IKEA for FIAT Press Conference Speech by Luca De Meo, Fiat Brand & Commercial Manager, Turin – Mirafiori Motor Village:

We have chosen this setting to tell you about our plans for the network and to present a world preview of the FIAT Brand CI project, because this site has become our customer satisfaction laboratory, symbolising the entire process that the car follows, from the plant to the hands of our customers, passing through the extremely important link of the distribution process.

This centre was inaugurated on May 26, after reconstruction work coordinated by the Faculty of Architecture of Turin Polytechnic that respects the original structure of the buildings, which were inaugurated in 1939. The site stands in an area of 70,000 sq m, 30,000 of which are covered. 3000 sq m of this are dedicated to a display of vehicles from Fiat Auto’s 4 brands, with about 1400 dedicated to FIAT itself. But the complex also includes numerous other attractions for our customers, like the test track of the Mirafiori plant where they can test drive our cars or take a Safe Driving course, or the “virtual experience” room, where there are three driving simulators. Not to mention a shopping gallery, an elegant café/restaurant, the multipurpose room we are in now, which seats 400, and plenty more that you will discover as you walk around.

Today we have brought you here to talk about our network. We felt it was necessary to involve you in the reorganisation that is taking place in our sales network in order to sustain and support our growth. What is the current state of the art in our network? What kind of image do our dealers have? I would like to start by eliminating the first “barrier” that many of us still have regarding the quality of our dealers, by showing you the result of a survey conducted through Mistery shopping. The survey has shown that we come in above the market average but below the best in class, and, above all, below the premium brands. I believe that in Italy, Fiat should compete with the best in terms of service to customers. So this is where we have to act, because it is at the point of sale that all our products, plans, and strategies take shape in the customer’s eyes!

But if we are talking about distribution in the automotive market, we must understand that this sector has for many decades been regulated in such a way that it has not developed at the same speed as other sectors, but has remained “protected” and “closed” in a world of its own. Today, on the other hand, but above all in future, distribution and after-sales service must create value for the customer; they will be increasingly integrated with the brand to highlight its distinctive features, communicating its values and transmitting the so-called “Brand experience”, and in many cases making the difference. In this sense, we can say that the automotive sector is converging on an approach to retail sales where other sectors have been working and investing for many years. It is easy to think of the world of luxury goods, food or large retail chains. For years they have been working to “impose” their values through the atmosphere which they create in their outlets, and the structured way that customers are “managed” in sales and after-sales services.

We can all see the transformation that is taking place in the world of point of sale outfitting, with larger shop windows and signs that are less obtrusive, but with more premium products, new spaces and new ways of displaying products, and new ways of organising the customer’s time spent at the showroom. We intend to work in our own way even in this area, in the point of sale, because we are well aware that the distribution scenario is not only following the trends created on the market, but is actually accelerating because of the new regulations governing car distribution, the well known BER or Block Exemption Regulations. These have been strongly supported by Brussels, and encourage the spread of multi-brand franchises but they also risk de-personalising the brand identity.

Our goal is to create a concept that is on the cutting edge in our sector by anticipating trends and not by hiding behind the status quo, a concept that can meet our goals of transmitting our values to the customer and of simplifying the process of “information” first and then “sale” as much as possible. In brief, this means making the purchase of a Fiat a pleasant, straightforward but above all simple experience. There we have it, simplicity. A concept on which our brand is investing heavily. And where distribution is concerned, we want to talk to our potential customers simply, without effort or stress.
 

We do not want to bore you with our surveys regarding the stress of buying a car, but we certainly have to be ready to deal with a competent, demanding customer who wishes to invest 15, 20 or 30,000 Euros. The entire project is focused on reducing the anxiety that tackling a similar purchase can cause. The starting point had to be the customer, or rather his purchasing process. Most important, the sales environment has to be as clean, light and simple as possible, without barriers. Access to information has to be as free as possible, via the Internet (we are studying a touch-screen project that would simplify the process directly in the point of sale), or from easily visible information panels or brochures distributed in numerous points around the showroom without having to interact with anyone. Or it may be guided, depending on the individual requirements involved, through specially designed software which we will discuss later.

If we had tried to develop a model by ourselves, or by analysing what our direct competitors were doing we probably would not have introduced anything innovative; it would have been an excellent, conventional concept of retail car sales, but it would not have been as distinctive as we wanted. So how, or rather with whom, were we to find the right solution? We decided that Ikea was the best choice. A company that has created a new approach to retail sales, affirming its leadership in the retail world with a simple, innovative but highly effective concept. And Ikea also shares many of our values.

In 2005 Fiat and the Ikea Italia Business Division formed a working group and we began to work on the project. We soon realised that we had made the right choice, and that the stimulus of another sector, with its experience and professional skills in the retail world would produce a concept that met our expectations. Today we want to show you the “results” of our research, and present our operating plan. So it is now my pleasure to hand over to Roberto Monti, the Country Manager of IKEA Italia. Thank you Roberto for your words which have clarified the whole concept perfectly.

But we had to finish the job, as Ikea had suggested, by redefining the entire architectural container, making it modern, but not excessively so. Lighting is fundamental for products like ours and so we approached two leading Italian manufacturers, Targetti and Guzzini, who will develop a tailor-made Lighting plan for each of our showrooms on the basis of a clear-cut brief. For the floors, Graniti & Fiandre have developed a white floor that makes the product stand out, but is also resistant to fashions and wear. Now I would like to show you the development plan for this project. So far we have carried out preliminary tests in about 10 towns, but we intend to deliver the definitive project elaborated by a firm of architects commissioned by us to each dealer by the end of the year, and we expect at least 120 to be in place by that date. This will enable us to complete implementation in Italy by the end of 2007. As you can see from the second slide, the project has also been launched in the rest of Europe with pilot sites, and we expect to have more than 70% of the network ready by the end of 2007, and to complete the remainder in 2008.

We said earlier that even the way customers are handled inside the point of sale must be managed in a structured manner. To do this, Fiat has created a special project known as FIAT Link. This is an innovative application on a website, which links the manufacturer to the network. The particular feature of the system is that the customer is its focal point and that the staff at the dealership will find updated information in real time. In addition to this, Fiat Link provides salesmen with “structured sale” software, a complete procedure, from the choice of the model/version etc. to information about loans and so on, which gives the customer all the information he needs, and is then gathered together in a contract (Patto Chiaro) which is printed professionally to summarise the entire negotiations. This system will improve the quality of relations between our dealers and our customers, and will also introduce an element of significant economic efficiency into the entire “Dealership” system.

But that is not all. If the Ikea project for Fiat, Fiat Link and the numerous other tools that we have developed are the “hardware” of the network, we are also working with our dealers who I do not hesitate to describe as the software of the system. With their ideas, skills and initiatives, they make the difference for the brand’s success. We have launched a research and development plan in this area too, initially in the EU but also in the rest of the world.

This plan obviously starts from the development of our branches in areas that we consider strategic and which we prefer to manage directly, both because of the volumes involved and to create the brand image. The plan envisages the inauguration of new centres in Madrid, London, Brussels and Munich and the complete refurbishment of existing structures and the addition of flagship facilities like the one we are in today. At the same time, we have launched an ambitious programme to find new players. Our target is certainly a modern businessman who knows how to interpret new market trends and to manage the complexities of this business, and one who is financially strong. By the middle of next year, we intend to cover the areas currently not catered for, but above all to replace any dealers who are unable to maintain the Brand’s development plans.