Chrysler 2009 Annual Report Download - page 45

REPORT ON
OPERATIONS
MAIN RISKS AND
UNCERTAINTIES
TO WHICH FIAT
S.P.A. AND
THE GROUP
ARE EXPOSED
44
RISKS ASSOCIATED WITH MANAGEMENT
The Group’s success is largely dependent on the ability of its senior executives and other members of management to manage the Group and the individual
Sectors effectively. The loss of any senior executive, manager or other key employee without an adequate replacement or the inability to attract and retain
new, qualified personnel could therefore have an adverse effect upon the Group’s business prospects, earnings and financial position.
RISKS ASSOCIATED WITH THE HIGH LEVEL OF COMPETITIVENESS IN THE INDUSTRIES IN WHICH THE GROUP OPERATES
Substantially all of the Group’s revenues are generated in the automotive industry, which is highly competitive and includes the production and distribution
of passenger cars, trucks and commercial vehicles, agricultural and construction equipment and automotive-related components and production systems.
The Group faces competition from other international automotive and commercial vehicle manufacturers in Europe and Latin America and from
global, regional and local agricultural and construction equipment manufacturers, distributors and component suppliers in Europe, North America
and Latin America. These markets are highly competitive in terms of product quality, innovation, pricing, fuel economy, reliability, safety, customer
service and financial services.
Competition, particularly in pricing, has increased significantly in several of the Group’s areas of activity in recent years. In addition, partly as a result of the
contraction in demand for automobiles, current global production capacity for the automotive industry significantly exceeds demand. This overcapacity,
combined with high levels of competition and weakness of major economies, could intensify pricing pressures.
Should the Group be unable to adapt effectively to external market conditions, this could have an adverse effect on its activities and future prospects, as
well as its earnings and financial position.
RISKS ASSOCIATED WITH SALES IN INTERNATIONAL MARKETS AND EXPOSURE TO CHANGES IN LOCAL CONDITIONS
A significant portion of the Group’s existing activities are conducted and located outside of Italy and the Group expects that revenues from sales outside
Italy – and, more generally, outside of the European Union – will account for a continually increasing portion of its total revenues. The Group is subject to
risks inherent to operating globally, including those related to:
exposure to local economic and political conditions;
import and/or export restrictions;
multiple tax regimes, including regulations relating to transfer pricing and withholding and other taxes on remittances and other payments to
or from subsidiaries;
foreign investment and/or trade restrictions or requirements, foreign exchange controls and restrictions on repatriation of funds;
the introduction of more stringent laws and regulations.
Unfavourable developments in any one of these areas (which may vary from country to country) could have a material adverse effect on the Group’s
activities and future prospects, as well as its earnings and financial position.