Fiat issued a statement this afternoon which attempted to dampen speculation as their share price continued to climb, now reaching two year highs. Meanwhile, Fiat CEO Sergio Marchionne, is putting the finishing touches to a new business plan for the Auto Division.

The statement - released to the Milan stockmarket earlier today - reiterated Fiat's belief that there are no surprises in store, and that they cannot explain the recent rally in shares. Second quarter financial results will be released as scheduled next Thursday.

FIAT SET TO UNVEIL NEW BUSINESS PLAN

Fiat Group and Auto Division CEO Sergio Marchionne has been working on a new business plan in recent weeks, but has been keen to downplay its significance, telling reporters "it's just a question of what we make, where". It is believed that Marchionne will release greater funds for the areas of research and development, as well as speeding up model introduction, an issue he is tackling by outsourcing the C-segment Fiat Silo replacement's development to Austrian engineering group Magna-Steyr.

Marchionne will also make greater use of the Italian government-sponsored state redundancy fund, which offers contributions towards wages for up to 52 weeks per two year period. With a national election due next year, along with Italy's tight labour laws, widespread redundancies or factory closures are right out of the question. Redundant parts of the sprawling Mirafiori plant are also expected to be sold off, however.

MARKET CONFIDENCE RISES AS FIAT'S SHARE PRICE RALLIES

Since dropping below the 5 euro threshold (hitting a low of 4.39 euros) a couple of months ago, Fiat Group shares have - over the last few weeks - rallied dramatically, and in fact, late this morning they stood at 7.00 euros, just cents below their year high of 7.09 euros.
 

In brisk trading today over 20 million Fiat Group shares changed hands on the Milan stock exchange, combining to a market value of 143 million euros. The price closed at 6.825 euro, down 0.124 pct.

Over the last few weeks several rumours have swept the bourses, with analysts believing that unidentified hedge funds were building up a stake in Fiat by stealth, and that recent short-selling was also contributing to the rise.

Giant US stockbroker, JP Morgan, sees only Fiat and VW/Audi Group - out of all the European carmakers - reporting a positive second quarter. They added that recent currency movements, along with more favourable raw material prices, are likely to trickle down, and impact on the bottom line soon.

FIAT GROUP STATEMENT, 21.07.2005 - PERFORMANCE OF FIAT SHARES

"Upon request by Consob, Fiat hereby reports that it has no elements to explain the performance and the significant volumes of Fiat shares that are being traded on the stock exchange nor does it possess information on new significant events that could have an influence on said performance," said today's statement.

"As per the calendar of company events, on Thursday July 28 the Board of Directors will review data for the second quarter of 2005 and disclose them on that day. Said data will also be the object of a conference call that will be held at 5:00 p.m," it concluded.