Chrysler 2005 Annual Report Download - page 56

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Report on Operations Fiat Auto
The decrease was more pronounced in Germany (-15.8%) and the
United Kingdom (-38.5%, owing to a sharp drop in market demand).
Among all major European markets, only France bucked the trend,
posting an 8.3% increase in shipments.
In Poland, weak demand had a strong negative impact on Fiat Auto’s
sales volume, which contracted by 44.3% compared with 2004.
In 2005, Fiat Auto intensified its activity in those markets outside
the EU where it already has an established presence, such as Brazil,
Argentina and Turkey, while at the same time launching programmes
to expand in emerging markets through alliances with strong local
partners.
In Brazil, Fiat Auto benefited from healthy demand in the local
market, increasing sales by 12.9% with respect to 2004 and regaining
leadership of the market.The success of the flex (alcohol and
gasoline bi-fuel) versions of the Palio and Mille models, which
were introduced during the first half of the year, account for this
outstanding performance.
In Argentina, where consumer demand continued to improve after
the deep crisis of 2002, the automobile market expanded at a rate
of 35.6% compared with 2004 and Fiat Auto increased its market
share to 12.4% (up 0.6% percentage points compared with 2004).
Thanks to the positive impact of new products and the contribution
of a revamped sales network, deliveries of automobiles and light
commercial vehicles increased by43.1% to 44,100 units.
In Turkey, 2005 was a good year for the economy in general and
the automobile industry in particular. Demand for automobiles and
light commercial vehicles increased to about 720,000 units (+2.9%
compared with 2004). In this environment,Tofas (a local joint venture
in which Fiat Auto has a 37.9% interest) achieved a market share
of 11.2% and increased deliveries by 8.1%.Tofas’s improved
performance over 2004, both in the domestic and export markets,
was made possible by the start of production of the new Doblò
and the market launch of the new Palio and Albea.
In 2005, sales of light commercial vehicles followed a positive trend,
with total shipments rising to 285,200 units or 5.1% more than in
2004. In Western Europe, sales decreased to 181,800 units, or 0.7%
less than in 2004. With the exception of Italy and Germany, where
shipments were down 2.7% and 0.4%, respectively, sales improved
throughout WesternEurope (Spain +11.6%, France +3.9%, United
Kingdom +1.4%).
After termination of the Master Agreement with General Motors,
Fiat Auto regained its strategic independence and was thus able
to execute targeted industrial agreements with major carmakers
outside Italy.These agreements will provide the foundation for
increasing the competitiveness of Fiat Auto’s products and expand
its presence in emerging markets.
This was the rationale for the agreements signed in 2005 with
Pars Industrial Development Foundation for the production and
sale of Fiat cars in Iran, with PSA and Tofas to design and produce
anew light commercial vehicle in Turkey, with Ford to develop and
manufacture A Segment automobiles at a Fiat Auto plant in Poland,
with Zastava to assemble the Fiat Punto under license at a Zastava
plant in Serbia, and with Suzuki to study the feasibility of producing
new Multijet engines in Asia under license.
Two additional agreements were executed in January 2006: one
in India with Tata Motors Ltd that involves the sharing of the dealer
network and the distribution of Fiat-branded cars through Tata’s
dealers in India; and another in Russia with Severstal Auto for the
assemblyin Russia of the Fiat Palio and Fiat Albea using CKD kits
manufactured in Turkey by Tofas. In February 2006, industrial
cooperation with Severstal was extended to Fiat Doblò models, which
will be assembled in Russia using CKD kits manufactured byTofas.