Chrysler 2006 Annual Report Download - page 33

Report on Operations Fiat Auto62
Operating Performance
In 2006, the Western European automobile market expanded
slightly (+0.7%) from 2005.
Demand rose 3.7% in Italy and 3.8% in Germany, while it
contracted in the other principal countries: France by -3.3%,
Great Britain by -3.9%, and Spain by -2%.
Outside Western Europe, demand expanded slightly in
Poland (+1.5%). In contrast, the Brazilian market expanded
significantly,at a rate of 13.1%.
The commercial vehicle market performed well in Western
Europe (+5.6%) as compared with the previous year. Demand
rose by about 8% in Italy, over 10% in Germany, 4.8% in France,
and 5.9% in Spain, while remaining stable in Great Britain.
In 2006, the Sector performed very well in terms of market
share. In Italy,its share of the automobile market rose to
30.7%, or 2.7 percentage points higher than in 2005. In
Western Europe, its share reached 7.6%, up 1.1 percentage
points from 2005.
Fiat Auto’s share of the commercial vehicle market in Italy
was 47.1%, with an improvement of 4.7 percentage points. In
Western Europe, its share rose by 0.7 percentage points to 11%.
In Brazil, the Sector’sshare of the automobile and commercial
vehicle markets in 2006 reached 25.3% (for an increase of 0.9
percentage points) and 26.1% (-2.7 percentage points),
respectively.
In 2006, Fiat Auto delivered a total of 1,980,300 units, for an
increase of 16.7% from 2005. In Western Europe, 1,289,600
units were delivered, for an increase of 17.2%.
The positive sales performance during the year stemmed from
the growing success of new models that had been introduced
previously,first and foremost the Grande Punto and Panda, as
well as the other models that were introduced during the year
to enrich the product line of the three brands.
Deliveries increased sharply in almost all of the principal
European countries, with growth rates far outpacing the
market, as in Italy (+17.5% from 2005 deliveries) and Germany
(+21.3%), or realised in contracting markets, such as Great
Britain, where deliveries rose by 42.8%, and France (+10.9%).
Spain represented an exception, where a marginal slip
in deliveries (-1.0%) reflected weak demand.
enter new segments and technologies, enhance its know-how,
and access new markets.
The primary objective of these agreements was to reinforce
the Sector’s presence on two high-growth markets, Russia
and India.
The collaboration between Fiat Auto and the Russian car maker
Severstal Auto has evolved in a series of steps. At the
beginning of 2006, agreements were reached for the assembly
in Russia, starting in 2007, of Albea, Palio, and Doblò models
based on CKD produced by Tofas, as well as for the import and
distribution in Russia of Fiat cars and light commercial vehicles.
In March 2006, a letter of intent was signed to further develop
of the strategic partnership between Fiat and Severstal in all
industrial areas of the Fiat Group. An agreement was signed
in July for production and distribution of the Ducato in Russia
by Severstal. Production is planned to start in the last quarter
of 2007.
Cooperation with India was also intense. After reaching an
agreement in January 2006 for the sale of Fiat cars in India
through joint use of the sales network, Fiat and Tata Motors
signed a memorandum of understanding in July for industrial
collaboration; within this context, in December they signed an
agreement for the creation of a joint venture in India for the
production of cars, engines and transmissions. Fiat Auto will
introduce the Grande Punto and Fiat Linea. On the basis of a
joint analysis undertaken in July 2006, Fiat and Tata Motors
continued studies for industrial and commercial cooperation
in Latin America: these studies resulted in an agreement,
signed in February 2007, which calls for a Tata license to build
a pick-up vehicle in the Fiat Group Automobiles plant in
Cordoba, Argentina.
These important partnership agreements are complemented
by the license to produce diesel engines granted to Suzuki
in March 2006, the May 2006 agreement with PSA Peugeot
Citroën for production at the Fiat plant in Cordoba of a
transmission for the French customer,and the signing in
October of a memorandum of understanding with the
Chinese company Chery Automobiles for the supply of
gasoline engines to Fiat Auto.
Report on Operations Fiat Auto 63
In Poland, volumes contracted by 2.3% from 2005.
Outside the European Union, in 2006 Fiat Auto intensified its
activities on those markets where its position is consolidated,
such as Brazil, Argentina, and Turkey. At the same time, it
pursued growth opportunities on other emerging markets
together with strong local partners.
In Brazil, the Sector delivered 464,800 cars and light
commercial vehicles. It increased its sales by 15% from 2005
and confirmed its leadership position on the market. This
excellent result is mainly attributable to the success of flex
versions (which run on both alcohol and gasoline) of the Palio
and Mille models, as well as the Fiat Idea, voted Carro Do Año
(Car of the Year) in Brazil.
Economic recovery continued in Argentina. The automobile
market expanded by 16.2% from 2005, and Fiat Auto reported a
market share of 10.8%, down slightly from 2005 (-1.6 percentage
points). Deliveries of automobiles and light commercial
vehicles decreased by 0.7%, to a total of 43,800 units.
In Turkey,the automotive industry slowed down in 2006,
together with the rest of the economy.The automobile and
light commercial vehicle market totalled approximately 621,000
units, down 13.6% from 2005. Tofas (a local joint venture in
which Fiat Auto has a 37.9% interest) reported a 9.1% decrease
in deliveries. However,its aggregate market share was 11.8%,
up 0.6 percentage points from the previous year. This
improvement was driven by the New Doblò, New Palio,
and Albea.
In regard to light commercial vehicles only, a total of 323,500
units were delivered in 2006, for an increase of 13.4% from
2005. This was largely attributable to the New Ducato, which
enjoyed great success following its introduction at the end of
May 2006, and the New Doblò. In Western Europe, deliveries
totalled 211,900 units (+16.5%). With the exception of
Germany, where deliveries fell by 1.9%, the other European
countries reported an increase in the number of units
delivered: France +40.1%, Italy +24.4%, Great Britain +10.7%,
Spain +2.9%.
During 2006, the Sector continued its strategy of targeted
alliances to reinforce its position on international markets,
Fiat Auto –Fiat, Alfa Romeo, Lancia
and Fiat Light Commercial Vehicles
Highlights
(in millions of euros) 2006 2005
Net revenues 23,702 19,533
Trading profit 291 (281)
Operating result (*) 727 (818)
Investments in tangible and intangible assets 2,163 1,582
-of which capitalised R&D costs 434 310
Total R&D expenses (**) 675 665
Automobiles and light commercial
vehicles delivered (number) 1,980,300 1,697,300
Employees at year-end (number) 44,691 46,099
(*) Including restructuring costs and unusual income (expenses).
(**) Including R&D capitalised and charged to operations.
Automobile Market
(in thousands of units) 2006 2005 % change
-France 2,000.5 2,067.8 -3.3
-Germany 3,468.0 3,342.1 3.8
-Great Britain 2,344.9 2,439.7 -3.9
-Italy 2,321.1 2,237.4 3.7
-Spain 1,499.0 1,528.9 -2.0
Western Europe 14,624.2 14,529.8 0.7
Poland 239.0 235.5 1.5
Brazil 1,599.9 1,414.8 13.1
Sales Performance
Automobiles and Light Commercial Vehicles
(in thousands of units) 2006 2005 % change
-France 88.0 79.3 10.9
-Germany 110.1 90.8 21.3
-Great Britain 76.1 53.3 42.8
-Italy 808.2 687.7 17.5
-Spain 69.6 70.3 -1.0
-Rest of Western Europe 137.6 118.5 16.0
Western Europe 1,289.6 1,099.9 17.2
Poland 33.0 33.8 -2.3
Brazil 464.8 404.3 15.0
Rest of the World 192.9 159.3 21.2
Total sales 1,980.3 1,697.3 16.7
Associated companies 89.9 107.3 -16.2
Grand total 2,070.2 1,804.6 14.7