Chrysler 2011 Annual Report Download - page 47

Report on
Operations
46
political, financial or other difficulties (including difficulties related to control and coordination among different
shareholders or business partners) and thus fail to produce the benefits expected of it. The failure of any
significant strategic alliance, joint venture, merger or similar transaction could have an adverse effect on the
Group’s business prospects, earnings and/or financial position.
Risk associated with the alliance with Chrysler
The acquisition of a controlling interest in Chrysler and the related alliance is intended to provide both Fiat
and Chrysler with a number of long-term benefits, including sharing new vehicle platforms and powertrain
technologies, as well as procurement benefits, management services and global distribution opportunities.
The alliance is also intended to facilitate both parties penetration in several international markets where
the companies’ products would be attractive to consumers, but where one of the parties does not have
significant penetration.
The ability to realize the benefits of the alliance is critical for Fiat and Chrysler to compete with their competitors.
If the parties are unable to convert the opportunities presented by the alliance into long-term commercial
benefits, either by improving sales of our vehicles and service parts, reducing costs or both, the Group’s
financial condition and results of operations will be materially adversely affected.
Additionally, any adverse development in the Chrysler investment and the related alliance could have a material
adverse effect on the Group’s business prospects, financial condition and results of operations. Therefore,
if the investment and the related alliance do not bring their intended benefits or changes in circumstances at
Fiat or Chrysler occur, there may be a material adverse effect on the Group’s business prospects, financial
condition and results of operations.
Risks associated with selling in international markets and exposure to changes in local conditions
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; and/or
the introduction of more stringent laws and regulations.
Unfavorable developments in any one of these areas (which may vary from country to country) could have a
material adverse effect on the Group’s business prospects, earnings and/or financial position.
Risks associated with operating in emerging markets
The Group operates in a number of emerging markets, both directly (e.g., Brazil and Argentina) and through
joint ventures and other cooperation agreements (e.g., Turkey, India, China and Russia). The Group’s
exposure to these countries has increased in recent years, as have the number and importance of such joint
ventures and cooperation agreements. Economic and political developments in emerging markets, including
economic crises or political instability, have had and could in the future have material adverse effects on the
Group’s business prospects, earnings and/or financial position.
Main Risks and
Uncertainties to
which Fiat S.p.A.
and its Subsidiaries
are Exposed