Chrysler 2004 Annual Report Download - page 58

REPORT ON
OPERATIONS
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SIGNIFICANT EVENTS OCCURRING SINCE THE END
OF THE FISCAL YEAR AND BUSINESS OUTLOOK
SIGNIFICANT EVENTS OCCURRING SINCE THE END OF
THE FISCAL YEAR
The most significant transactions completed by the Fiat Group
during early 2005 are reviewed below:
■On February 13, 2005 the Board of Directors of Fiat and
General Motors approved a contract to terminate the Master
Agreement and related Joint Ventures between the two
companies. The agreement envisages that General Motors
pays to Fiat 1.55 billion euros to terminate the Master
Agreement, including cancellation of the put option and the
unwinding of all joint ventures.
In detail, the agreement provides that:
– GM pay to Fiat 1.55 billion euros, 1 billion euros of which
have already been paid with the remainder being paid
upon completion of the unwinding of the Joint Ventures,
which is expected within 90 days.
– GM return its 10% stake in Fiat Auto Holdings B.V. to Fiat.
– GM get a 50% interest in the Bielsko Biala plant, in Poland,
which manufactures the 1.3 liter Diesel engine as well as
50% of the involved technologies.
– GM co-own JTD engine technology while continuing to
take most of its European requirements from the Fiat plant
in Pratola Serra. Notwithstanding co-ownership of engine
technology, GM cannot manufacture JTD Diesel engines
outside Europe that are to be exported to Europe.
– Both Fiat and GM continue to support the joint
development of existing platforms.
– Fiat continue to sell engineering support to GM for the
development of diesel technology.
– The unwinding of the joint ventures and supply agreements
will be put in place as quickly as possible in order to avoid
any potential disruption to the respective businesses.
■Also in February, Fiat announced that the ownership of
Maserati, until then wholly owned by Ferrari, will be
transferred to Fiat as soon as practicable. The move foresees
that Alfa Romeo and Maserati will co-operate closely
technically and commercially – particularly in important
international markets. Maserati will, however, continue its
co-operation with Ferrari – especially in industrial, technical,
engine and sales network terms – which has helped re-vitalize
the marque.
■Early in March, Magneti Marelli signed an agreement with
the Turkish Group Koç for controlling the automotive supplier
company Mako Elektric Sanayi Ve Ticaret A.S., moving from
43% to 95% of participation. Mako is actually market leader
in Turkey in automotive lighting systems. Magneti Marelli
will commit Mako’s business management to its subsidiary
company Automotive Lighting.
■On March 21, 2005 Fiat exercised the Put option on EDF (the
so-called “EDF Put”) relating to the interest held in Italenergia
Bis and equivalent to 24.6% of the shares, as well as the Put
on the 14% holding sold to the three Banks (Banca Intesa, IMI
Investimenti and Capitalia) in 2002.
■On March 24, Fiat announced the creation of Fiat Powertrain
Technologies, a new industrial unit that will integrate all the
Group’s innovation capabilities and expertise in engines and
transmissions. The new company will operate in 12 countries
with 26 plants and 16 research and development centers and
will combine the resources, employees and activities of Fiat
Auto Powertrain, Iveco Powertrain, Magneti Marelli Powertrain
(including Motor Sport), Iveco Motoren Forschung and the
Powertrain research activities of the Fiat Research Center and
Elasis.
■At the 75th Geneva International Motor Show, Fiat Auto
provided concrete proof of its vitality by unveiling, in a world
preview, three new models that will be brought to market in
2005.
The first is the new Fiat Croma, which marks Fiat Auto’s return
to the D Segment. Offered with a choice of powerful but
environmentally friendly engines, it combines pleasing and
harmonious lines with lively performance and the roominess
of a minivan.
Along with the new Croma, the Sector introduced two Alfa
Romeo models: the 159 sports sedan and the Brera coupé.
The 159, the base model of a new family of cars, offers both a
spacious interior and the sporty performance typical of Alfa
Romeo. The Brera, a very exciting 2+2 model, is notable for
the harmony and beauty of its Giugiaro styling and for the
outstanding technology of its Alfa Romeo engine and
components.
Geneva also offered a venue for new ideas to Ferrari, which
unveiled the F430 Spider, and to Lancia, which brought out
the Ypsilon Sport, a concept car developed with Zagato.
We also wish to announce that the filings required to comply
with the law on data protection, which in the past were carried
out in accordance with the old, repealed law, are currently being
updated. The new filings will also take into account the
innovations found in LegislativeDecree No. 196/2003. In
particular, the planning document on security has been updated
due to the need to reflect the Group’s ongoing quest for
increased security, which is a permanent work in progress.
BUSINESS OUTLOOK
In 2005, the automobile market should hold steady in Italy and
the rest of Western Europe, and expand in Brazil. Demand for
agricultural equipment is expected to show little change in