caption Leases and rental relate rental and,

according to the Italian regulations, the operating leases costs, included those carried out by Fraikin Group's

companies following the securitization of the fleet.

Advertising and promotion expenses are charged to the statement of operations in the period in which they are

incurred. Estimated product warranty costs are charged to the statement of operations at the time of sale

(accrual method).

Financial income and expenses

Income and expenses resulting from off-balance sheet financial instruments, as well as year-end exchange

differences, are included as financial income and expenses in the statement of operations in accordance with the

following policies.

Gains and losses relating to off-balance sheet financial instruments not designated as hedges are determined

based on the fair market value of such instruments and are included in the statement of operations.

For foreign exchange instruments designated as hedges, the premium or discount, representing the difference

between the spot exchange rate at the inception of the contract and the forward exchange rate, is included in

the statement of operations in accordance with the accrual method. Differences between the value of such

instruments using the exchange rates at inception and those at year-end are also included in the statement of

operations and offset the exchange effects of the items being hedged.

Costs relating to the factoring of receivables and notes of any type (with recourse, without recourse, securitization)

and nature (trade, financial, other) are charged to the statement of operations on an accrual basis.

Income taxes

Income taxes currently payable are provided for on the basis of reasonable estimates of the liability for the year,

in accordance with the existing legislation of the countries in which the Group operates.

Deferred tax liabilities or deferred tax assets are determined for the most significant consolidation transactions

and all the temporary differences between the consolidated assets and liabilities and the corresponding amounts

for purposes of taxation shown on the statutory financial statements of the consolidated companies.

In particular, deferred tax assets have only been recorded if there is a reasonable certainty of their future

recovery. Deferred tax liabilities, instead, are not recorded if it is unlikely that a future liability will arise.

Deferred tax assets and liabilities are offset if they refer to the same company. The balance from offsetting the

amounts is recorded in Other receivables in current assets, if a deferred tax asset, and in the Deferred tax

reserve, if a deferred tax liability.


52

2. Property, plant and equipment

(thousand euros) Net of Addi- Depre- Change in Reclassifi- Foreign Disposals Net of Accumulateddepreciation tions ciation the area of cations exchange and depreciation depreciation12/31/2000 consolidation effects other 12/31/2001 12/31/2001

Land and buildings 701,392 35,230 30,379 — (12,994) (15,483) (26,198) 651,568 463,606

Plant and machinery 645,874 67,644 98,013 29 85,156 1,402 (27,533) 674,558 1,203,656

Industrialand commercialequipment 209,262 48,418 58,851 — 8,281 677 (7,768) 200,019 579,791

Other assets 84,655 38,071 25,060 97 (2,555) (175) (20,535) 74,499 300,386

Vehicles onoperating leases 449,119 348,328 131,525 93 959 1,493 (271,018) 397,450 472,201

Constructionin progressand advances 188,600 180,580 — — (78,847) (148) (1,578) 288,607 —

Total property,plant and equipment 2,278,902 718,271 343,829 219 — (12,233) (354,629) 2,286,702 3,019,639


(thousand euros) Net of Additions Amortization Disposals, Net ofamortization reclassifications amortization

12/31/2000 and other 12/31/2001

Start-up and expansion costs 32,680 231 5,921 (3,967) 23,023

Research, developmentand advertising expenses — — — — —

Industrial patentsand intellectual property rights 11,167 227 2,009 131 9,516

Concessions, licenses, trademarksand similar rights 50,491 12,059 28,709 13,908 47,749

Goodwill 19,515 1,259 3,077 (63) 17,634

Intangible assets in progressand advances 22,013 17,901 — (15,068) 24,846

Other intangible assets 3,753 26,429 6,630 1,072 24,624

Differences on consolidation 354,299 6,839 19,868 (15) 341,255

Total intangible fixed assets 493,918 64,945 66,214 (4,002) 488,649

The decrease in 'Start-up and expansion costs' (9.7 million euros) is due to the amortization for 5.9 million euros

and to the difference in exchange rates of 4.0 million euros in Iveco Fiat Brasil Ltda and Iveco Latin America Ltda.

Increase during the year in the item ‘Concessions, licenses, trademarks and similar rights’ mainly concerns the

acquisition of the license IBM Catia for CAD and CAE, and the reclassification from 'Intangible assets in progress

and advances' for the software programmes to be used in Iveco processes.

The addition in 'Intangible assets in progress and advances' of 17.9 million euros concerns in particular an

acquisition in Iveco S.p.A. of software programs that refer to: PRP release 3, Oracle HRMS; Incas.

The increase in 'Other intangible assets' is mainly due to the capitalisation of know-how for the development and

industrialisation of the new model Stralis for an amount of 23.4 million euros.

COMPOSITION, PRINCIPAL CHANGES AND OTHER INFORMATION

Fixed assets

1. Intangible fixed assets


A limited part of the tangible fixed assets were revalued in past year as described in the accounting policies.The

residual net book value of these revaluations at December 31, 2001 after depreciation and disposals amounted

to 101.6 million euros (112.0 million euros at 2000 year end). A fixed assets revaluation booked in Iveco

Venezuela S.A. and Iveco Otomotive Ticaret AS, which operate in hyperinflationary economy, has been reported

in the item ‘Others’ for a total amount of 5.9 million euros.

Reclassifications primarily refer to a reduction in construction in progress and advances for the purchase of

property, plant and equipment existing at the end of the prior year which were reclassified at the time they were

effectively acquired and put into operation.

Foreign exchange effects for a negative amount of 12.2 million euros is principally due to the exchange effect in

Iveco Fiat Brasil Ltda, Iveco Latin America Ltda and Iveco Argentina SA.

Caption “Vehicles under operating leases” refers to value of assets of Fraikin Group and Transolver companies

under operating leases contracts.The additions in this item for an amount of 348.3 million euros is mainly due to

the renewal of the Fraikin fleet for an equivalent of 292.0 million euros.

Disposals of 271.0 million euros in the item ‘Vehicles under operating leases’ (227,4 million euros in 2000) is

mainly due to the securitization of a part of Fraikin Group fleet starting from 2000 year, through which the

invested capital has been reduced versus the development of innovative structured leasing operations. Future

lease payments under non cancellable Fraikin’s lease agreements are as follows (in million euros):

- year 2002: 93.9

- year 2003: 93.9

- year 2004: 93.9

- year 2005: 66.6

- year 2006: 38.1

The increase in 'Construction in progress and advances' is essentially due to the significant investments made by

the italian companies.

The depreciation rates % are not changed compared to the previous year.

Weighted average

Land and buildings 2.9% - 4.1%

Plant and machinery 5.2% - 17.7%

Industrial and commercial equipment 16.7% - 18.8%

Other assets 11.1% - 24.0%


3. Financial fixed assets

Investments

The movement in investments is as follows:

12/31/2000 Other Translation Dividends Share in result 12/31/2001movements differences received & valuation

adjustments

Unconsolidated subsidiaries 24,740 (5,920) 1,196 — (1,213) 18,803

Associated companies 57,963 14,823 675 (519) (3,130) 69,812

Other companies 105,805 (67,270) (1) (1,209) 1,270 38,595

Total investments 188,508 (58,367) 1,870 (1,728) (3,073) 127,210

On January 2001 the Iveco Group sold the investment in Fidis to Fiat Group and this movement is shown in the

column "Other movements" in the line "Other companies" for an amount of 67.3 million euros. In the same

column in the line "Associated companies" it is shown the increase mainly due to the acquisition of CBC-Iveco

Ltd for an amount of 14.5 million euros.

Investments are stated net of provisions for permanent impairment where considered necessary.

The detail of the share in results and dividends received is as follows:

(thousand euros) Dividends Sharereceived in result

Otoyol Sanayi — (2,064)

Otoyol Pazarlama 519 (539)

Iveco Motorsich — (571)

Iveco Ukraine — (642)

Ashok Leyland — (1,298)

Ennore Foundries — (32)

Haveco — 789

Iveco Uralaz — 3,048

Elasis 1,209 1,270

E.E.A. — (3,034)

Total 1,728 (3,073)

The investments by type of consolidation method, are analysed as follows:

(thousand euros)

(thousand euros) 12/31/2001 12/31/2000

Investments accounted for using the equity method 63,337 126,228

Investments valued at cost 63,875 62,280

Total investments 127,211 188,508


(thousand euros)

% Amount % Amount

Unconsolidated subsidiaries :

Fias 80.— 82 80.— 82

Financière Pegaso France 100.— 169 100.— 169

F. Pegaso S.A. 100.— 1,278 100.— 1,278

Finomina — — 60.— 32

Iveco Ukraine 65.909 11,517 58.— 11,393

Iveco Otomotive Ticaret — — 99.973 3,418

Iveco Motorsich 55.556 4,765 55.556 4,913

Transolver Service GmbH — — 100.— 750

Transolver Lease GmbH — — 100.— 775

V.I.O. — — 100.— 945

Transolver Finance AG 100.— 993 100.— 985

Total 18,803 24,740

At 12/31/2000At 12/31/2001

(thousand euros)

% Amount % Amount

Associated companies:

AFIN Leasing AG 40.— 1,600 — —

Atlas Vehicules Ind. SA. 48.985 853 — —

Auto Distribution Illiberis 49.— 1.208 49.— 1,208

CBC - Iveco Ltd 50.— 11,468 — —

C.R.F. 20.— 5,032 20.— 2,582

C.S.S.T. 30.— 155 30.— 155

E.E.A. 33.333 4,966 33.333 8,000

Elettronica Trasporti 50.— 66 50.— 66

Fiat OM Carrelli 25.— 5,171 25.— 5,171

SADI Brasil Ltda (ex Gesco Fortrade) 20.— 10 10.— 11

Haveco 33.333 9,908 33.333 8,727

Iveco Uralaz 33.333 4,462 33.333 1,131

Machen 30.— 9,312 30.— 10,642

Otoyol Pazarlama 27.— 961 27.— 1,823

Otoyol Sanayi 27.— 14,641 27.— 16,706

Vehiculos Industriales — — 20.— 1,170

Zona Franca Motor — — 20.— 571

Total 69,812 57,963

At 12/31/2000At 12/31/2001

As allowed by law, the above companies have not been consolidated either because it would not have been

practicable to obtain the necessary information for their consolidation in time or because their activities are

not significant.

Investments in associated companies are as follows:

The detail of the unconsolidated investments is as follows:

56

At 12/31/2000

Receivables

(thousand euros)

Due within Due beyond Total Due within Due beyond Totalone year one year one year one year

Parent companies 2,953 — 2,953 — 908 908

Unconsolidated subsidiaries — — — — — —

Others 40,019 7,719 47,738 12,348 13,753 26,101

Total receivables 42,972 7,719 50,691 12,348 14,661 27,009

At 12/31/2000At 12/31/2001

At 12/31/2000

Other securities mainly include marketable Government securities and bonds.

Assets leased consist of vehicles sold by the Iveco Sector under financial leases (Transolver companies).

Assets leased do not include vehicles on operating leases, which are included under property, plant and

equipment.

The increase of the leasing portfolio is essentially due to the growth of Iveco Finance Italy and Germany that have

reached a mature phase after the priors year launch.

Assets leased

(thousand euros) Value at Additions Depreciation Foreign Disposals Net of Accumulated12/31/2000 exchange and other depreciation depreciation

effects 12/31/2001 12/31/2001

Assets leased 568,000 456,222 192,521 — (71,414) 769,987 435,558


At 12/31/2001

Other Securities

(thousand euros)

Bonds held as permanent investments 5,227 4,719

Investments in other companies are as follows:

(thousand euros)

Other companies:

Fidis — 68,315

Truck & Bus Company 32,503 32,503

Elasis 2,640 2,578

Others 3,453 2,409

Total 38,595 105,805

At 12/31/2001

57

4. Current assets

Movements in the inventory allowance accounts during the year were as follows:

Net inventories of 1,530 million euros at December 31, 2001 show a decrease of 25.0 million euros compared

to the prior year (1,555 million euros at December 31, 2000), the decrease is split as follows:

- gross inventories decrease of 8.3 million euros.

- allowance for inventory writedowns increase of 16.7 million euros.

Inventories

(thousand euros)

Gross Allowance Net Gross Allowance Net

Raw materials and supplies 387,975 (20,971) 367,004 411,120 (19,475) 391,645

Work in progressand semifinished products 208,493 (3,689) 204,804 210,597 (3,237) 207,360

Contract work in progress 5,910 — 5,910 1,787 — 1,787

Finished goodsand merchandise 860,164 (104,614) 755,550 850,537 (95,799) 754,738

Used stock 239,587 (48,257) 191,330 237,303 (42,329) 194,974

Advances to suppliers 5,454 — 5,454 4,577 — 4,577

Total inventories 1,707,584 (177,532) 1,530,052 1,715,921 (160,840) 1,555,081

At 12/31/2000At 12/31/2001

(thousand euros) At Increase Foreign Change in the At 12/31/2000 (Decrease) exchange area of 12/31/2001

effect consolidation

Allowance forinventories writedown 160,840 16,622 (910) 981 177,532



5. Receivables

An analysis of receivables by due date is as follows:

(thousand euros)

Due Due Total Due Due Totalwithin beyond within beyond

one year one year one year one year

Third parties 835,212 5,702 840,913 956,790 3,179 959,969


Other companies 168,145 — 168,145 169,865 — 169,865

Total trade receivables 1,003,357 5,702 1,009,059 1,126,655 3,179 1,129,834

Other receivables from:

Employees 10,089 1,433 11,522 13,480 1,683 15,163

Tax authorities 210,920 108,911 319,831 156,027 124,996 281,023

Social security contributions 2,675 23 2,698 2,056 — 2,056

Others:Third parties 123,500 2,605 126,105 108,646 5,709 114,355

Others: Unconsolidated subsidiaries 1,713 — 1,713 — — —

Others:Associated companies 8,319 — 8,319 12 — 12

Others: Parent companies — — — 61 — 61

Others: Other companies 13,151 — 13,151 7,756 674 8,430

Total other receivables 370,368 112,972 483,339 288,038 133,062 421,100

Total receivables 1,373,725 118,673 1,492,398 1,414,693 136,241 1,550,934

At 12/31/2000At 12/31/2001


(thousand euros) At Accruals Decrease and Change in At12/31/2000 other the area of 12/31/2001

changes consolidation

Allowance for doubtful accounts 115,106 41,613 (23,429) — 133,291

(thousand euros)

Trade Other Total Trade Other Total

Third parties 840,914 — 840,914 959,969 — 959,969


Other companies 168,145 — 168,145 169,865 — 169,865

Total trade receivables 1,009,059 — 1,009,059 1,129,834 — 1,129,834

Other receivables from:

Employees — 11,522 11,522 — 15,163 15,163

Tax authorities — 319,831 319,831 — 281,023 281,023

Social security contributions — 2,698 2,698 — 2,056 2,056

Others:Third parties — 126,105 126,105 — 114,355 114,355

Others: Unconsolidated subsidiaries — 1,713 1,713 — — —

Others:Associated companies — 8,319 8,319 — 12 12

Others: Parent companies — — — — 61 61

Others: Other companies — 13,151 13,151 — 8,430 8,430

Total other receivables — 483,339 483,339 — 421,100 421,100

Total receivables 1,009,059 483,339 1,492,398 1,129,834 421,100 1,550.934

Receivables are shown net of allowances for doubtful accounts of 133.3 million euros at December 31, 2001

(115.1 million euros at December 31, 2000).

Movements in these allowance accounts during the year were as follows:

Receivables from tax authorities principally refer to the Italian tax authorities for VAT and income taxes.

They also include the tax credit regarding the advance payments of income tax maturing on employee severance

indemnities paid by the Italian companies according to the Italian law: the related interest income receivable

referring to the current year is recorded in Financial income and expenses. Furthermore, they include the net

balance of deferred tax assets of 183.4 million euros (152.8 million euros at December 31, 2000), accounted for

according to the accounting principle was previously described.Additional information on these assets is provided

in reserve for risks and charges under Deferred income tax reserve.

The decrease in trade receivables is mainly due to the higher level of securitization programs implemented and

to the reduction of overdue accounts.

At 12/31/2000At 12/31/2001

An analysis of receivables by nature is as follows:


(thousand euros)

Due Due Total Due Due Totalwithin beyond within beyond

one year one year one year one year

Third parties

Unconsolidated subsidiaries 2,455 — 2,455 448 — 448

Associated companies 28,932 — 28,932 29,879 — 29,879

Parent companies 33,284 689 33,973 44,551 — 44,551

Other companies 1,772,768 978,738 2,751,505 1,254,494 530,782 1,785,276

Total financial receivables 1,837,439 979,427 2,816,866 1,329,372 530,782 1,860,154

At 12/31/2000At 12/31/2001

Financial receivables amount to 2,816.9 million euros at December 31, 2001 (1,860.2 million euros at December

31, 2000) and show an increase of 956.7 million euros mainly related to higher level of activity of Transolver

financial companies, and to the temporary investments of liquidity on the Group Central Treasury. They are

shown net of an allowance for doubtful accounts of 22.7 million euros (16.4 million euros at December 31, 2000).

Movements in these allowance accounts during the year were as follows:

6. Financial assets not held as fixed assets

Securities

The caption includes an amount of 49,696 million euros (9,853 million euros as of December 31, 2000) of

marketable securities held as temporary investment of liquidity in Irisbus Group.

Financial Receivables

(thousand euros) At Increase Decrease and At12/31/2000 other 12/31/2001

changes

Allowance for doubtful accounts 16,366 7,416 (1,047) 22,735

The increase in item “Bank and post office account” is due to a grater level of cash in Iveco UK companies.

Cash recorded in the financial statements at December 31, 2001 and 2000 is in line with the fair value of the

respective periods.

7. Cash

(thousand euros) At 12/31/2001 At 12/31/2000

Bank and post office accounts 351,310 233,265

Checks 774 814

Cash on hand 3,491 2,526

Total cash and cash equivalent 355,575 236,605


9. Stockholders’ equity

(thousand euros) Paid-up Share Accumulated Accumulated Totaland premium translation results and other

called-up reserve differences reserves, net incomecapital for the year

Balance at January 1, 2000 1,179,440 13,067 (235,569) 860,570 1,817,508

Translation differences — — 17,055 — 17,055

Other movements — — — (3,015) (3,015)

Result of the year — — — 146,257 146,257

Dividend paid — — — (64,100) (64,100)

Balance at December 31, 2000 1,179,440 13,067 (218,514) 939,712 1,913,705

Translation differences — — (20,941) — (20,941)

Other movements — — — (1,422) (1,422)

Result of the year — — — (124,578) (124,578)

Dividend paid — — — (64,100) (64,100)

Balance at December 31, 2001 1,179,440 13,067 (239,455) 749,612 1,702,664

Share capital

At December 31, 2001 the authorized share capital amounted to 100,000,000 shares of Euro 46 (Euro in units)

of which 25,640,000 were issued and fully paid up.

Accumulated translation differences

They represent the cumulative difference arising on the translation of the equity of the consolidated companies

whose financial statements were prepared in foreign currencies.

Accumulated results and other reserves

Other reserves include surpluses arising on the tangible fixed asset revaluations recorded in past years

particularly in Italy under specific local laws and practices. The residual net book value of these surpluses is

disclosed in note 2. Under Italian law the surplus can be utilized to cover losses but in case of distribution it may

attract the taxation from which it was exempt on constitution.

8. Accrued income and prepaid expenses


Commercial accrued income

Accrued interest and commissions 1,258 5,307

Other 8,564 5,569

Total commercial accrued income 9,822 10,876

Commercial prepaid expenses

Interest 745 2,153

Other 6,222 16,721

Total commercial prepaid expenses 6,967 18,874

Financial accrued income 2,527 4,608

Financial prepaid expenses 12,547 1,381

Total accrued income and prepaid expenses 31,863 35,739


(thousand euros) Net equity Net profit Net equity Net profitAt 12/31/2001 2001 At 12/31/2000 2000

Statutory financial statements Iveco NV 2,110,184 (163,057) 2,307,207 124,211

Different valuation methodon tangible fixed assets (407,520) 38,479 (393,502) 22,046

Consolidated financial statements Iveco NV 1,702,664 (124,578) 1,913,705 146,257

The minority interest in stockholders' equity refers to the following companies consolidated on a line-by-line basis:

Dividend

The Shareholders decided on December 4, 2001 to distribute an amount of Euro 2.50 (Euro in units) per share as

interim dividend for the year 2001.This dividend amounting to 64.1 million euros, was paid on December 21, 2001.

Distributable results

The amount of accumulated net profit which is available for distribution is established in the official accounts of

Iveco NV, a copy of which is filed at the Amsterdam Chamber of Commerce.

The reconciliation to Stockholders' equity and net income of the parent company Iveco NV is as follows:

2001 2000% held by % held byminority minority

shareholders shareholders

Companies:

Amce, Ethiopia 30.00 30.00

Componentes Mecanicos, Spain 40.61 40.61

Iveco Eurofire (Holding), Germany — 15.00

Lohr Magirus,Austria 5.00 19.25

Iveco Fiat Brasil, Brasil 50.00 50.00

Transolver Finance EFC, Spain 50.00 —

Transolver Services, France 90.00 90.00

Ikarusbus, Hungary 23.47 23.47

Rhein Main, Germany 35.00 35.00

Minority interest

(thousand euros) 2001 2000

Balance at January 1 70,123 139,093

Changes during the year:

Change in consolidation area 4,835 (89,812)

Result of the year 1,758 341

Translation differences (2,737) (1,262)

Capital increase — 23,668

Dividends paid (1,678) (1,075)

Other movements (6,524) (830)

Balance at December 31 65,777 70,123

During the year 2001 Iveco Group has acquired the further 15% in Iveco Eurofire (Holding) from third parties.


The increase of the item "Other reserves" is mainly due to restructuring reserves that include the costs for

reorganisation and restructuring plans.

As indicated in the accounting principles, starting from 2001, in order to improve the presentation of the effect

deriving from the actuarial gains or losses relating to Pension Plans, the Group shifts to the corridor approach,

allowed by IAS 19, from the "immediate recognition" methodology applied in previous years.

The above change produced a net positive impact on the result of the year and on the shareholder's equity as of

December 31, 2001 of 20 million euros, including the effect of the restatement of the previous year financial

statements, accounted for in the caption Extraordinary expenses, as requested by the Italian GAAP.

Income tax reserves

The Deferred income tax reserve at December 31, 2001 includes deferred tax liabilities, net of deferred tax

assets, which have been offset where possible, in reference to the individual companies in consolidation. The

Deferred income tax reserve, net of Deferred tax assets recorded under Other receivables from others, is

composed as follows:

10. Reserves for risks and charges

(thousand euros) At 12/31/2001 At 12/31/2000 Change

Reserve for pension and similar obligations 149,293 158,332 (9,039)

Income tax reserves

Current income tax reserve 10,169 12,474 (2,305)

Deferred income tax reserve 165,785 184,438 (18,652)

Total income tax reserves 175,955 196,912 (20,957)

Other reserves

Warranty reserve 165,596 164,043 1,552

Restructuring reserves 55,115 24,045 31,070

Buy back reserve 86,352 80,121 6,231

Various liabilities and risk reserves 248,571 188,977 59,594

Total other reserves 555,633 457,186 98,448

Total reserves for risks and charges 880,881 812,430 68,451

(thousand euros) At 12/31/2001 At 12/31/2000 Change

Deferred income tax reserve 165,785 184,438 (18,653)

Deferred tax assets (183,430) (152,767) (30,663)

Total (17,645) 31,671 49,316

Deferred tax assets are included in Other receivables from tax authorities (see note 5).


The Deferred income tax reserve, net of Deferred tax assets recorded under Other receivables from others, can

be analyzed as follows:

The item 'Other' mainly includes the warranty reserve and other taxed provisions.

The Deferred tax reserve includes 100 million euros (94 million euros at December 31, 2000) of tax benefits

connected to tax loss carryforwards.

Other reserves

The various liabilities and risk reserves amount to 248.6 million euros at December 31, 2001 (189.0 million euros

at December 31, 2000) and represent the amounts set aside by individual companies of the Group principally in

connection with contractual and commercial risks and disputes.


Deferred tax liabilities for:

Accelerated depreciation 228.703 223,885

Deferred tax on gains 21.326 11,444

Capital investment grants 1.061 1,659

Other 60.871 58,581

Total deferred tax liabilities 311.961 295,569

Deferred tax assets for:

Reserves for risks and taxed charges 87.238 64,044

Inventories 25.915 23,974

Taxed allowance for doubtful accounts 35.754 16,344

Pension funds 4.672 3,765

Other 90.646 98,847

Total deferred tax assets 244.225 206,974

Theoretical tax benefit connectedto tax loss carryforwards 156.263 216,800

Adjustments for assets whose recoverability is uncertain(mainly tax loss carryforwards) (70.882) (159,876)

Total deferred income tax reserve, net of Deferred tax assets (17.645) 31,671


11. Reserve for employee severance indemnities

12. Payables

Payables may be analyzed by due date as follows:

(thousand euros) At Increase Decrease Change in the At 12/31/2000 and other area of 12/31/2001

changes consolidation

Reserve for employeeseverance indemnities 225,431 33,064 (45,146) — 213,349

The reserve for employee severance indemnities amounts to 213.3 million euros at December 31, 2001 (225.4

million euros at December 31, 2000) and reflects the severance indemnities accrued in favour of employees at

year-end by the companies in conformity with existing laws.

(thousand euros)

Due within Due beyond Of which Total Due within Due beyond Of which Totalone year one year due beyond one year one year due beyond

five years five years

Bonds — — — — 3,632 — — 3,632

Borrowings from banks 831,945 458,403 27,081 1,290,348 356,653 85,516 42,831 442,169

Other financial payables 1,678,311 1,149,551 372,125 2,827,862 1,082,787 1,238,345 25,783 2,321,132

Advances 58,264 82 — 58,347 40,283 63 — 40,346

Trade payables 2,192,889 19,827 — 2,212,717 2,238,827 27,179 — 2,266,006

Notes payable 19,490 36 — 19,526 17,406 242 — 17,648

Payables to unconsolidatedsubsidiaries 2,449 — — 2,449 141 — — 141

Payables to associatedcompanies 11,648 — — 11,648 4,016 — — 4,016

Payables to parentcompanies 5,356 — — 5,356 7,166 — — 7,166

Taxes payable 155,361 9,193 — 164,554 145,519 8,015 — 153,534

Social security payable 55,532 1,324 — 56,856 56,531 1,110 — 57,641

Other payables 119,479 6,212 — 125,691 157,178 7,076 — 164,254

Total payables 5,130,724 1,644,629 399,206 6,775,353 4,110,139 1,367,546 68,614 5,477,685

At 12/31/2000At 12/31/2001


(thousand euros)

Trade Financial Other Total Trade Financial Other Total

Bonds — — — — — 3,632 — 3,632

Borrowings from banks — 1,290,348 — 1,290,348 — 442,169 — 442,169

Other financial payables — 2,827,862 — 2,827,862 — 2,321,132 — 2,321,132

Advances — — 58,347 58,347 — — 40,346 40,346

Trade payables 2,212,717 — — 2,212,717 2,266,006 — — 2,266,006

Notes payable 11,204 8,321 — 19,525 10,329 7,319 — 17,648

Payables to unconsolidated

subsidiaries — 2,449 — 2,449 — 141 — 141

Payables to associated

companies 9,883 — 1,765 11,648 3,020 — 996 4,016

Payables to parent

companies 5,356 — — 5,356 36 — 7,130 7,166

Taxes payable — — 164,554 164,554 — — 153,534 153,534

Social security payable — — 56,856 56,856 — — 57,641 57,641

Other payables — — 125,691 125,691 — — 164,254 164,254

Total payables 2,239,160 4,128,980 407,213 6,775,353 2,279,391 2,774,393 423,901 5,477,685

At 12/31/2000At 12/31/2001

The increase in Payables (1,297.7 million euros) compared to December 31, 2000 is mainly due to the increase

in Financial payables of 1,354.6 million euros as a result of refinancing of the portfolio of the Transolver financial

companies.

The portion of medium and long-term financial payables due beyond one year amounts to 1,608.0 million euros

at December 31, 2001 (981.0 million euros at December 31, 2000).

The scheduled maturities are:

(thousand euros) 2003 2004 2005 2006 beyond 2006

Medium and long-term debtdue beyond one year 718,972 225,806 175,184 88,787 399,206

Payables may be analyzed by nature as follows:


(thousand euros) Less than From 5% From 7.5% From 10% Greater Total

5% to 7.5% to 10% to 12.5% than 12.5%

Total 2001 mediumand long-term debt 1,005 436 104 22 50 1,618

Interest rates of medium and long-term debt, including the instalments expiring within the next year, at

December 31, 2001 are as follows:

Financial accrued expenses include interest expenses on financial payables and financial deferred income includes

deferred interest income.

13. Accrued expenses and deferred income


Commercial accrued expenses

Accrued interest and commissions 27,270 27,102

Other 163,628 159,340

Total commercial accrued expenses 190,898 186,442

Commercial deferred income

Interest 1,902 2,426

Other 33,629 49,356

Total commercial deferred income 35,531 51,782

Financial accrued expenses 48,154 34,669

Financial deferred income 92,309 37,155

Total accrued expenses and deferred income 366,892 310,048


At December 31, 2001 Guarantees granted by the Iveco Group totaled 993 million euros (1,008 million euros

at December 31, 2000).

Other guarantees include commitments for receivables and bills discounted with recourse in the amount of

410.7 million euros (459.1 million euros at December 31, 2000). The volume of receivables discounted with

recourse in 2001 was 2,004.3 million euros (2,323.2 million euros in 2000).

Although not included in the memorandum accounts, receivables and bills discounted by the Group without

recourse having due dates beyond December 31, 2001 amounted to 1,183.0 million euros (in 2000, 1,273.4 million

euros with due dates beyond December 31, 2000).

14. Memorandum accounts


Guarantees granted

Unsecured guarantees

Suretyships:

On behalf of unconsolidated subsidiaries

On behalf of associated companies

On behalf of others 226,288 220,095

Total suretyships 226,288 220,095

Guarantees of notes:


Total guarantees of notes 107,879 19,022

Other unsecured guarantees:


On behalf of associated companies 50


Total other unsecured guarantees 571,681 660,504

Total 905,848 899,621

Secured guarantees


On behalf of associated companies


Total secured guarantees 86,923 108,036

Total guarantees granted 992,772 1,007,657


Commitments

Commitments amounted to 1,802 million euros as December 31, 2001 (1,527 million euros at December 31, 2000)

and the increase is principally due to commitments to "Off-balance sheet instruments-interest rate risk group"

of Fraikin group.

Commitments for buy back for the amount of 654 million euros as December 31, 2001 (610 million euros at

December 31, 2000) represent the repurchase value stipulated in the contract for vehicles sold under this kind

of sales scheme.

There are also some commitments for contracts to hedge foreign exchange risks of 363.4 million euros (428.9

million euros at December 31, 2000).

Such transactions, reflecting the notional principal amount, should not be subject to risks owing to non-fulfillment

by the counterparties insofar as the contracts are mainly entered into with Fiat Group's financial companies and

with several primary financial institutions. The contracts outstanding at December 31, 2001 will expire during

2002. The consolidated statement of operations includes the effects both of the contracts that expired in 2001

and the accruals for the contracts expiring after December 31, 2001 as stated in the accounting principles.

The Iveco Group’s financial policy attaches particular importance to the management and control of financial risks

in that they can significantly impact profits. The Group has adopted a series of guidelines regarding the

management of exchange rate and interest rate exposure.

The Group’s policy allows off-balance sheet financial instruments to be used only for managing exchange and

interest rate risks connected to monetary flows and assets and liabilities, and not for speculative purposes.

In 2001, foreign exchange risk management followed the aforementioned policy and maintained the character of

selectivity. The reduction in exchange exposure, substantially originating from the positive balance between

exports and imports, was based on the expected trend in exchange rates and the need to hedge the exchange

levels of reference without completely foregoing the benefits deriving from a favorable trend in the rates.

Also this year, the management of exchange risks was again based principally on a combination of currency options.

Finally, the European Union issued Directive 2000/53/CE relative to end-of-life-vehicles. This Directive, among

other things, provides that, in the future, vehicles manufacturers will have to bear all, or a significant part of the

cost arising from the collection, treatment and recovery of end-of-life vehicles. The above Directive should be

introduced into the national legislation of the individual member states by April 2002 and would become

applicable for all vehicles placed on the market starting from July 2002; beginning January 2007, instead, all vehicles

on the market will be covered, even those placed before July 2002.The Group is still evaluating the effect would

could arise national laws introducing this Directive, but in the absence of certain or reliable elements as to the

quantification of future expenses that will eventually be borne by the Group, no provision has been set aside in

the consolidated financial statements at December 31, 2001.


15.Value of Production

Revenues from sales and services and change in contract work in progress

Revenues from sales and services and change in contract work in progress amounted to 8,650.1 million euros in

2001 compared to 8,611.0 million euros in 2000.They include revenues from sales and services of 8,646.3 million

euros (8,610.7 million euros in 2000) and the change in contract work in progress of 3.7 million euros (0.3

million euros in 2000).

Capital gains from the sale of fixed assets of 40.8 million euros (156.4 million euros in 2000) of which 16.4

million euros are due to disposals regarding land & building of Iveco Mezzi Speciali and 8.1 million euros due

to the renewal of "vehicles under operating leases" in Fraikin group. Other income includes sundry income and

income which cannot be classified as revenues from sales and services.

The caption includes royalties, refunds of customs and export duties, miscellaneous cost recoveries.

Other income and revenues


Revenue grants 5,352 6,074

Capital gains 40,761 156,368

Investment grants 1,245 3,225

Other income 249,782 279,155

Total other income and revenues 297,141 444,822

Net revenues by area of destination may be analyzed as follows:


Italy 2,687,741 2,752,549

Europe (excluding Italy) 5,090,773 4,862,229

Mercosur and Central and South America 277,150 283,608

North America 3,638 10,400

Other areas 590,789 702,229

Total revenues from sales and servicesand change in contract work in progress 8,650,091 8,611,015


16. Cost of Production

The costs of production amount to 8,910.5 million euros (8,770.2 million euros in 2000), an increase of 1.1% compared

to 2000.The main components of this item and the changes that occurred during the year can be described as follows:

Raw materials, supplies and merchandise

Raw materials, supplies and merchandise amount to 4,995.2 million euros (5,130.2 million euros in 2000), a

decrease of 2.6% compared to 2000.The total is equal to 57.8% of revenues (59.6% in 2000).

Services

Services amount to 1,367.1 million euros (1,221 million euros in 2000), an increase of 12.0% compared to 2000.

This amount is equal to 15.8% of revenues (14.2% in 2000). Services include advertising costs, outside information

technology and telecommunication service costs, maintenance costs and transportation costs.

Leases and rental

The caption includes rental costs for 174,9 million euros (97,0 million euros in 2000) and, according to the Italian

regulations, the operating leases costs, included those carried out by Fraikin’s companies following the

securitization of the fleet, of 55,6 million euros.

Personnel

Personnel costs consist of the following:

Personnel costs, which amount to 1,336.9 million euros in 2001, are equal to 15.5% of revenues (15.8% in 2000).

The decrease is principally due to a reduction in the average number of employees (-363 units) in 2001

compared to 2000.

An analysis of the average number of employees by category is provided as follows:

Companies Companies Total Companies Companies Totalconsolidated on consolidated by consolidated on consolidated by

a line-by-line proportional a line-by-line proportionalbasis method basis method

Average number of employees

Managers 354 39 393 410 32 442

White-collar 9,677 1,793 11,470 9,653 1,615 11,268

Blue-collar 20,344 3,557 23,901 21,004 3,413 24,417

Total 30,375 5,389 35,764 31,067 5,060 36,127

Number of emloyeesas of 12/31/2001 29,934 5,406 35,340 30,466 5,386 35,852

At 12/31/2000At 12/31/2001


Salaries and wages 1,000,225 1,016,045

Social security contributions 253,369 268,169

Employees severance indemnities 33,064 40,239

Employees pension and similar obligations 23,706 16,555

Other costs 26,561 18,018

Total personnel costs 1,336,926 1,359,026


Provisions for risks

Provisions for risks of 305.6 million euros in 2001 (264.0 million euros in 2000) mainly relate to other reserves

connected to industrial risks.

Further details on such caption are shown in the Balance Sheet section.

Dividends were mainly received from minority investment valued at costs.

Tax credit on dividends is related to the dividends paid to Iveco Spa by Astra, Elasis and Cemat.

Other financial income - expenses

The following analyses of “Other financial income” and “Interest and other financial expenses” present the

amounts shown in the related captions on the statement of operations and also the amounts of income and

expenses of the Group’s financial companies presented in the captions on the statement of operations under

“Revenues from sales and services” and “Interest and other expenses of Financial Services Companies”, respectively.

The last line in the table shows “other financial income” and “interest and other financial expenses” as shown

on the statement of operations, excluding the financial activities. Customer interest and lease income increase is

due to the higher level of business of financial activities in 2001.

The increase in financial expenses is due to the higher average indebtedness especially related to Latin America

indebtedness (in particular for Brazil and Argentina).

Other operating costs


Loss on sale of fixed assets 32,691 3,368

Indirect and other taxes 54,132 56,856

Sundry expenses 123,039 168,499

Total other operating costs 209,862 228,723

17. Financial income and expenses

Investment income


Dividends 70 109

Tax credit on dividends 11,901 —

Gain on sale of investments classified within current assets — —

Total investment income 11,971 109


Interest and other financial expenses


Interest and other financial expenses:

Unconsolidated subsidiaries 8 4

Associated companies 44 12

Parent companies 268 39

Others:

Bond interest 72 23

Bank interest 10,668 13,173

Interest on trade and other payables 27,267 7,024

Interest on notes payable 779 241

Discounts and other expenses 143,856 138,615

Expenses from off-balance sheet financial instruments 34,429 33,484

Interest to other financial institutions 123,018 110,606

Loss on sale of securities — —

Foreign exchange losses, net 59,930 84,311

Total interest and other financial expenses - other 400,020 387,477

Total interest and other financial expenses 400,339 387,532

of which:

Interest and other financial expenses, excluding financial activities 317,369 345,109


Other financial income from:

Receivables from others held as fixed assets 651 383

Securities held as fixed assets other than equity investments 261 25

Securities held as current assets other than equity investments 193 637

Other income from:

Unconsolidated subsidiaries 33 —

Associated companies — —

Third companies — —

Others:

Bank and other interest 3,196 4,913

Customer interest and lease income 169,514 130,253

Discounts and other income 47,066 45,803

Income from off-balance sheet financial instruments 32,062 5,479

Foreign exchange gains, net 49,633 79,185

Total from others 301,472 265,633

Total other income 301,505 265,633

Total other financial income 302,610 266,678

of which:

Other income, excluding financial activities 159,927 200,530

74

Revaluations and writedowns of equity investments include the share of the net income and losses of companies

accounted for using the equity method.

The writedown of equity investments in 2001 is mainly due to the consolidation at equity method of the

company named E.E.A. (European Engine Alliance Scrl).


18. Adjustments to financial assets


Revaluations:

Equity investments 5,249 7,981

Financial fixed assets other than equity investments — —

Securities among current assets other than equity investments — —

Total revaluations 5,249 7,981

Writedowns:

Equity investments 8,197 14,362

Financial fixed assets other than equity investments 2 9

Securities among current assets other than equity investments — —

Provisions for doubtful financial credits — 35

Total writedowns 8,199 14,406

Total adjustments to financial assets (2,950) (6,425)


The increase in other extraordinary expenses is mainly due to the provision for reorganisation and restructuring

plans of some subsidiaries located in Europe and South America.

Income taxes paid by the Iveco Group in 2001 approximately amounted to 43.5 million euros.

20. Income taxes

Income taxes recorded in the consolidated statement of operations in 2001 and 2000 are as follows:


Current taxes:

IRAP 29,587 30,202

Other taxes 30,758 85,251

Current taxes 60,345 115,453

Deferred taxes (49,159) 14,797

Total income taxes 11,186 130,250

19. Extraordinary income and expenses


Extraordinary income

Gains on disposals of investments and other fixed assets 339 464

Other income:

Prior period income 63 442

Other income 2,629 26,531

Total other income 2,692 26,973

Total extraordinary income 3,030 27,437

Extraordinary expenses

Losses on disposals of investments and other fixed assets 1,252 4,693

Taxes related to prior years 551 1,269

Other expenses:

Extraordinary accruals 114,359 24,484

Other extraordinary expenses 119,149 54,264

Prior period expenses 1,600 4,142

Total other expenses 235,107 82,890

Total extraordinary expenses 236,911 88,852

Total extraordinary income and expenses (233,880) (61,415)


The item 'Services and Financial Companies' includes: Transolver Financial and Services Companies, Fraikin

Group and Iveco Participations.

21.Other information

Segment information - Business segments

Operating Services Elimin. TotalYear ended Companies and Financial Interco. GroupDecember 31, 2001 Companies

Revenues 12,785.4 792.2 (4,927.5) 8,650.1

Segment result

Operating profit 202.7 68.0 — 270.7

Financial cost (135.9) (21.5) — (157.4)

Share results non-cons. invest. 9.0 — — 9.0

Profit from ordinary activities 75.8 46.5 — 122.3

Extraordinary item (232.3) 13.6 (15.2) (233.9)

Profit before tax (156.5) 60.1 (15.2) (111.6)

Tax 8.2 (19.4) — (11.2)

Income before minority interest (148.3) 40.7 (15.2) (122.8)

Minority interest 1.8 — — 1.8

Net income (146.6) 40.7 (15.2) (121.1)

Total consolidated assets 12,178.6 4,019.9 (6,193.6) 10,004.9

Total consolidated liabilities 6,932.5 3,323.1 (2,019.1) 8,236.5

Equity 5,246.1 696.8 (4,174.5) 1,768.4

Capital expenditure 374.6 343.7 — 718.3

Depreciation 206.5 137.3 — 343.8

Amortization 44.0 22,2 — 66.2

(million euros)


(million euros) Operating Services Elimin. TotalYear ended Companies and Financial Interco. GroupDecember 31, 2000 Companies

Revenues 12,917.9 598.5 (4,905.4) 8,611.0

Segment result

Operating profit 434.4 54.8 — 489.2

Financial cost (113.5) (31.0) — (144.5)

Share results non-cons. invest. (6.4) — — (6.4)

Profit from ordinary activities 314.5 23.8 — 338.3

Extraordinary item (61.4) (0.1) — (61.5)

Profit before tax 253.1 23.7 — 276.8

Tax (117.7) (12.5) — (130.2)

Income before minority interest 135.4 11.2 — 146.6

Minority interest 1.1 (1.4) — (0.3)

Net income 136.4 9.8 — 146.2

Total consolidated assets 11,509.8 2,719.5 (5,419.9) 8,809.4

Total consolidated liabilities 6,491.7 2,108.0 (1,729.1) 6,870.6

Equity 5,018.1 611.5 (3,690.8) 1,983.8

Capital expenditure 336.7 319.1 — 655.8

Depreciation 205.2 159.2 — 364.4

Amortization 54.7 3.8 — 58.5


REPORT OF THE INDIPENDENT AUDITORS


TEN-YEAR HIGHLIGHTS (*)

2001 2000 1999 1998 1997 1996 1995 1994 1993 1992

Commercial data

Sales of trucks, buses and special vehicles (units) 160,397 164,776 149,903 136,824 124,162 119,697 124,835 101,217 90,830 115,433

Engines production (units) 413,222 457,745 404,917 363,089 292,268 274,438 330,169 244,174 206,333 247,694

Western European truck marketshare GVW >= 3.5 tonnes (%) 17.0 17.8 16.6 17.0 18.4 20.0 19.1 19.8 20.1 19.4

Financial data (millions euros)

Net sales 8,646.3 8,610.7 7,386.2 6,649.5 5,913.8 5,324.7 4,954.5 4,310.0 3,828.3 5,143.1

Operating income 270.7 489.1 311.1 261.5 204.2 154.7 247.8 139.2 (159.7) (104.3)

Net profit (124.6) 146.2 162.7 200.5 176.4 124.5 190.5 14.1 (268.5) (47.0)

Cash flow (net profit plus depreciation and amortisation) 285.5 569.2 415.8 376.4 378.2 324.8 363.4 202.1 (62.9) 208.4

Tangible fixed assets as at December 31 2,286.7 2,278.9 2,305.2 1,541.3 1,465.8 1,423.0 1,300.8 1,369.8 1,530.7 1,657.3

Net financial resources (indebtedness) as at December 31 (210.9) (222.6) (402.2) (67.8) 194.4 (54.0) 44.2 (236.5) (822.2) (686.9)

Group Shareholders' equity as at December 31 1,702.7 1,913.7 1,817.5 1,685.8 1,626.2 1,496.3 1,362.9 1,197.2 874.7 1,216.4

Ratios (%)

Operating income / Net sales 3.1 5.7 4.2 3.9 3.5 2.9 5.0 3.2 (4.2) (2.0)

Net profit / Net sales (1.4) 1.7 2.2 3.0 3.0 2.3 3.8 0.3 (7.0) (0.9)

Cash flow / Net sales 3.3 6.6 5.6 5.7 6.4 6.1 7.3 4.7 (1.6) 4.1

Other data

Gross additions to tangible fixed assets (million euros) 718.3 655.8 359.5 306.7 268.5 243.5 148.5 112.7 159.7 276.7

of which: under operating leases(millions euros) 348.3 306.1 60.7 12.4 — — — — — —

Gross additions / Net sales (%) 8.3 7.6 4.9 4.6 4.5 4.6 3.0 2.6 4.2 5.4

Research and development expenses (million euros) 214.9 226.5 214.6 200.5 188.3 189.6 153.5 136.8 164.8 215.0

Research and development expenses / Net sales (%) 2.5 2.6 2.9 3.0 3.2 3.6 3.1 3.2 4.3 4.2

Number of employees as at December 31 35,340 35,852 36,217 31,912 32,074 32,448 33,390 31,510 33,715 37,073

(*) All figures referring to 1997 and previous years have been calculated using the official exchange rate as at

December 31, 1998: 1 Euro equal to 2.204 Netherlands Guilder


Companies consolidated on a line-by-line basis

Registered Capital % of Interest % Name office Country stock Currency Group held interest

consolid. by held

Iveco NV Amsterdam Netherlands1,179,440,000.00 EURO 100.000 IHF-Int.-Hold. Fiat SA 55.285Fiat SpA 44.715

2H Energy Fecamp France 2,000,000.00 EURO 100.000 Iveco Aifo SpA 100.000

Amce - Automotive Manuf. Co. Ethiopia Addis Ababa Ethiopia 3,000,000.00 ETB 70.000 Iveco NV 70.000

Astra VI SpA Piacenza Italy 10,400,000.00 EURO 100.000 Iveco SpA 100.000

Bedrijswagen Service Nijmegen BV Nijmegen Netherlands 100,000.00 NLG 100.000 Iveco Nederland BV 100.000

Brandschutztechnik Gorlitz GmbH Gorlitz Germany 1,000,000.00 DEM 88.000 Iveco Magirus Brand. GmbH 88.000

BV Rimij Apeldoorn Netherlands 10,000.00 NLG 100.000 Iveco Nederland BV 100.000

Camiva SA Saint-Alban-Leysse France 1,870,168.50 EURO 99.963 Iveco Eurofire (Holding) GmbH 99.963

CBW Grundstucksver. GmbH ODS KG Ulm Germany 10,000.00 DEM 100.000 Iveco Investitions GmbH 95.000Iveco NV 5.000

Componentes Mecanicos SA Barcelone Spain 37,405,038.00 EURO 59.387 Iveco Pegaso SA 59.387

Effe Grundbesitz GmbH Ulm Germany 20,000,000.00 DEM 100.000 Iveco Investitions GmbH 90.000Iveco NV 10.000

Equip' Lev Srl Antibes France 50,600.00 EURO 99.940 Lev SA 100.000

Euromoteurs SA Garchizy France 915,000.00 EURO 100.000 Iveco France SA 100.000

Fiat Capital Corporation New Castle United States 0.10 USD 100.000 Iveco Trucks of NA Inc. 100.000

FL Maintenance Société Anonyme Levallois Perret France 40,000.00 FRF 99.940 Locamion Société Anonyme 100.000

Fraikin Alquiler de Vehiculos SA Barcelone Spain 1,803,000.00 EURO 100.000 Fraikin Société Anonyme 100.000

Fraikin Belgium Sociéte Anonyme Bruxelles Belgium 2,974,722.30 EURO 100.000 Fraikin Sociéte Anonyme 100.000

Fraikin Belgium Truck Renting Société Anonyme Bruxelles Belgium 9,048,113.65 EURO 99.940 Locamion Société Anonyme 99.997Fraikin Société Anonyme 0.003

Fraikin Limited Langley Great Britain 2,710,000.00 GBP 100.000 Fraikin Société Anonyme 100.000

Fraikin Locatime Société Anonyme Levallois Perret France 3,754,080.00 EURO 100.000 Fraikin Société Anonyme 100.000

Fraikin Locamion Société Anonyme Levallois Perret France 23,071,328.00 EURO 100.000 Fraikin Société Anonyme 92.929Locamion Société Anonyme 7.071

Fraikin - Lux SA Walferdange Luxembourg 142,166.94 EURO 100.000 Fraikin Société Anonyme 97.303Fraikin Belgium Truck Renting SA 2.697

Fraikin SA (Suisse) Romont Switzerland 1,000,000.00 CHF 100.000 Fraikin Société Anonyme 100.000

Fraikin Société Anonyme Cannes France 50,329,643.00 EURO 100.000 Iveco Participations SA 100.000

IAV Industrie-Anlagen-Verpachtung GmbH Ulm Germany 50,000.00 DEM 100.000 Iveco Investitions GmbH 95.000Iveco NV 5.000

Immobilière Fraikin Société Anonyme Cannes France 4,634,720.00 EURO 100.000 Fraikin Société Anonyme 100.000

Ind.Vehic. Center Brabant/Antwerpen NV St. Pieters Leeuw Belgium 37,380,000.00 BEF 100.000 Iveco Belgium SA/NV 99.732Iveco Nederland BV 0.268

Ind.Vehic. Center Hainaut SA Charleroi Belgium 600,000.00 EURO 100.000 Iveco Belgium SA/NV 95.000Iveco Nederland BV 5.000

Interoto France Location GEIE Levallois Perret France 0 FRF 99,97 Locamion Société Anonyme 25.000Fraikin Locamion Société Anonyme 25.000Fraikin Locatime Société Anonyme 25.000

Lev Société Anonyme 25.000

IVC Nutzfahrzeuge AG Hendschiken Switzerland 3,500,000.00 CHF 100.000 Iveco (Schweiz) AG 100.000

THE COMPANIES IN THE IVECO GROUP

I V E C O N V C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S 81

IVC Salzburg Ntz.GmbH Eugendorf Austria 36,336.42 EURO 100.000 Iveco Austria GmbH 100.000

IVC Vehicules industriels SA Morges Switzerland 1,200,00.00 CHF 100.000 Iveco (Schweiz) AG 100.000

IVC - Wien Ntz.GmbH Wien Austria 36,336.42 EURO 100.000 Iveco Austria GmbH 100.000

Iveco Aifo SpA Milan Italy 5,200,000.00 EURO 100.000 Iveco SpA 100.000

Iveco Argentina SA Cordoba Argentina 26,700,000.00 ARS 100.000 Iveco SpA 99.999Iveco NV 0.001

Iveco Austria GmbH Wien Austria 6,177,190.90 EURO 100.000 Iveco NV 100.000

Iveco Danmark A/S Kastrup Denmark 501,000.00 DKK 100.000 Iveco NV 100.000

Iveco Eurofire (Holding) GmbH Weisweil Germany 60,194,300.00 DEM 100.000 Iveco Magirus AG 90.032Iveco SpA 9.968

Iveco Fiat Brasil Ltda Sete Lagoas Brazil 110,100,000.00 BRL 50.000 Iveco SpA 47,800Iveco Mercosul Ltda 2.200

Iveco Finance Ltd Watford Great Britain 100.00 GBP 100.000 Iveco UK Ltd 100.000

Iveco Finance Luxembourg SA Luxembourg Luxembourg 12,252,065.83 EURO 100.000 Iveco NV 100.000

Iveco Finland OY Espoo Finland 1,000,000.00 FIM 100.000 Iveco NV 100.000

Iveco Ford Truck Ltd *Watford Great Britain 117,000,000.00 GBP 84.820 Iveco UK Ltd 84.821

Iveco Ford Truck Pension Trustee Ltd Watford Great Britain 2.00 GBP 92.410 Iveco Ford Truck Ltd 50.000Iveco UK Ltd 50.000

Iveco France SA Trappes France 93,800,000.00 EURO 100.000 Iveco NV 51.220Iveco SpA 48.780

Iveco Investitions GmbH Ulm Germany 5,000,000.00 DEM 100.000 Iveco Magirus AG 99.020Iveco NV 0.980

Iveco Latin America Ltda Sao Paulo Brazil 266,000,000.00 BRL 100.000 Iveco SpA 99.999Iveco NV 0.001

Iveco LKW-Zentrum Sachsen GmbH Dresda Germany 2,000,000.00 DEM 100.000 Iveco Magirus AG 100.000

Iveco Magirus AG Ulm Germany 492,000,000.00 DEM 100.000 Iveco NV 51.341Iveco SpA 48.659

Iveco Magirus Brandschutztechnik GmbH Ulm Germany 12,700,000.00 DEM 100.000 Iveco Eurofire (Holding) GmbH 99.998Iveco NV 0.002

Iveco Mezzi Speciali SpA Brescia Italy 3,120,000.00 EURO 100.000 Iveco Eurofire (Holding) GmbH 100.000

Iveco Motorenforschung AG Arbon Switzerland 4,600,000.00 CHF 100.000 Iveco SpA 60.000Iveco France SA 40.000

Iveco Nederland BV Amersfoort Netherlands 10,000,000.00 NLG 100.000 Iveco NV 100.000

Iveco Nordbayern Ntz. GmbH Nurnberg Germany 1,450,000.00 DEM 100.000 Iveco Magirus AG 100.000

Iveco Nord Ntz. GmbH Hambourg Germany 1,600,000.00 DEM 100.000 Iveco Magirus AG 100.000

Iveco Norge AS Voyenenga Norway 500,000.00 NOK 100.000 Iveco NV 100.000

Iveco Ntz. GmbH Berlin-Brandeburg Berlin Germany 2,150,000.00 DEM 100.000 Iveco Magirus AG 100.000

Iveco Ntz. GmbH Hannover - Braunschweig Hannover Germany 1,550,000.00 DEM 100.000 Iveco Magirus AG 100.000

Iveco Ntz. Nord - West GmbH Dortmund-Wambel Germany 2,650,000.00 DEM 100.000 Iveco Magirus AG 100.000

Iveco Otomotiv A.S. Nisantasi Turkey 1,957,763,000,000.00 TRL 99.993 Iveco SpA 99.993

Iveco Participations SA Trappes France 250.000.000,00 EURO 100,000 Iveco SpA 80.000Iveco NV 20.000


consolid. by held


Iveco Pegaso SL Madrid Spain 105,213,628.00 EURO 100.000 Iveco NV 100.000

Iveco Plan SA Buenos Aires Argentina 153,000.00 ARS 100.000 Iveco Argentina SA 99.600Iveco SpA 0.400

Iveco Poland Ltd Warsaw Poland 13,866,350.00 PLN 100.000 Iveco NV 100.000

Iveco Portugal Ltda Villa Franca de Xira Portugal 15.961,532.71 EURO 100.000 Iveco NV 99.999Iveco SpA 0.001

Iveco Rhein - Ruhr Ntz. GmbH Dusseldorf Germany 1,500,000.00 DEM 100.000 Iveco Magirus AG 100.000

Iveco Rhein - Sieg Ntz. GmbH Koln Germany 1,750,000.00 DEM 100.000 Iveco Magirus AG 100.000

Iveco (Schweiz) AG Kloten Switzerland 9,000,000.00 CHF 100.000 Iveco NV 100.000

Iveco South Africa Ltd Wadeville South Africa 15,000,750.00 SAR 100.000 Iveco NV 100.000

Iveco SpA Turin Italy 322,400,000.00 EURO 100.000 Iveco NV 100.000

Iveco Sud-West Ntz. GmbH Mannheim-Neckarau Germany 1,533,900.00 EURO 100.000 Iveco Magirus AG 100.000

Iveco Sweden A/B Arlov Sweden 600,000.00 SEK 100.000 Iveco NV 100.000

Iveco Trucks Australia Ltd Dandenong Australia 47,492,260.00 AUD 100.000 Iveco NV 100.000

Iveco Trucks of North America Inc Wilmington United States 1,00 USD 100.000 Iveco NV 100.000

Iveco (UK) Ltd Watford Great Britain 47,000,000.00 GBP 100.000 Iveco NV 67.723Iveco SpA 32.277

Iveco Venezuela CA La Victoria Venezuela 2,495,691,000.00 VEB 100.000 Iveco NV 100.000

Lev Sociéte Anonyme Levallois Perret France 9,165,168.00 EURO 99.940 Locamion Sociéte Anonyme 100.000

Locamion Sociéte Anonyme Levallois Perret France 10,900,064.00 EURO 99.940 Fraikin Sociéte Anonyme 99.940

Loca-Pel Srl Antibes France 75,900.00 EURO 99.940 Lev SA 100.000

Lohr-Magirus Feuerwehrtechnik GmbH Lassnitzhohe Austria 1,271,774.60 EURO 95.000 Iveco Magirus Brand. GmbH 95.000

Lyon Vehicules Industriéls SAS Saint Priest France 915,000.00 EURO 100.000 Iveco France SA 99.999Iveco NV 0.001

Mediterranéa de Camiones SL Valencia Spagna 48,080.00 EURO 100.000 Iveco Pegaso SA 100.000

Officine Brennero SpA Trento Italy 3,120,000.00 EURO 100.000 Iveco NV 100.000

Rhein-Main Ntz.GmbH Reichold & Partner Frankfurt Germany 1,800,000.00 DEM 65.000 Iveco Magirus AG 65.000

SA Iveco Belgium /NV Zellik Belgium 6,000,000.00 EURO 100.000 Iveco NV 99.950Iveco SpA 0.050

SCI La Mediterraneenne Vitrolles France 248,000.00 EURO 100.000 Soc.Dif.Veh.Ind.SDVI SA 50.000Iveco France SA 50.000

Seddon Atkinson Spares & Services Ltd Oldham Great Britain 20,000.00 GBP 100.000 Seddon Atkinson Vehicles 100.000

Seddon Atkinson Vehicles Ltd Oldham Great Britain 41,700,000.00 GBP 100.000 Iveco UK Ltd 100.000

SELTRA Bezons France 2,598,864.00 EURO 100.000 Fraikin Sociéte Anonyme 100.000

Service Lorrain VI SAS Ludres France 699,200.00 EURO 100,000 Iveco France SA 99.500Iveco NV 0.500

Sicca SpA Modena Italy 5,300,000.00 EURO 100,000 Iveco SpA 100.000

SIMIS Sociéte Anonyme Saint-Alban-Leysse France 40,015.50 EURO 98.000 Camiva SA 98.000

Société Civile Immobiliere Cles Amiens France 33,600.00 EURO 100.000 Immobiliere Fraikin SA 99.905Fraikin Sociéte Anonyme 0.095


consolid. by held

T H E C O M P A N I E S I N T H E I V E C O G R O U P 83


consolid. by held

Société Civile Immobiliere Des Cars Bleus Levallois Perret France 90,000.00 EURO 99.940 Locamion Sociéte Anonyme 99.833Immobiliere Fraikin SA 0.167

Société Civile Immobiliere Les Boussenot Levallois Perret France 36,864.00 EURO 99.940 Locamion Sociéte Anonyme 99.957Immobiliere Fraikin Societé Anonyme 0.043

Société Civile "La Vitrollaise" Levallois Perret France 640.00 EURO 100.000 Immobiliere Fraikin Sociéte Anonyme 97.500Fraikin Sociéte Anonyme 2.500

Societè de la Seoune SA Trappes France 45,600.00 EURO 100.000 Iveco France SA 100.000

Societè Diffusion Vehicules Industriels SA Trappes France 7,022,400.00 EURO 100.000 Iveco France SA 100.000

Sodima SA Haunconcourt France 305,600.00 EURO 100.000 Iveco France SA 100.000

Stevi SA S.Priest en Jarez France 503,250.00 EURO 100.000 Iveco France SA 100.000

Transolver Finance EFC SA Madrid Spain 9,315,500.00 EURO 50.000 Iveco Fin. Luxembourg SA 50.000

Transolver Finance GmbH Ulm Germany 35,000,000.00 EURO 100.000 Iveco Magirus AG 100.000

Transolver Finance SA Trappes France 15,244,900.00 EURO 100.000 Iveco Finance Luxembourg SA 100.000

Transolver Finance SpA Turin Italy 30,000,000.00 EURO 100.000 Iveco SpA 100.000

Transolver Lease GmbH Ulm Germany 775,000.00 EURO 100.000 Iveco Magirus AG 100.000

Transolver Operational Services Ltd Watford Great Britain 1,400,000.00 GBP 100.000 Iveco UK Ltd 100.000

Transolver Services GmbH Unterschliessheim Germany 750,000.00 EURO 100.000 Iveco Magirus AG 100.000

Transolver Services SA Trappes France 38,000.00 EURO 10.000 Iveco France SA 10.000

Transolver Service SA Madrid Spain 610,000.00 EURO 100.000 Iveco Pegaso SL 100.000

Transolver Service SpA Turin Italy 1,989,000.00 EURO 100.000 Iveco SpA 100.000

Trucksure Services Ltd Watford Great Britain 900,000.00 GBP 100.000 Iveco UK Ltd 100.000

U.V.I.F. SAS La Garenne France 1,067,500.00 EURO 100.000 Iveco France SA 99.999Iveco NV 0.001

Vehic. Ind. Phoceens SAS Vitrolles France 927,200.00 EURO 100.000 Iveco France SA 99.999Iveco NV 0.001

Companies valued by equity method

Altra SpA Genoa Italy 516,400.00 EURO 33.340 Irisbus Italia SpA 66.670

Ashok Leyland Ltd Madras India 1,189,500,000.00 RUPIA 15.280 LRLIH Ltd 50.935

Auto Distr. Illiberis SA Peligros Spain 2,773,400.00 EURO 49.000 Iveco Pegaso SL 49.000

Ennore Foundries Ltd Madras India 67,899,000.00 RUPIA 20.911 LRLIH Ltd 59.090

European Engine Alliance Scrl Turin Italy 24,000,000.00 EURO 33.330 Iveco SpA 33.330

Fiat GRA.DE EEIG Watford Great Britain 0 GBP 24.000 Iveco NV 24.000

F.Pegaso SA Madrid Spain 933,045.20 EURO 100.000 Iveco Pegaso SL 100.000

Financiere Pegaso France SA Trappes France 260,832.00 EURO 100.000 Iveco Pegaso SL 100.000

GEIE V.IV.RE Paris France 0 FRF 50.000 Iveco SpA 50.000

Haveco Ltd Zhajiang Rep. of China 200,010,000.00 CNY 33.330 Iveco SpA 33.333

Iveco - Motor Sich Inc Zaporozhye Ukraine 26,568,000.00 UAH 55.560 Iveco SpA 55.556



consolid. by held

Iveco SPRL **Kinshasa Rep. of Congo 340,235,000.00 ZRN 100.000 Iveco NV 100.000

Iveco Ukraine Inc Kiev Ukraine 62,515,200.00 UAH 65.910 Iveco SpA 65.910

Iveco Uralaz Ltd Miass Russia 65,255,056.00 RUR 33.330 Iveco SpA 33.333

LRLIH Ltd London Great Britain 76,075,000.00 GBP 30.000 Machen-Iveco Holding SA 100.000

Machen-Iveco Holding SA Luxembourg Luxembourg 26,000,000.00 GBP 30.000 Iveco SpA 30.000

Otoyol Pazarlama AS Istanbul Turkey 1,410,000,000,000.00 TRL 27.000 Iveco SpA 27.000

Otoyol Sanayi AS Istanbul Turkey 8,000,000,000,000.00 TRL 27.000 Iveco SpA 27.000

V.IVE.RE GEIE Turin Italy 0 LIT 50.000 Iveco SpA 50.000

Companies valued at cost

AFIN BULGARIA AD Sofia Bulgaria 200,000.00 BGN LEV 40.000 AFIN LEASING AG 100.000

AFIN LEASING AG Vienna Austria 1,500,000.00 EURO 40.000 IVECO NV 40.000

AFIN ROMANIA AS Bucarest Romania 2,063,200,000.00 LEI 39.920 AFIN LEASING AG 99.800

Atlas Vehicules Ind.AS Casablanca Marocco 19,700,000.00 MAD 48.985 Iveco NV 48.984Iveco SpA 0.001

CBC-IVECO Ltd Changzhou Rep. of China 664,000,000.00 CNY 50.000 Iveco NV 12.500Iveco SpA 37.500

CONSAF - Consorzio Svil.Az. Fornitrici Torino Italy 250,741.33 EURO 10.300 Iveco SpA 10.300

Consorzio Coforma Turin Italy 100,000,000.00 LIT 50.000 Iveco SpA 50.000

Consorzio Fiat Media Center Turin Italy 275,000,000.00 LIT 5.952 Iveco SpA 2.381Astra VI SpA 2.381

Irisbus Italia SpA 2.381

Consorzio Iveco Fiat - Oto Melara Rome Italy 100,000,000.00 LIT 50.000 Iveco SpA 50.000

CSST SpA Turin Italy 520,000.00 EURO 30.000 Iveco SpA 30.000

Elettr.Trasp. Comm. Srl Turin Italy 109,200.00 EURO 50.000 Iveco SpA 50.000

European Engine Alliance E.E.I.G. Maidenhead Great Britain 0 GBP 33.330 Iveco SpA 33.330

Fias Fiat Administration und Service GmbH Ulm Germany 200,000.00 DEM 80.000 Iveco Magirus AG 80.000

Fiat OM-Carr. Elev.SpA Lainate Italy 20,000,000.00 EURO 25.000 Iveco SpA 25.000

GESTRANS SA Suresnes France 45,730.00 EURO 50.000 Irisbus France SA 100.000

IKAMCO **Teheran Iran 25,000,000,000.00 RIALS 0.220 Iveco SpA 0.220

Ikarusbus Trejd Kft Mosca Russia 20,000.00 USD 38.265 Ikarusbus Jamugyàrto RT 100.000

Iran Magirus-Deutz Teheran Iran 180,000,000.00 IRR 100.000 Iveco Magirus AG 100.000

Irisbus North America LLC Dover United States 20,000.00 US$ 50.000 Irisbus France AS 50.000

Iveco Colombia Ltda S.ta Fè di Bogotà Colombia 43,478,000.00 PESO COL. 99.530 Iveco Venezuela 99.530

Iveco Hong Kong Ltd. Hong Kong Rep. of China 1,000.00 HK$ 100.000 Iveco NV 100.000

Orione Cons. Ind.le per la Sicur. e la Vigil. Turin Italy 50,500,000.00 LIT 0.990 Iveco SpA 0.990

T H E C O M P A N I E S I N T H E I V E C O G R O U P 85

Sirio Consorzio per la Sicurezza Industriale Turin Italy 106,552,000.00 LIT 11.239 Iveco SpA 9.385Irisbus Italia SpA 1.313

Iveco Aifo 0.469Iveco Mezzi Speciali SpA 0.093

Sicca SpA 0.469Astra VI SpA 0.187

SOTRA SA Abidjan Ivory Coast 3,000.000,000.00 CFA 19.900 Irisbus France SA 39.800

Transolver Finance AG Kloten Schweiz 1,500,000.00 CHF 100.000 Iveco Schweiz 100.000

Trucks & Bus Company Tajoura Libya 87,000,000.00 LYD 17.241 Iveco SpA 17.241

Zastava-Kamioni D.O.O. **Kragujevac Serbia 1,234,433,600.00 DIN. 46.500 Iveco SpA 46.500

Zona Franca Alari Sepauto AS Barcellona Spain 520,560.00 EURO 10.373 Iveco Pegaso SL 10.373

Companies consolidated by proportional method

Heuliez Bus SA Mauleon France 9,000,000.00 EURO 49.760 Societè Charolaise SA 99.520

Ikarusbus Jamugyàrto RT Szekesfehervar Hungary 6,007,459,850.00 HUF 47.500 Irisbus Holding SL 95.000

Ikarus Egyedi Autobusz Gy Budapest Hungary 350,000,000.00 HUF 26.058 Ikarusbus Jamugyarto RT 68.114

Irisbus Australia Pty Ltd Brisbane Australia 825,000.00 AU$ 30.000 Irisbus Holding SL 60.000

Irisbus Deutschland GmbH Mainz Germany 10,000,000.00 EURO 50.000 Irisbus Holding SL 100.000

Irisbus France SA Venissieux Francia 142,482,000.00 EURO 50.000 Irisbus Holding SL 100.000

Irisbus Holding SL Madrid Spain 233,670,000.00 EURO 50.000 Iveco SpA 30.403Iveco NV 19.597

Irisbus Iberica SL Madrid Spain 28,930,787.75 EURO 50.000 Irisbus Holding SL 100.000

Irisbus Italia SpA Turin Italy 100,635,750 EURO 50.000 Irisbus Holding SL 100.000

Irisbus (UK) LTD Watford Great Britain 200,000.00 GBP 50.000 Irisbus Holding SL 100.000

Karosa AS Vysoke Myto Czeck Rep. 1,065,559,000.00 CZK 47.940 SATAU SA 95.880

Karosa rso Bratislava Slovak Rep. 200,000.00 CZK 47.940 Karosa SA 100.000

Naveco Ltd Nanjing Rep. of China 2,527,000,000.00 CNY 50.000 Iveco SpA 50.000

Soc.d'Ass.Tecn.Automob. - SATAU SA Venissieux France 35,610,000.00 EURO 50.000 Irisbus France SA 100.000

Soc. Charolaise de Participat SA Venissieux France 2,370,000.00 EURO 50.000 Irisbus Holding SL 100.000


consolid. by held

Investment in other companies


consolid. by held

A.Q.M. Soc. Cons. rl Rezzato Italy 1,549,352.00 EURO 0.933 Iveco SpA 0.933

ASSE Scpa Avellino Italy 428,280.00 EURO 3.010 Irisbus Italia SpA 6.020

Cemat SpA Rome Italy 7,000,000.00 EURO 5.640 Iveco SpA 5.638

Consorzio SCLV Giugliano Italy 775,000,000.00 LIT. 1.300 Iveco SpA 1.300

Consorzio a respons. limitata Spike Genoa Italy 90,380.00 EURO 15.000 Iveco SpA 15.000

Consorzio Bolzano Energia Bolzano Italy 12,000.00 EURO 16.670 Iveco SpA 16.667

C.R.F. Scpa Orbassano Italy 12,750,000.00 EURO 20.000 Iveco SpA 20.000

Elasis Soc. Cons. pAz Pomigliano d'Arco Italy 19,240,000.00 EURO 3.300 Iveco SpA 3.300

Fiat GES.CO France (GEIE) Paris France 0 EURO 15.000 Iveco France SA 15.000

Fiat Revi Scrl Turin Italy 300,000.00 EURO 10.000 Iveco NV 10.000

Fiat Sepin ScpA Turin Italy 3,850,000.00 EURO 6.000 Iveco SpA 6.000

Hinduja TMT Ltd Mumbai India 239,919,000.00 RUPIA 0.125 Iveco SpA 0.125

Isfor 2000 ScpA Brescia Italy 540,000.00 EURO 2.300 Iveco SpA 2.300

Isvor Fiat SpA Turin Italy 780,000.00 EURO 9.000 Iveco SpA 9.000

Sadi Brasil Ltda Nova Lima Brazil 100,000.00 BRL 15.000 Iveco Fiat Brasil Ltda 10.000Iveco Latin America Ltda 10.000

Stormont Truck & Van Ltd Londra Gran Bretagna 2.00 GBP 84.820 Iveco Ford Truck Ltd 100.000

Transaval SGR SA Madrid Spain 1,889,118.60 EURO 6.999 Iveco Pegaso SA 6.999

Wohnungsverein Ulm AG Ulm Germany 1,000,000.00 DM 13.600 Iveco Magirus AG 13.600

(*) 52% of the issued ordinary voting share capital plus 100% of the issued non votin preference share capital

(**) investment fully written off


Publication editedby Iveco Communications

Publication SF00291800Printed in Italy - SANTurin - 06.02

These financial statements are alsoavailable in Italian and can be obtained either from:

Iveco NV - Prof. Bavincklaan, 5Amstelveen (The Netherlands)

Iveco CommunicationsVia Puglia, 3510156 Turin (Italy)

or from the individual nationalCompanies.

Design:Iveco Commercial Communication and ImageStudio Frenda Advertising (Turin)

Colour separations:Mycrom (Turin)

Iveco NV Prof. Bavincklaan, 5 Amstelveen (The Netherlands)www.iveco.com

iveco annual report 2001

Documents

development expenses

different iveco vehicles

road vehicles

medium range vehicles

euros research

giancarlo vezzalini

western european market

medium vehicle market