in the First Half of 2003 98th Fiscal Year - FIAT SpA

During the first half of 2003, Western European demand for
automobiles declined to about 7.5 million units, or 2.6% less
than in the same period last year. In Italy, shipments held at
1,237,000 units, about the same as in the first six months of
2002. However, new registrations were down sharply in France
(-7.8%), Portugal (-23%) and Belgium (-9.9%).
Demand patterns were uneven outside Western Europe.
Shipments were up 13.5% in Poland, but slumped 8.8% in Brazil
due to that country’s growing economic instability. In China,
the automobile market expanded by 80% compared with the
first half of 2002, while a lingering economic crisis caused
demand in Argentina to fall below the already low level reached
in the first half of last year.
The Western European market for light commercial vehicles was
also weak, shrinking by 2.1% compared with the first six months
of 2002. In other countries, demand was up 14.9% in Poland,
but fell in Brazil, where it contracted even more than in the
automobile segment (-22.6%).
In this environment, Fiat Auto sold 867,100 automobiles and
light commercial vehicles, down 12.7% from the first half of
2002. A total of 632,200 units were sold in Western Europe,
or 11% less than in the first six months of 2002.
Compared with the first half of last year, unit sales were up
10.6% in Poland, but decreased 16.6% in Brazil, where Fiat
nevertheless remains the leading seller of automobiles and
light commercial vehicles as a whole.
Fiat Auto’s market share decreased to 7.6% for all of Western
Europe (-0.9 percentage points less than at June 30, 2002) and
28.2% for Italy, down 3.4 percentage points from June 30, 2002.
Outside Western Europe, market share held steady at 17.2%
in Poland, but decreased to 24.8% in Brazil (1.6 percentage
points less than midway through 2002).
The main reasons for the decreases in sales and market share
were the difficult conditions in the Sector’s target markets, which
were characterized by weak demand and the aggressive sales
policies pursued by the competition, and Fiat Auto’s aging
product line, which is scheduled for gradual renewal starting
in the second half of 2003. Another negative factor was the
production shortfall caused by a flood at the Termoli engine
plant in the first quarter of this year. The shortfall could not be
made up fully during the second quarter.
The Sector’s share of the market for light commercial vehicles
was also affected by an unfavorable business environment. In
Automobile Market
19
Automobiles — Fiat Auto Holdings
1st half 1st half %
(in thousands of units) 2003 2002 change
France 1,065.0 1,155.4 (7.8)
Germany 1,641.3 1,661.2 (1.2)
Great Britain 1,351.0 1,352.3 (0.1)
Italy 1,237.4 1,238.9 (0.1)
Spain 686.3 691.2 0.7
Western Europe 7,525.7 7,726.5 (2.6)
Poland 171.4 151.0 13.5
Brazil 539.3 591.2 (8.8)
Western Europe, the Sector’s share fell from 12.1% in the first
six months of 2002 to 11.5% in the same period this year,
despite a gain of 0.9 percentage points in Italy.
The first six months of the year were rich in events. Four new
models introduced at the Geneva Motor Show were well
received both by the public and the industry press. Models of
the Fiat and Lancia brands launched in June included the Nuova
Punto, which generated customer and dealer orders that were
in line with expectations, and the new Ypsilon, which was
presented to Fiat Auto’s European dealers at an event in Rome.
The comments in the press and feedback from customers
confirm the sales potential of these new models and bode well
for improvements both in unit sales and profitability.
The share of the Western European market claimed by the
Alfa Romeo brand held at 1.2%, about the same as in the first
half of 2002, owing in part to a gain of 0.5 percentage points
achieved in the relevant segments of the Spanish market.
In Italy, the 147, which now includes the GTA version, and
the156 family models did especially well. The 156 is expected
to post further gains in market share, based on the enthusiastic
response with which the press and the business community
greeted the presentation of a restyled version designed by
Giugiaro.
Also at the Geneva Motor Show, the Sector unveiled the Kamal
concept car. The production model of this Segment C crossover
is scheduled for introduction in 2006.
Work carried out within the framework of the agreement with
General Motors to increase competitiveness and product
innovation included further joint development of the “Small”
platform.
In the service area, ACI/Targa, a joint venture established in
December 2002 by Fiat Auto, Fidis and the Italian Automobile
Club (ACI) performed well in the first half of 2003, reaching its
expected targets.
In February, the Sector sold 50.1% of its investment in the In
Action company to Communication Services S.p.A., Italy’s
Sales Performance - Automobiles and Light Commercial
Vehicles
1st half 1st half %
(in thousands of units) 2003 2002 change
France 38.8 53.2 (27.1)
Germany 59.9 63.8 (6.1)
Great Britain 45.6 45.2 0.9
Italy 378.0 420.1 (10.0)
Spain 35.5 31.8 11.6
Rest of Europe 74.4 96.2 (22.7)
Western Europe 632.2 710.3 (11.0)
Poland 33.0 29.9 10.6
Brazil 147.1 176.3 (16.6)
Rest of the world 54.8 76.4 (28.3)
Total units sold 867.1 992.9 (12.7)
Associated companies 33.5 15.7 113.4
Overall total 900.6 1.008.6 (10.7)