Chrysler 2012 Annual Report Download - page 41

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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
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 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). In Brazil, the Group retains its position as the market leader, providing
a key contribution to the Group’s performance in terms of revenues and profitability. The Group’s exposure to other emerging countries
has increased in recent years, as have the number and importance of such joint ventures and cooperation agreements. Economic and
political developments in Brazil and other 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 financial position.
Risks associated with the ability to enrich the Group’s product portfolio and offer innovative products
The success of the Group’s businesses depends, among other things, on their ability to maintain or increase their share in existing
markets and/or to expand into new markets through the development of innovative, high-quality products that provide adequate
profitability. On 30 October 2012, the Group outlined its strategic direction in response to the continued crisis in the European car
industry, which includes leveraging its historical premium brand heritage (Alfa Romeo and Maserati), re-aligning its product portfolio
and repositioning the business for the future. In order to regain profitability in the EMEA region, the Group intends to shift a significant
portion of its product portfolio towards higher margin vehicles and to utilize the EMEA production base to develop the Group’s global
brands (Alfa Romeo, Maserati, Jeep and the Fiat 500 Family).
A failure to develop and offer innovative products that compare favorably to those of the Group’s principal competitors, with particular
regard to the upper-end of the product range, in terms of price, quality, functionality and features, or delays in bringing strategic
new models to the market, could impair the Group’s strategy, which would have a material adverse effect on the Group’s business
prospects, earnings and financial position.
Risks associated with the policy of targeted industrial alliances
The Group has engaged in the past, and may engage in the future, in significant corporate transactions such as mergers, acquisitions,
joint ventures and restructurings, the success of which is difficult to predict. There can be no assurance that any such significant
corporate transaction which might occur in the future will not encounter administrative, technical, industrial, operational, regulatory,
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 financial position.
Main Risks and
Uncertainties to
which Fiat S.p.A.
and its Subsidiaries
are Exposed
Report on
Operations