"Ladies and Gentlemen: Speaking on behalf of Fiat and myself, I would like to welcome you to the Sevel plant, the largest light commercial vehicle production facility in Europe," said Fiat Group and Auto Division CEO Sergio Marchionne to the assembled press and guests at the Sevel plant this morning. "I would also like to thank Jean Martin Folz, CEO of PSA-Peugeot Citroen, who will speak after me. We share a productive working relationship and we are also good friends.

"Whenever I hear someone cite examples of successful collaborations in the automotive business, Fiat and PSA are often mentioned together. This partnership, which started 28 years ago, is recognized by carmakers, the financial community and the press as an exemplary collaborative relationship. And that’s not just because it was one of the first to be established. It’s also because it continues, today, to be one of the most productive. Fiat and PSA have been co-operating for a long time. It was back in 1978 that our two groups decided to create Sevel here in Val di Sangro to jointly study, develop and manufacture a commercial vehicle designed specifically for the European market. Ten years later, as a result of the expertise gained and the collaborative success, the relationship was expanded to include the development of a second production facility, this one in France. Our relationship also produced a further agreement, which was signed last year with Monsieur Folz and the organization of Turkey, Tofas, to jointly develop a minicargo that we will bring to market in 2008.

"The latest result of this profitable cooperation is the vehicle that you can see being manufactured at this facility, which is currently identified with the product code “X250” and will replace the existing Citroen Jumper, Peugeot Boxer and Fiat Ducato," continued Marchionne. "Unquestionably, when it was first established, this collaborative relationship represented a new and, perhaps, daring approach in the automotive business. It was the first 50-50 joint venture established by two major European carmakers, at a time when alliances seemed to entail more risks than opportunities. It took courage to launch a relationship in which both partners had equal authority at all levels: not just in controlling the venture, but also in making decisions, in product availability, and in allocation of capital expenditures and R&D expenses.

"Cohabitation is never easy when it requires constant consensus. However, it is also true that determination, clarity of intent and shared goals and programs can make cohabitation very fruitful. Back then, like today, our two companies shared a common vision about the future of the transportation business. They also agreed on what the products, processes and organizational models should be. Last, but not least, their model renewal schedules were very similar. The results that we have achieved together with PSA confirm the wisdom of our choice. When a decision is taken to develop a new model or enter a new market, two avenues are available. One is to go at it alone. In this case, a company, relying only on its own abilities, decides on its own what to do and how to do it. But to be successful, it must have strong financial resources and must be very skilful.

"Today, the market requires great flexibility and rapidity, which a do-it-alone approach does not always provide. The other avenue is to develop alliances that target individual projects and to enter into specific commercial or industrial agreements. The advantages go beyond cost considerations. Sharing an idea with a partner means saving time and energy, because it allows efforts to be focused where they are really needed. It means gaining access to technologies that would not otherwise be available.
 

"It also provides access to the knowledge of a market in which a company wishes to expand, knowledge that only a local manufacturer can provide. In other words, it means becoming more competitive. This is the path that Fiat Auto has chosen to take, signing agreements with international partners such as Ford, Suzuki, Tata, Severstal and, in particular, PSA. We will continue to pursue this approach whenever the opportunity arises. This approach is precisely the reason why, today, Sevel is successful at the manufacturing, product and image levels. I can confidently say that our relationship with PSA has been one of our most positive collaborative work experiences. he quality of our partner has a lot to do with it. PSA is a strong, dynamic group that has achieved important milestones in automotive innovation. Jean Martin Folz is a very high-profile manager who led PSA’s recovery and made it the second largest carmaker in Europe. The alliance between our two companies is in a business that is very important for Fiat.

"Commercial vehicles have always played a key role in determining Fiat Auto’s performance. In 2005, we sold more than 339,000 vehicles worldwide and attained very high market shares: 40.4 percent in Italy and 10.4 percent in Europe. We have significant presences in all countries and we are the number one importer in France and Germany. In the first four months of 2006, a total of 117,000 Fiat commercial vehicles were sold worldwide, almost 9,000 more than in the same period last year. More specifically, sales in Europe rose by 8.5 percent, with our market share increasing from 10.4 to 10.8 percent. We also strengthened our leadership in Italy: our market share grew to 44.5 percent for the first four months of 2006 and it exceeded 50 percent for the month of April. These figures confirm the strategic importance that this business segment has for Fiat and reward our investments, which are not only earmarked for products but also for our sales network – a network that is required to provide structures and resources specifically dedicated to Commercial Vehicles.

"Going back to our partnership with PSA, over one-third of Fiat’s commercial vehicles are built in cooperation with PSA.
In two years, when production of the minicargo gets under way in Turkey, the percentage of vehicles produced jointly will rise to more than 50 percent.  I would also like to point out that for the past seven years, the vehicle manufactured at this plant in Abruzzo has been the uncontested leader of the European market. It is not by chance that we chose to welcome you at the plant’s new painting facility. You know that I believe that actions speak louder than words.

"And this facility speaks for itself. It speaks of the level of technology and quality that we are pursuing, both in our processes and in our finished products. It speaks of the importance that Sevel has in Fiat’s growth plans. It speaks of a company that has refocused itself on its core business and regained a “can do” culture. A culture of doing what by tradition, expertise and skills it knows how to do best: building automobiles and commercial vehicles. But there is another excellent reason why we chose to show you our new vehicle at the place where it is being manufactured. We thought that this was the best way to acknowledge the contribution of the Sevel staff — their skills and the results that they have achieved. And a way to thank employees and trade unions for their co-operation during the delicate model production start-up phase. Thanks to all of you. I now yield the floor to Jean-Martin Folz," concluded Marchionne.