FIAT GROUP CLOSES FIRST QUARTER 2008 WITH ITS 13TH CONSECUTIVE QUARTERLY YEAR-OVER-YEAR IMPROVEMENT

• Revenues exceeded the €15 billion mark, nearly 10% up on 2007 and the highest 1st quarter level in its history, with all businesses contributing to the increase.
• Trading performance moved up to €766 million, €171 million or 28.7% better than prior year, with margins improving to 5.1% from 4.4%.
• Pre-tax profits rose €62 million to €636 million, with the substantial improvement in operating performance being partially offset by a €154 million worsening of the mark-to–market of two equity swaps related to stock option plans.
• Net profit of €427 million was 13.6% higher than prior year.
• Seasonal working capital build (€1.3 billion), acquisitions (€0.1 billion) and share repurchases (€0.2 billion) pushed Group’s Net Industrial Debt to €1.1 billion. Nonetheless, liquidity remained strong at €4.8 billion.
• Group 2008 targets are confirmed, including a Net Industrial Cash position of €1.5 billion (exclusive of additional share repurchases)

Profit before taxes totalled €636 million, an increase of €62 million over Q1 2007. Higher operating profit (+€188 million) and an increase in investment income (+€27 million) more than offset higher net financial expense. Income taxes amounted to €209 million (€198 million in Q1 2007), representing an effective tax rate of 32.9% (34.5% in Q1 2007). Net profit (before minority interests) for Q1 2008 totalled €427 million, compared to €376 million for the same period in 2007.

Net industrial Debt rose by €1.5 billion, mainly due to seasonal working capital absorption (€1.3 billion), share buy-backs of €0.2 billion, acquisitions of € 0.1 billion and the equity swap impact of €63 million. Liquidity of €4.8 billion remained strong and in line with Group guidelines.

For Q1 2008, the Automobile businesses had revenues of €7.4 billion, an increase of 8.8% over the first quarter of 2007. In particular, Fiat Group Automobiles closed the quarter with revenues of €6.8 billion, up 8.4% over the same period in 2007 due to higher sales volumes.

Several unfavourable factors impacted business during the quarter: a decline in demand in Italy; the halt in production at the Giambattista Vico plant in Pomigliano d'Arco in January and February and the gradual return to production in March while an extensive industrial re-engineering was being carried out; the temporary suspension in production of vehicles equipped with the 1.3 Multijet engine due to defects which emerged in relation to an externally supplied component.

Notwithstanding these factors, Fiat Group Automobiles delivered a total of 563,600 units in Q1 2008, up 4.1% year-on-year. Deliveries were down in Italy (-11.7%), while out-performance against the market was achieved in the rest of Western Europe, with significant increases in both France (+27.3%) and Germany (+15.3%). Deliveries decreased in Spain (-31%) - where demand was extremely weak - as well as in Great Britain (-3.6%). Details by brand show that the Fiat brand, in particular, continued to post positive performances: Fiat Panda and Fiat 500 (which at the end of Q1 had reached 182,000 orders since its launch) were the best selling cars in Europe in the A-segment and the Punto was one of the models in its class with the highest demand.

The Western European passenger vehicle market decreased 2.8% over Q1 2007. This performance reflected a decline in demand in Italy (-10%), driven by an overall economic slowdown and increased fuel prices. Demand also decreased significantly in Spain (-15.3%), while there were moderate increases in Germany (+2.6%) and France (+1.3%) and a slight drop in Great Britain (-0.7%). In Poland the market grew 19.5% and in Brazil 28.5%.

Fiat Group Automobiles market share for passenger vehicles for the first quarter 2008 was 31.1% in Italy (down 0.6 percentage points over Q1 2007) and 8.3% for Western Europe (-0.2 percentage points) overall. Details by brand show that performance for the Fiat brand is against this trend both in Western Europe and in its home market, Italy, where its share increased 1.2 percentage points to 25.4%. Market share for the Lancia brand was substantially flat, while Alfa Romeo was heavily impacted by the closure of the Giambattista Vico plant. In Brazil, the Sector continued to achieve outstanding levels of performance: deliveries for the quarter increased 34.7% over Q1 2007 and its share of the passenger vehicle market rose 0.6 percentage points to 25.5%.

Light commercial vehicles also performed positively: a total of 105,300 units were delivered in Q1 2008, an increase of 11.8% over Q1 2007. In Western Europe, where the market contracted 1.7%, deliveries increased 9.9% to 65,300 units. New models such as the new Ducato, the new Scudo and the new Doblò contributed significantly to the performance of Fiat Professional. In addition, the new Fiorino Cargo was launched at the end of 2007. Fiat Professional’s market share was 11.5% for Western Europe overall (up 0.9 percentage points over Q1 2007) and 42.4% in Italy (up 0.5% percentage points).

Fiat Group Automobiles achieved €193 million in trading profit (€192 million in Q1 2007), while trading margin went from 3% to 2.8%. Q1 2007 included a one-off gain of €40 million and Q1 2008 included €40 million in lost fixed costs absorption resulting from the temporary closure of the Giambattista Vico plant. Excluding these one-off items, trading profit in Q1 2008 would have been €233 million compared to €152 million, with margins improving to 3.4% from 2.4%. This improvement was principally attributable to an increase in volumes, an improved product mix – benefiting from the introduction of new models in 2007 – especially from the Brazilian market.

On the product side, the year started off with the world preview of four new models presented by Fiat Group Automobiles’ various brands at the Geneva Motor Show. First, a new car bearing an historic name, Delta, designed to begin the process of rebuilding the product portfolio for the Lancia brand. Then the limited production Alfa 8C Spider and the small but powerful 500 Abarth, equipped with 135 b.h.p., representing the second vehicle in the newly re-launched brand. Finally, the functional and versatile people mover, the Fiorino passenger version.

There were other new developments following the show in Geneva. Fiat Professional completed the Fiorino range with the Combi version, designed to transport both people and goods. Alfa Romeo previewed photos of the MiTo, the brand’s much awaited “junior” model - the “sportiest compact ever" - which will be officially presented in June and available for sale beginning in July. The existing range of models on offer was further enhanced with the 2008 versions of the Sedici, Ulysse and Idea (Fiat) and the Ypsilon and Phedra (Lancia).

Maserati reported revenues of €193 million for Q1 2008, up 15.6% over the corresponding period in 2007. This significant increase is mainly attributable to the excellent performance of the GranTurismo, which is selling well in all markets. A total of 2,234 cars were delivered to the network during the quarter, up 21% year-on-year. Trading profit for the quarter totalled €10 million, a sharp reversal over the €1 million loss reported for the corresponding period in 2007. Despite the significant impact of adverse currency movements, higher volumes and large cost efficiency gains enabled Maserati to repeat the positive results achieved in the second half of 2007. One year after unveiling the GranTurismo, Maserati presented the GranTurismo S at the Geneva Motor Show in March. Equipped with a 440 b.h.p. 4.7 litre V-8 engine, this car is a captivating interpretation of Maserati’s sportiness.

Ferrari reported revenues of €456 million for Q1 2008, up 19.7% over the same period in 2007. The increase is mainly attributable to higher sales of the 612 Scaglietti and 599 GTB Fiorano models. A total of 1,654 cars were delivered to the network during the quarter, a 4% increase over the first quarter of 2007, while sales to end-customers totalled 1,645 units (+1%). Ferrari closed the first quarter of 2008 with a trading profit of €59 million, an improvement of €28 million (+90.3%) over the €31 million figure for Q1 2007. This positive performance is mainly attributable to an increase in sales volumes, selling prices and cost efficiency gains, including a substantial reduction in the net costs associated with F1 racing. Ferrari launched its exclusive “One-to-One Personalisation Programme” for the 612 Scaglietti at the Geneva Motor Show, enabling customers to fully personalise this flagship model.

CNH’ s global reach enabled it to fully participate in every region, with worldwide retail unit sales of both tractors and combines up more than the industry. In the first quarter of 2008, the global construction equipment market grew approximately 5% with respect to Q1 2007. Demand grew slightly in Western Europe and significantly in Latin America and in the Rest of the World, more than offsetting the decline in North America. CNH’s strong global presence allowed it to capitalize on growth in healthier markets outside of North America and to increase retail unit sales in line with the industry in those markets.

CNH closed the first quarter of 2008 with a trading profit of €198 million (6.7% of revenues), an increase of €9 million from the €189 million (7.0% of revenues) for Q1 2007 (up 19.4% in US dollar terms). Higher material, manufacturing and procurement costs required to maintain the higher production levels prevented CNH from realizing the full incremental margins for additional volumes and better mix. The Sector is taking actions to increase industrial capacity and implement corrective actions in order to fully recover the lost incremental margins.

In the quarter, all CNH brands (New Holland Agriculture, Case IH Agriculture, Steyr, New Holland Construction, Case Construction, Kobelco) continued the launch of new, repowered and up-graded products further widening their product offering. New Holland Agricultural Equipment launched new products, including subcompact, compact and utility product lines, while Case IH Agricultural Equipment launched extensions in Europe of its Farmall utility tractors and for its Puma over-100 b.h.p. tractors. It also launched a new 120-foot boom Patriot self-propelled sprayer, a higher-capacity line of seeding tools and precision planters. New Holland Construction Equipment launched a new B Series loader backhoe, and it also announced INDR, a key brand initiative for Integrated Noise & Dust Reduction Cooling System technology installed in its crawler excavators, to reduce fuel consumption and pollution. In North America, Kobelco introduced a new 80-90 ton crawler excavator, expanding the top end of its product line-up. Case IH Agricultural Equipment and Case Construction Equipment further expanded their industry-leading customer support programs that work with dealers to help minimize customer downtime and maximize productivity.

Iveco reported revenues of €2.9 billion for the quarter, a sharp increase (+17.9%) over 2007, resulting from higher sales volumes and increased prices. Iveco delivered a total of 58,050 vehicles during the period (up 21% year-on-year) of which 38,000 units were delivered in Western Europe (+10.3%). Significant increases were posted in Italy (+9.6%) and France (+19.2%) as a result of higher volumes in the light and heavy ranges. The increase in Great Britain (+50.6%) reflected higher volumes in all product categories. However, the volume of deliveries decreased in Germany (-9.2%), principally in the medium and heavy ranges, and in Spain (-5.3%) reflecting a general weakness in demand. For the Rest of the World, volumes continued to rise sharply in Eastern Europe (+39%) and Latin America (+30.5%).

In the first quarter of 2008, the Western European market for commercial vehicles (weight ≥ 2.8 tons) increased 3.3% over Q1 2007. Demand in the light vehicle category was in line with the previous year, the medium range saw a modest 2.2% decrease and the heavy vehicle range experienced a healthy increase of 15.5% on the back of large order intakes for all manufacturers during 2007. Demand rose in all major European markets, except Spain (-18.4%) and Germany (where medium and heavy ranges declined by 12.2% and 5.5%, respectively), with significant increases in Great Britain (+15.7%) and France (+10.9%) which suffered large decreases in 2007.

Trading profit for Iveco was €222 million (7.6% of revenues), a sharp improvement (up €72 million; +48%) over the €150 million level (6% of revenues) reported for the first quarter of 2007. The increase was mainly due to a sharp rise in sales volumes, better selling prices following the competitive repositioning of products and positive results in the heavy vehicle range in Eastern Europe and Latin America.

The Passenger & Commercial Vehicles product line closed the quarter with revenues of €998 million (+6.8%), 80% of which represented intra-group sales. A total of 688,000 engines (+8.6%) and 575,000 transmissions (+14.9%) were sold during the quarter.

Industrial & Marine reported revenues of €991 million, up 29.1% over the first quarter of 2007, which came primarily from sales to Group companies. A total of 160,000 engines were sold - up 27.5% - mainly to Iveco (44%), CNH (22%) and Sevel (23%), a joint venture for the production of light commercial vehicles. In addition, 38,000 transmissions (+17.3%) and 90,000 axles (+16.7%) were sold.

Trading profit totalled €47 million for the quarter, against €44 million for Q1 2007. Trading profit benefited from higher volumes and increased efficiencies in both purchasing and manufacturing, but was negatively impacted by costs associated with the faulty production of 1.3 Multijet engines as a result of a defective externally provided component.

During the quarter, FPT continued development of the new gasoline-powered engines which are to be offered in the coming months (principally the 1.8 direct injection engine with double various valve timing). The new development in diesel engines, on the other hand, is the launch of production of the F1C 3-litre 146 and 176 b.h.p. engines to be mounted on Iveco’s new off-road, the Massif. For CNH Off Road vehicles, production of the new NEF Tier 3 motors for application on Dozers (4- & 6- cylinder Common Rail engines ranging from 60 to 74 kW) and the first Common Rail Tier 3 application for Wheel Loaders (a 101 kW, 4-cylinder engine) was launched. In the automotive area, the first application of the new 1.6 litre 105 b.h.p. and 120 b.h.p. engine, which complies with the new Euro 5 emission standards (effective in 2009) was offered beginning January (on the Fiat Bravo). Finally, in Japan the Fiat 500 with the C514 – a 5-speed automated manual transmission - was launched.

Magneti Marelli reported €1.3 billion in revenues for Q1 2008, up 8.5% over the same period in 2007. Excluding the After Market Parts and Services business – consolidated as of May 2007 – revenues increased 5.6% on the back of strong results in Brazil, Poland and Germany. For the Lighting business, increased sales to external customers in Germany, Fiat in Brazil, and overall increases in sales in Turkey and China compensated for the effects of the temporary closure of the Giambattista Vico plant and the negative trend in NAFTA markets. Engine Control reported an increase in revenues driven by positive results in Europe and Brazil, while there was a contraction in the US market. Revenues were stable for the Suspension Systems business: the negative impact of the production shutdown at Pomigliano was offset by higher sales of products for Fiat models in Poland and Italy, in addition to the significant growth in the Brazilian market. An increase in revenues for the Exhaust Systems and Shock Absorbers businesses was primarily driven by sales to Fiat in Poland and Brazil. The Electronic Systems business closed Q1 2008 with revenues substantially in line with the first quarter of 2007: there were increases in sales of the Blue&Me system for the main Fiat models and instrument panels to external customers, while revenues from high-tech telematics experienced a decrease due to a change in product mix.

Magneti Marelli reported €45 million in trading profit for the first quarter, in line with the figure for Q1 2007. The effect of higher sales volumes was offset by the negative impact of the production shutdown at the Pomigliano plant, the launch of a new range of in-car communication and information products and additional costs related to production startup for a number of new products launched by the Lighting business at the end of 2007. Optimisation of overheads and efficiency gains compensated for continued competitive pressure on selling prices and increases in raw material costs. During the quarter, production commenced on 23 new products involving all business lines. The main products were: headlamps and rearlamps for Audi, the CAD 241 Euro 5 manifold for the 1.9 JTD engine, the new Power-shock shock absorbers and exhaust systems for the 1.6 MDE (Medium Diesel Engine).

Comau had revenues of €252 million in Q1 2008, up 10% compared with the first quarter of 2007. The increase is principally attributable to body-welding operations in Europe, with adverse currency movements having a moderately negative impact. Order intake for the period totalled €376 million, slightly lower than Q1 2007. At 31 March 2008, the order backlog totalled €613 million, a 5% increase over the figure reported at the end of 2007. First quarter trading profit totalled €1 million, in contrast to the €26 million trading loss reported for the corresponding period in 2007. The improvement is mainly attributable to body-welding operations in Europe and South Africa and the effects of the reorganization and restructuring process initiated in the second half of 2006.

In January, Magneti Marelli and Sumi Motherson Group signed an agreement to establish a joint venture in India for the production of automotive components focused in the area of lighting and engine control systems. These products will be distributed in the Indian market and to domestic and international automakers operating in India.

On 28 January, FPT Powertrain Technologies, the Region of Piedmont, Province of Biella and City of Verrone (in Biella) signed a Letter of Understanding relating to expansion of the plant in Verrone, where a new transmission, the C635, designed for use in mid-size autos will be produced. There will be three versions: Manual, Dual Dry Clutch and robotized. The amount to be invested by FPT Powertrain Technologies is estimated at around €500 million, including fixed assets and R&D costs and should enable production capacity of approximately 800,000 transmissions annually to be reached by 2012. Once fully operational, employment at the plant could reach 1,100, representing an increase of 600 employees over the current level.

In February, Fiat Group Automobiles announced its decision to produce a new model, which will replace the current Lancia Ypsilon, at the Termini Imerese plant beginning in the second half of 2009.

Magneti Marelli consolidated its presence in India with the signing of two 50/50 joint venture agreements with SKH Metals Limited and SKH Sheet Metal Components Limited (both part of the Krishna Group) for the production of automotive exhaust systems. The plant to be established jointly with SKH Metals Limited will be located in Mannesar (40 km south-west of New Delhi). It will design and produce components for automotive exhaust systems for Suzuki Maruti India Limited and other companies in the Suzuki Motor Corporation Group. The plant established jointly with SKH Sheet Metal Components Limited will be located at Pune in the western Indian region of Maharashtra, where it will be strategically located for the design, production, testing and supply of exhaust systems to Fiat and Tata and to other automotive manufacturers operating in the south-west of India.

In March, FPT Powertrain Technologies acquired from Chrysler L.L.C. the 100% of the Tritec Motors plant located in Campo Largo in the metropolitan area of Curitiba (Paraná, Brazil). This acquisition - which includes the land, industrial facilities, production lines and license to build existing products – represents a total investment, including additional development costs, of 250 million Brazilian reais (approximately €83 million). At this plant, one of the most modern engine production facilities in the world, FPT will produce a new range of mid-size engines in both gasoline and flex-fuel versions. As a result of the acquisition by FPT Powertrain Technologies, approximately 500 direct new jobs and 1,500 indirect jobs will be created.

On March 3, 2008, the plant in Pomigliano d'Arco (renamed Giambattista Vico), was reopened, concluding the intensive extraordinary re-engineering of the site, where €70 million was invested in providing a significant technological update. This investment was accompanied by large-scale training for employees and an additional €40 million in costs related to the shutdown in production (from 7 January to 2 March 2008) necessary for implementation of the project.

During the Annual Meeting of Shareholders held on 31 March, in which the 2007 Financial Statements were approved, the authorisation for the purchase (for the next 18 months) and sale of own shares was renewed. Under the new authorisation, an aggregate total of shares, for all three classes combined, representing a maximum of 10% of share capital or a purchase value of €1.8 billion - including the €0.6 billion in Fiat shares already held by the Company - may be purchased.

The sound results of the first quarter provide a solid foundation for the Group’s commitment to growth and margin expansion over the 2008-10 period. Current trading conditions in some product markets and some geographies have weakened during the quarter, especially in terms of passenger car demand in Western Europe and construction equipment in the North American market. The Group is also beginning to experience weakness in truck market in some European geographies, notably Spain. Notwithstanding these slowdowns, we believe that our portfolio of activities will enable us to offset the associated negative impact on profits, and we are therefore confirming our 2008 Group objectives:

• Group sales well in excess of €60 billion:
• Group trading profit between €3.4 and €3.6 billion;
• Net income between €2.4 and €2.6 billion;
• Earning per share between €1.90 and €2.00.