Chrysler 2010 Annual Report Download - page 43

42 REPORT ON
OPERATIONS
MAIN RISKS AND
UNCERTAINTIES
TO WHICH FIAT
S.P.A. AND FIAT
GROUP POST
DEMERGER
ARE EXPOSED
RISKS ASSOCIATED WITH GENERAL ECONOMIC CONDITIONS
The Group’s earnings and financial position are influenced by various macro-economic factors – including
increases or decreases in gross national product, the level of consumer and business confidence, changes in
interest rates on consumer credit, the cost of raw materials and the rate of unemployment – within the various
countries in which it operates.
For example, the global economic recession in 2008 and the first half of 2009 had a negative impact on
the Group’s earnings. Weak economic conditions resulted in a significant decline in demand for most of the
Group’s products. In 2010, demand levels for the automobiles business in Europe also reflected the absence
of significant measures previously put in place by major governments and monetary authorities. In general,
the sectors in which the Group operates have historically been subject to highly cyclical demand and tend
to reflect the overall performance of the economy, in certain cases even amplifying the effects of economic
trends. Given the difficulty in predicting the magnitude and duration of economic cycles, there can be no
assurances as to future trends in the demand for or supply of products sold by the Group in any of the markets
in which it operates.
Moreover, certain major economies are still in recession or have recently suffered periods of low growth or
economic stagnation. These conditions or the return to economic recession in markets that have recently
recovered could ultimately affect the industrial development of many businesses, including those of the Group.
There can be no certainty that measures taken by governments and monetary authorities will be successful
in re-establishing the conditions necessary for sustainable economic growth. As such, uncertainty remains
as to the global economic outlook and some national economies could experience extended periods of slow
economic growth or recession.
Additionally, even in the absence of slow growth or recession, other economic circumstances – such as
increases in energy prices, fluctuations in prices of raw materials or contractions in infrastructure spending
– could have negative consequences for the industries in which the Group operates and, together with the
other factors referred to previously, could have a material adverse effect on the Group’s business prospects,
earnings and/or financial position.
Following is a brief description of risks and uncertainties that could potentially have a significant impact on the activities
of Fiat Group post Demerger. Other risks and uncertainties, which are currently unforeseeable or considered to be
unlikely, could also have a significant influence on the operating performance, financial position and future prospects
of Fiat S.p.A. and Fiat Group post Demerger.
MAIN RISKS AND UNCERTAINTIES
TO WHICH FIAT S.P.A. AND FIAT GROUP
POST DEMERGER ARE EXPOSED