The Board of Directors of Fiat S.p.A. met today in Turin, under the chairmanship of Luca Cordero di Montezemolo, to approve the Group’s first quarter 2009 results.

􀂃 Group revenues were down 25.3% to €11.3 billion on the back of substantial deterioration in all markets, with particularly severe declines in construction equipment and trucks. Market declines were more contained for automobiles and agricultural equipment, where the Group successfully capitalised on the strengths of its product portfolio to consolidate or improve its position in several key regions.
– Fiat Group Automobiles (FGA) reported €5.6 billion in revenues (-18%) on a total of 464,600 cars and light commercial vehicles delivered (-17.6% over Q1 2008). Demand trends improved during the quarter, especially in March as a result of the introduction of tax and scrapping incentives in several Western European countries and Brazil. With its fuel efficient and environmentally-friendly products, FGA gained market share in Germany (to 5.5% from 3.3%), France (to 4.7% from 4.0%) and Italy (to 32.2% from 31.1%). Fiat was confirmed as the market leader in Brazil.
– Agricultural and Construction Equipment (CNH) revenues were down 12.7% to €2.6 billion, mainly driven by a sharp decline in the global construction equipment industry. For agricultural equipment, revenues were substantially unchanged as pricing actions compensated the decrease in volumes.
– Trucks and Commercial Vehicles (Iveco) reported a 48.7% decrease in revenues to €1.5 billion, reflecting the sharp drop in demand (compared with a particularly strong performance in Q1 2008) and measures to reduce dealer inventories. Total deliveries were down 63% to 21,485 vehicles, with significant decreases in each of the Sector’s threee major regions: Western Europe (-63.9%), Eastern Europe (-80%) and Latin America (-33%).

􀂃 The Group’s trading performance was substantially break even (-€48 million) as a result of sharply lower volumes, offset by rigorous cost containment measures, including prudent reductions in production levels to respond to weaker demand.
– Fiat Group Automobiles reported a trading loss of €30 million attributable to lower volumes, particularly in the first two months of the quarter, partially offset by significant cost containment actions.
– CNH posted a trading profit of €49 million (€198 million in Q1 2008). Positive price recovery and cost containment measures reduced the substantial impact of the weakness in construction equipment markets and lower volumes in agricultural equipment.
– Iveco posted a trading loss of €12 million, down from a €222 million profit for Q1 2008. The steep decline in volumes was partially offset by extensive and disciplined cost reduction measures. After sales activities, Latin America and the special vehicles business continued to provide margin support.

􀂃 Net industrial debt was contained at €6.6 billion due to rigorous working capital management and increased discipline in capital expenditures.

􀂃 In Q1, the Group finalised a new 3-year, €1 billion syndicated facility and once again accessed the US ABS market with a USD 0.5 billion transaction.

Group Results

Group revenues for Q1 2009 totalled €11.3 billion, down 25.3% over the same period in 2008: the global economic crisis had a significant negative impact on demand for all of the Group’s businesses. The first quarter closed with an operating loss of €129 million (operating profit of €783 million in Q1 2008), including €81 million in net unusual expense related to provisions on vehicles inventory and residual values for leased vehicles for FGA and Iveco.

Net financial expenses for the first quarter totalled €210 million and included a €14 million gain from the marking-to-market of two stock option related equity swaps (€63 million loss for Q1 2008). Net of this item, financial expense increased €77 million over prior year substantially due to a higher level of debt. The loss before taxes was €360 million, compared with a profit before taxes of €636 million for Q1 2008. This figure mainly reflects a significantly lower operating result (€912 million lower) and a decrease in the result from investments (€84 million lower). Income taxes totalled €51 million (€209 million for Q1 2008) and essentially relate to employment related cash income taxes in Italy. There was a net loss for the period of €411 million, compared with a profit of €427 million for Q1 2008.

Net industrial debt rose by €0.6 billion, compared to the increase of €1.5 billion in Q1 2008; the cash flow from operations (+€0.2 billion) was more than offset by capital expenditures (€0.7 billion) and the negative impact of mark-to-market of operational hedging items. Liquidity improved by €1.2 billion to €5.1 billion following drawdown on the new 3-year syndicated loan facility.

For passenger cars only, Fiat Group Automobiles delivered a total of 398,800 units during the quarter, representing a 13% decrease over Q1 2008. In Western Europe, deliveries fell 9.5% to 243,200 units (with an overall market decline of 16.3%). Deliveries of passenger cars fell in some of the main Western European markets: Italy (-21%), Great Britain (-23.1%) and Spain (-73%). There was an exceptional performance in Germany (+192.8%), where the increase significantly outpaced growth in the market. The positive performance recorded in France (+4.4%) ran counter to the trend in market demand.

The Fiat brand itself performed exceptionally well. In Europe, the Fiat Panda and the Fiat 500 continue to be the most sold A-segment cars and the Punto is one of the most sold cars in its segment. The Western European passenger vehicle market declined 16.3% over Q1 2008, with significant variations in performance in the principal markets. Scrapping incentives introduced in Germany at the end of January, together with a reform of the annual vehicle tax, were particularly effective with demand rising 18%. The modest 3.9% year-over-year decline in France also reflected the positive effect of car scrapping incentives introduced in December 2008. In Italy, the decline in demand (-19.1%) was still quite pronounced, as the positive impact of scrapping incentives introduced by the government in February were only felt toward the end of the quarter. Finally, there was a continued severe deterioration in both Spain (-43.1%) and Great Britain (-29.7%). In Brazil, demand increased 3.4% due to the positive impact of government incentives. During the first quarter of 2009, Fiat Group Automobiles made notable gains in market share despite the significantly negative performance of the overall automobile market: market share was 32.2% in Italy (+1.1 percentage points over Q1 2008) and 9% in Western Europe (+0.7 percentage points), with the company now ranking fourth among the major European automakers. Fiat Group Automobiles’ performance was particularly strong in Germany where it registered a 5.5% market share for the quarter (+2.2 percentage points). A share increase was also recorded in France (+0.7 percentage points to 4.7%). The Fiat brand achieved a 7.4% share for Western Europe overall (+0.5 percentage points over Q1 2008) and performance was stable in Italy (with a share of 25.3%).

A total of 65,800 light commercial vehicles were delivered during the first quarter, representing a year-over-year decrease of 37.5%. For Western Europe, deliveries were down 50.3% to 32,500 units. Fiat Professional’s share in Western Europe, where the market contracted 34.1%, was up to 12% (+0.5 percentage points over Q1 2008). In Italy, share for the period was 40.1% (-2.2 percentage points). In Brazil, cars and commercial vehicles deliveries decreased 7.2% over the first quarter of 2008 and the share declined 1.4 percentage points to 23.8% in order to protect margins. Market leadership was maintained.

Fiat Group Automobiles reported a trading loss of €30 million compared with a €193 million trading profit for the first quarter of 2008. This decrease was attributable to the significant contraction in volumes, particularly at the beginning of the quarter, partially offset by significant cost containment actions.

During the quarter the Geneva Motor Show was held, where Fiat premiered the 500C cabriolet which features a sophisticated, electronically-controlled soft top. Alfa Romeo unveiled the MiTo GTA concept car, a prototype of the brand’s future sporting style, which offers an optimised power-to-weight ratio. In Geneva, Alfa Romeo also presented two new Euro 5 engines, the 2.0-litre, 179 hp JTDM diesel and the 1750, 200 hp Turbo gasoline (TBi) which will power the Brera, the Spider and the newly enhanced 159. Lancia also announced new developments with the Delta Executive, the brand’s prestigious new flagship model, and the bi-fuel LPG/gasoline “ECOchic” Ypsilon and Musa. Fiat Professional released the Ducato 140 Natural Power, which offers optimised performance, low fuel consumption and minimal emissions. Also of note is the expansion of the Fiat brand’s bi-fuel (LPG/gasoline and natural gas/gasoline) range of vehicles. Added to the existing Panda, Grande Punto and Bravo line up were the Punto Classic and Idea. In the area of technical innovation, Fiat Group Automobiles and FPT Powertrain Technologies presented the MultiAir system, which is destined to significantly improve performance and fuel consumption for gasoline engines. This autumn, the Alfa MiTo will be the first vehicle equipped with the new device. The Group’s cars also received many awards from readers of specialist magazines throughout Europe. Of note was the “2009 World Car Design of the Year” award granted in New York to the Fiat 500 by a panel of 59 journalists from 25 countries.

For Q1 2009, Maserati reported €115 million in revenues, down 40.4% over the same period in 2008. This decrease reflected the crisis impacting the Sector’s reference market segments globally, which saw an average decline of 55%. A total of 1,157 cars were delivered to the network during the quarter, 48% lower than for the same period in 2008. Despite a sharp decrease in revenues, significant cost containment measures enabled Maserati to achieve a trading profit of €3 million for the quarter compared with €10 million for Q1 2008.

At the Detroit Motor Show in January, the company presented a new entrant to the luxury sport sedan category, the Quattroporte Sport GT S: a true driving machine dressed up as a luxury sedan. This car is the best compromise ever achieved by Maserati between a luxury sedan and a sports car. The new Maserati GranTurismo S Automatic was presented at the Geneva Motor Show in March.

For Q1 2009, Ferrari reported €441 million in revenues, down 3.3% over the corresponding period for 2008 due to lower sales volumes which reflected the slowdown in the global economy. A total of 1,571 cars were delivered to the network during the quarter, a 5% decrease over Q1 2008, while sales to end-customers totalled 1,480 units (-10%). Of note is the positive sales performance of the new Ferrari California in the second part of the quarter.

Ferrari closed the quarter with a trading profit of €54 million (€59 million for Q1 2008). Efficiency gains in production costs and overhead substantially offset the negative impact of lower sales volumes and unfavourable exchange rates. Ferrari started the year with the presentation of two new products, both unveiled at the Geneva Motor Show. The Handling GT Evoluzione (HGTE) performance package for the 599 GTB Fiorano and the 599XX. The HGTE package enhances the handling performance and responsiveness of the 599 GTB Fiorano. The 599XX, on the other hand, is targeted at a select customer base who desire the highest level of technological innovation available.

Construction equipment industry unit retail sales declined 57% in Q1 2009 across all regions. Industry sales of heavy construction equipment were down 50%, with Western Europe and Latin America declining more than the global average. Light construction equipment fell 61% and there were sharp declines in all regions, with North America decreasing less than the other markets. CNH global market share in the construction equipment was flat for the quarter. Share for light equipment was flat with strength in North and Latin America offset by declines in Western Europe and Rest of World markets. Heavy equipment share remained unchanged with gains in the Americas offset in Western Europe. Share in Rest of World was flat.

As a result of the continuing weak trading conditions in the global construction equipment market, CNH has undertaken a thorough review of the positioning of its brands. Based on preliminary findings, actions will be introduced starting in the second quarter of 2009, designed to streamline the businesses, reinforce the product architectures and significantly reduce the costs associated with the management of the networks, while improving our brand value and customer support.

CNH closed the first quarter of 2009 with a trading profit of €49 million, a decrease of €149 million from the €198 million for Q1 2008 (down 78.4% in US dollar terms). The significant loss of volumes in the construction equipment markets and lower volumes for agricultural equipment, more than offset the cost containment measures and pricing actions which were initiated already at the end of 2008. In Q1 2009 Case IH Agriculture expanded its Magnum tractor range in North America, while the international region saw the introduction of the Quantum N and V specialty tractors, enlarging the narrow and vineyard offering.

New Holland Agriculture launched the 167 to 225 hp T7000 Auto Command™ range in Europe designed for cash crop farmers and contractors. It features the new in-house manufactured CVT transmission to optimize engine speeds and operating costs. New Holland Latin America introduced the TT4030 75 HP standard tractor, ideal for small and mid-sized farms as well as family agriculture. Case Construction introduced 7 new models of its B series excavators, including longreach, mass and compact models, with increased fuel efficiency and lower noise levels. New Holland Construction focused on the non-residential construction area, integrating its current product offering with configurations specific to infrastructure and demolition, as well as waste management applications.

In Q1 2009, Iveco reported revenues of €1.5 billion, down 48.7% year-over-year mainly due to lower sales volumes in extremely difficult markets. Iveco delivered 21,485 vehicles, a 63% decrease over the same period in 2008, reflecting the sharp drop in demand and measures to reduce dealer inventories. A total of 14,431 vehicles were delivered in Western Europe (-63.9%). Significant declines were experienced in all principal markets including Italy (-58.8%), France (-59.1%) and Germany (-58.7%), and were particularly marked in Spain (-82.9%) and Great Britain (-72.8%). Volumes were also down in other regions: deliveries fell over 80% in Eastern Europe and 33% in Latin America. In Western Europe, the market for ≥2.8 ton trucks and commercial vehicles contracted significantly (-36.2%) over Q1 2008. The light and heavy segments fell 37%, while demand in the medium segment decreased 26%. Demand fell significantly in all major European markets: Italy (-34.2%), France (-29.7%), Germany (-27.5%), with particularly sharp declines in Great Britain (-47.5%) and Spain (-63.2%), which had already experienced a material contraction in 2008.

Iveco's market share in Western Europe was 9.3% for the quarter, down 0.5 percentage points over the first quarter of 2008. Market share in the light vehicle segment decreased 0.3 percentage points reflecting continuing competition from car-based models (“vans”). Market share in the heavy segment fell 1.7 percentage points, primarily impacted by the significant drop in the Spanish market, where Iveco still achieved a notable performance increasing market share by 8.8 percentage points. A modest increase in market share was also achieved in Italy (+0.7 percentage points). Market share increased slightly in the medium segment (+0.2 percentage points), with significant improvements in Italy (+6.8 percentage points), France (+4.4 percentage points) and Great Britain (+2.5 percentage points).

Iveco closed the quarter with a trading loss of €12 million compared with a trading profit of €222 million for Q1 2008. This decrease was primarily attributable to the sharp reduction in sales volumes, only partially offset by extensive cost containment measures adopted throughout the organization. After sales activities, Latin America and the special vehicles business continued to provide margin support.

In March, the Genlyon, the first product of the joint venture between SAIC and Iveco, was presented in Beijing. This new “heavyweight” from SAIC-Iveco Hongyan Commercial Vehicles (SIH) was designed in China and brings Iveco’s technological excellence and European standard of quality to the Chinese market. This product launch also coincided with the world debut of the new Cursor 9 engine which is available in four versions ranging from 270 hp to 400 hp. Significant new long-term orders received during the quarter include the delivery of 4,500 low environmental impact Daily vehicles to Deutsche Post and 150 Light Multi-role Vehicles (an anti-mine protection vehicle widely used in peacekeeping roles) to the Austrian Ministry of Defence. Iveco’s development and testing of innovative vehicles included delivery of a hybrid parallel diesel/electric Eurocargo, the first European vehicle of its type and size for use in urban areas. Finally, Iveco was also named best importer in the transport sector in Germany.

FPT reported a trading loss of €58 million for the first quarter, compared to a trading profit of €47 million for the same period in 2008. A sharp contraction in volumes and a worsening of the sales mix were only partially offset by measures taken to reduce manufacturing and central costs.

FPT began the year with the presentation of the MultiAir system, an electro-hydraulic valve management mechanism, which allows direct control of the air intake and combustion for gasoline engines. The result is an engine which produces 10% more power and 15% more torque at low revolution than a traditional engine having an equivalent cubic capacity, while at the same time delivering a reduction in fuel consumption and CO2 emissions of 10%. FPT Powertrain Technologies also released the 3-litre, 136 hp engine for the Fiat Ducato 140 Natural Power. This bi-fuel engine is powered by natural gas and gasoline. FPT also supplied Fiat Group Automobiles with the new engines for the Alfa MiTo (the 1.4-litre, 120 hp Turbo gasoline and the 1.3-litre, 90 hp JTDM diesel).

Magneti Marelli produced many components for the Fiat 500C, most notable of which was the Stop&Start system, and shock absorbers for the Punto and Linea produced in Brazil. Numerous other components for engines, lighting and electronic systems were also designed and produced for several major European automakers.

On January 20th, Fiat S.p.A., Chrysler LLC (Chrysler) and Cerberus Capital Management L.P., the majority shareholder of Chrysler LLC, signed a non-binding term sheet for the establishment of a global strategic alliance. Under the agreement, Fiat will contribute strategic assets to the alliance including products and platforms (city and compact segment vehicles) to expand Chrysler’s current portfolio, technology (fuel-efficient and environmentally friendly power-train technologies), and access to international markets. As consideration, Fiat will receive an equity interest in Chrysler. The alliance does not contemplate Fiat making a cash investment in Chrysler or committing to funding Chrysler in the future. The proposed alliance will be consistent with the terms and conditions of the U.S. Treasury financing to Chrysler. Final terms for this transactions continue to be negotiated with the U.S. Treasury and other relevant stakeholders and are subject to customary regulatory approvals. If negotiations are concluded successfully, final terms will be set on or before April 30, 2009.

At the end of January, Magneti Marelli and SAIC Motor Corporation Ltd., through its subsidiary Shanghai Automobile Gear Works (SAGW), signed a joint venture agreement in China aimed at the production of hydraulic components for the Automated Manual Transmission (AMT) produced by Magneti Marelli (Freechoice). Under the agreement, the new company would be equally owned by the two companies. The company will be located in the Shanghai area and becomes operational in the second half of 2009. Once fully operational, it will be capable of producing components for 350,000 transmissions a year.

During the Annual General Meeting held on 27 March, in which the 2008 Financial Statements were approved, shareholders elected the Boards of Directors and Statutory Auditors for the 2009-2011 financial years. The shareholders renewed also the authorisation for the purchase and sale of own shares. 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 €656 million in Fiat shares already held by the Company –may be purchased. The share buyback program is currently on hold. Finally, shareholders, approved amendments to the 2004 stock option plan and adopted the 2009-2011 incentive plan as announced publicly on 22 January 2009 and 23 February 2009, respectively.

As indicated at the close of 2008, the first semester of 2009 was expected to be characterised by erratic market demand, and the first quarter has seen evidence of demand volatility, but has also allowed us to deliver a trading performance in excess of our own internal expectations. We expect an improvement in the remainder of the year, as trading conditions stabilise and improve for most of our businesses. As an exception, we believe that the truck market and the construction equipment business will continue to suffer depressed demand for the major portion of the year, with signs of recovery only visible in the 4th quarter. On the basis of performance to-date and barring unforeseen systemic shifts in demand, the Group reaffirms its view that the following conditions will materialize for the whole of 2009.

• Global demand for our products will decline ~20% compared to 2008.
• Group trading profit will be in excess of €1 billion (or a minimum margin of ~2%).
• Restructuring charges of ~€300 million and other unusual costs ~€200 million.
• The net result for the Group will be in excess of €100 million.
• Group net industrial cash flow will be in excess of €1 billion, with net industrial debt levels below the €5 billion mark.