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Herbert Demel, CEO

Fiat Analyst & Investor DayBalocco - July 26, 2004


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FIAT AUTO Presentation Fiat Analyst & Investor Day Balocco - July 26, 2004 Slide 2

7%

7%

46%

37%

2003 Highlights

By Brand / Business

8%

7%

12%

15%

58%

1,301 k/units 101 k/units 176 k/units 276 k/units

Registrations

including JVs:

Fiat/Lancia

Alfa Romeo

LCV

Financial Services

Aftersales

By RegionNet Revenues 20 billion

Italy

25 EU countries

(excl. Italy)

Brazil

RoW

Strong market position in Italy, Brazil and Turkey


4/28FIAT AUTO Presentation Fiat Analyst & Investor Day Balocco - July 26, 2004 Slide 3

First Half Results

Q2 04 net revenues up 2.6% vs. Q2 03

Q2 operating income impacted by higher R&D and strike at Melfi plant

Overall operating loss reduced in H1

Net Revenues Operating Result

2002 2003 2004

Q2 H1

5,485 5,067 5,197

11,183

9,780

10,4622002 2003 2004

Q2 H1

(447)

(281) (282)

(929)

(656)

(474)

mn

Continuing Operations


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New products drive better mix and direct materials cost reduction

R&D spending and Melfi strike account for significant portion of Q2 result

Q2 O4 Compared with Q2 03

Operating Result

(281)

(30)

Q2 03Price /

Volumes

Mix

(Prod/Geogr)

Strike at

Melfi Plant

Direct

Materials

Other

Manufacturing

costs R&D

Provisions /

Others Q2 04

+10+45(53)

+47

+20 (23)

(17)

Advertising /

Network

Investments

(282)

mn



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Q1 Q2

(482)

(375)

(192)

(447)

(281) (282)

2002 2003 2004 2002 2003 2004

Q3

2002 2003

Q4

2002 2003

(409)

(331)

(223)

(107)

Unsatisfactory operating performance but improving since 2002

Substantial improvement expected in H2 2004

Trend in Operating Result

mn



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Cash Flow

70 68 8395 89 87

209

189 179

5768

4941

214217 172

48

52

Company Dealer Used

Dealer and Company inventory reduction

started in Q1 04 continuing in Q2

Reduction in payables driven by 100k unit

drop between Q2 03 & Q2 04

Positive H2 04 operating cash flow forecast

Q2 03 Q2 04

Q2 03 Stock TradeReceivables

Q2 04TradePayables

Other

Receiv/

Payab.

+21

(190)(89)

(580)

+167

+291

Inventory (units 000)

Cash Flow *

Q2 04 vs. Q2 03 - Change in NWC 292

345 372327

(351)(220)

H1 03 H1 04

(1,151)(1,175)

344

307

Dec. 02 Mar. 03 Jun. 03 Dec. 03 Mar. 04 Jun. 04

mn Continuing Operations

* Op. Result + D&A Capex + Change in GWC & Op. Funds


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Improvements

Good acceptance of new products

Product and channel mix in line with expectations

Cost reduction broadly in line with relaunch plan

Industrial joint ventures with GM (Powertrain and Purchasing) running well

Marginal improvement in quality perception

BUT

Volume growth lower than expected due to tough competition

Margin pressure on older models

Industrial complexity still an issue

Dealer network continues to be underdeveloped

Organizational structure dysfunctionalTHEREFORE

Small operating loss in 2005

Positive operating income and operating cash flow in 2006


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Market & Market Share Western Europe

Fiat Auto Market Share*

H1 03 H1 04

7,5847,836

Market*

k/units

6.9%7.2%

Q2 03 Q2 04

7.5% 7.6%

H1 03 H1 04

+3.3%

Fiat Auto market share increase in growing markets

* Passenger Cars

+20k units +29k units


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H1 03 H1 04

Market & Market Share Italy

+3.0%

1,2541,292

27.0% 27.4% 27.7%28.4%

Q2 03 Q2 04 H1 03 H1 04

0.7% market share growth in H1 04

* Passenger Cars

Fiat Auto Market Share*Market*

k/units



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5,0%

10,0%

15,0%

20,0%

25,0%

30,0%

17,0%

19,0%

21,0%

23,0%

25,0%

10%

20%

80%

H1 03 H1 04

Competition in Western Europe

76.6%

74.8% European

OEMs

Japanese/

Korean

OEMs

Fiat Auto

volumes = +0.9%

volumes = +5.0%

15.5%17.1%

7.5%

7.6%

volumes = +14.2%

Market Share

Fiat Auto improves market share against background of strong

Japanese/Korean competition


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Market & Market Share Emerging Markets

Market Volumes*

First Half 2003 = 540 k/units


+9.7%

Market Volumes*



+270%

23.7%24.4%

Q2 03 Q2 04

24.8%23.4%

H1 03 H1 04

9.7% 9.9%

Q2 03 Q2 04

9.6% 10.2%

H1 03 H1 04

Brazil: reduced discounts

Turkey: market recovery driven by incentives

* Passenger Cars

TurkeyBrazil




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Italy

WesternEurope

Market

Brazil

LCV,

W. Europe

2,250 2,250

14,146 14,535

1,195 1,320

1,728 1,800

Fiat Auto Market Share

28.0% 30.5%

7.4% 8.2%

25.2% 25.2%

11.2% 11.7%

Market & Market ShareAssumptions 2003-07

K/units

2003Actual

2007Estimate

2003Actual

2007Target

Conservative market assumptions

Expected market share growth in Europe, stable in Brazil


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2004-07 Product Strategy Western Europe

Segment

Segment

Weight

H1 04

ExpectedSegment trend

2004-07Fiat Auto segment

share

New Products &Facelifts

2004-07

B 26.8%

C 23.4%

A 3.3%

L1 9.7%

D16.2%

H 3.0%

I 5.4%

L0 3.7%

Others 8.5%

11.0%

6.2%

52.9%

0.9%

3.6%

0.8%

-

15.1%

4.0%

Maintain presence in

traditional A,B,C

segments

Promising pipeline in

growing I and L0segments


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Fiat and Lancia

Brand Positioning New Punto and Stilo in key B and C segments

Re-enter D segment with Fiat Large

Strengthen L1 segment with New Multipla; enter growing I segment with SUV

Lancia to focus on profitable niche segments

Five new models and seven facelifts to be launched in 2005-07

Fiat N. PandaFiat Punto FL

Fiat Idea

Fiat Multipla FL

Fiat Stilo FL

New Model Facelift

Lancia Ypsilon Lancia Musa

2003 2004 2005 2006 2007

Fiat Barchetta FL


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Alfa Romeo

Brand Positioning

Aggressive product portfolio renewal plan with New 156 and New 147

New models in niche segments (Coup, Spider)

Enter fast growing SUV segment

Five new models and one facelift to be launched in 2005-07

GT

156 FL

GTV FL

Spider FL

166 FL

New Model Facelift

2003 2004 2005 2006 2007


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Light Commercial Vehicles

Brand Positioning

Maintain strong position in minivan and small LCV

Model renewals in key medium and large LCV segments

Focus on key areas for success: safety and engine performances

Four new models and three facelifts to be launched in 2005-07

N. Panda Van

Stilo MW FL Van

Punto FL Van Dobl Cargo MY

Scudo FL

Multipla Van FL

New Model Facelift

2003 2004 2005 2006 2007

Stilo MW Van

Strada FL


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Distribution Network Action Plan

Close network gaps in Western Europe

Increase average volumes per dealer

Improve dealers image, service and profitability

Introduce new distribution formats


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Network Gaps in Western Europe Reduced

155192

2003 Jun-04

130

106

2003 Jun-04

178

149

2003 Jun-04

Complete exercise by 2006

128

98

2003 Jun-04

i


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Strategic Areas - Two Examples

About 50,000 additional units from restructuring of 50 key strategic areas in Europe basedsolely on market coverage and not market share gains

Market Size: ~3.2 mn new cars forecast in 04

Actual Fiat market share = 2.1%

Missing potential ~10,000 cars

High priority areas

Medium priority areas

Market Size: ~2.0 mn new cars forecast in 04

Actual Alfa Romeo market share = 0.8%

Missing potential ~1,100 cars

GermanyFrance

I A V l D l


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Increase Average Volume per Dealer

536

2003 2007

853

2003 2007

+20%+30%

Volume per

dealer Volume perdealer

1,463

2003 2007

-15%

# of dealers

-15%

# of dealers

+20%+30%

Volume per

dealer

Volume per dealer

(specialist and generic)

+10%

# of dealers

-15%

# of dealers

1,420

2003 2007

Specialist dealers Generic dealers

20%+ volume per dealer increase mainly driven by reduction of dealerships

I D l I & P fit bilit


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Improve Dealers Image & Profitability

E-LINK

New network system designed to increase

interface effectiveness

All dealers linked

by 2006

RETAIL PERFORMANCE INITIATIVE

- Improve revenues and profitability

- Upgrade service level

- Target of more than 700 entrepreneurs

Completion

by 2006

CORPORATE IDENTITY

Increase consistency and improve image of Fiat brands

Approx. 4,000 (~90%)

points of sales by2007

Pl tf C


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# of models / platform

# of vehicles / year / platform(including partners)

Joint Platforms with Partners

Total # of platforms

2.3

140 k

1

2.8

250 k

4

5.0

450 k

3

Platform Convergence

2004 2008 2012

1311

6Existing

in 2002

12Existing

in 2002

5

New

6

New

100 mn annual savings from 2006 ( 20 mn in 2005)

Component Standardization


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3

5

5 1

2004 2012

Component Standardization

300K

600K

FAMILIES OFGASOLINE ENGINES

Fiat + Partners

Fiat stand alone

8

6

FAMILIES OFDIESEL ENGINES

56

2004 2012

5 6

FAMILIES OFTRANSMISSIONS

6 6

4 4

2004 2012

10 10

Achieving critical mass through Powertrain JV

100%+

volume

increase

50%+

volumeincrease

30%+

volumeincrease

Average volume

per family

(incl. Partners)

(k/units)

Manufacturing Footprint


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Manufacturing Footprint

Area Strategic highlights

Shift towards a 1 platform - 1 pole long-term

production strategy:

- Higher operational synergies (capex, logistics,

know-how)

- Flexibility maintained (different models of the

same platform allocated to the same line)

Plants Utilization

2004 2004 2007

Europe* 7 95%78%

ROW 4 83%87%

Total 11 91%80%

Egypt

Cairo

Italy

Cassino

Melfi

Mirafiori

Pomigliano

Termini

Val di Sangro

India

Kurla

Turkey

Bursa

Poland

Tychy

China

Nanjing

S. Africa

Pretoria

Brazil

Betim

Partnership

Owned plant

Toll Manufacturer

* Capacity calculated on 230 days/year

Fiat Auto: A New Organization


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Fiat Auto: A New Organization

Finance Human ResourcesCommunication &

InstitutionalRelations

InformationSystems

GeneralAffairs

BusinessDevelopment

A B/L0 D+E LCV

CEO

Manufacturing

Supply Chain

Network Development& Coordination

Fleet Management

Quality

C/L1

Brand &Commercial Key Cross Functions

Fiat

Alfa Romeo

Lancia

LCV

After Sales Financial Services

Purchasing

Powertrain

P&L ResponsibleHeld to Efficiency Standards

Platforms

Engineering &Design

A flat organization (20 + direct reports) Designed to create and nurture accountability

Change in Operating Result 2004-07 Drivers


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Change in Operating Result 2004 07 Drivers

2004 Mix Price /Discounts

Volume Direct

Materials

Manufact. /

Logistics

G&A /

Other Cost

Reduction

2007Advertising /Network

Investments

+1600

Used

Car

Activity

mn Continuing Operations

Concluding Remarks


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Concluding Remarks

Consistent improvement since 2002 in tough competitive

environment

Ongoing product renewal boosting momentum

Clear first signs of Fiat brand image improvement

Product mix increasingly focused on higher margin and cashgeneration

Small operating loss in 2005

Positive operating result and operating cash flow in 2006

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