“l’ingegno è motore”...fpt key product strategy. global automotive conference - geneva -...

Global Automotive Conference - Geneva - March 3, 2008

“L’ingegno è motore”

Alfredo AltavillaCEO

1Global Automotive Conference - Geneva - March 3, 2008

The Fiat Group company dedicated to powertrain business

• Technology leadership and transfer of results to product range

• Synergies across all processes

• Development of non-captive market

FPT Powertrain TechnologiesMission


Integration of cross-sector powertrain needs and requirements

Leverage on strong technological and industrial expertise

Synergies and better utilization of powertrain R&D centers

Cutting-edge gasoline technology (Multiair)

Leadership on diesel technologies (Common Rail, Multijet)

Leadership on alternative fuels engines (bi-fuel CNG in EU, Flex & Tetra-fuel in LA)

Flexibility of transmissions manufacturing structures (widespread expertise on AMT and AWD variants)

Leverage on a wide purchasing base

Purchase volume (direct materials) in ‘07: €4.7bn

Focus on non-captive sales expansion

Dedicated organization

Competitive product line up

Why FPT


Revenues€ 7.1 bn

(of which € 1.7 bn non captive sales)

Production3.1 mn engines

2.2 mn gearboxes0.3 mn axles

R&D5.5% of sales

Capex5.2% of sales

FPT at a glance2007 key figures

Revenues by customer Revenues by application

CNH6%

Industrial7%

Fiat Group Automobiles43%

Third Parties & JVs24%

Iveco27%

Passenger Cars & LCV69%

Heavy-duty21%

PowerGeneration

2%

Marine& Others1%


Trading Profit variance (€mn)

Passenger & Commercial Vehicles

Revenues up 13%; 2.6mn engines (+11.5%) and 2.1mn transmissions (+23.5%)

Industrial & Marine

Revenues up 18%; 0.5mn engines (+14%)

New products start-up

P&CV

Gasoline: 1.4 T-jet engines

Diesel: 1.6 JTD & 1.9 JTD Twin Stage engines

I&M

F5C 3.2 liter engine both for CNH and third parties

Trading profit up 60% vs. ‘06

Improvement largely due to volume increase and purchasing & production cost reduction

Trading margin at 3.8% (2.7% in FY ’06), near top of target range (2.8%-3.6%)

Net Revenues (€mn)

6,1457,075

P&CV

I&M

Other€18mnOther

€20mn

16836

(82)

(8)(15) (15)

271129

58

FY ‘07 financial resultsA successful year ahead of guidance

2,678 3,166

3,447

3,891

FY '06 FY '07

FY '0

6

Vol./m

ix

Price

Purch

asing

Net

Prod

. Cos

t

SG&A R&

D

Othe

rs

FY '0

7


Cumulative cost savings- 2007-10 plan -

(as % of product cost)

Synergies across the board Maximizing competitiveness of captive customers

2007-10 plan key drivers

Material efficiency (commercial & technical savings)

Production cost efficiency (mainly labor productivity)

Expected generation of ~€0.4bn cumulative savings on direct materials and manufacturing efficiencies (2010 vs. ’06)

2.8% savings achieved in 2007 vs. ‘06 (30bp above original plan)

~50% of savings passed on to captive customers

0%

3%

6%

9%

2007 2008 2009 2010


Strategic CooperationAgreement

• 1.3 Multijet engine• 2.0 Multijet engine

• Transmissions

JV Agreements

• Medium & Heavy diesel engines

• 1.3 Multijet, Fire 1.2, Fire 1.4 and related transmissions

• Medium diesel engines

• Medium diesel engines

Argentina(Cordoba)

China(Chongqing)

India(Ranjangaon)

Russia(Zavolzhye)

• C514 transmission

• 1.3 Multijet engine• Gas engines and transmissions

Sharing know-how

A growing network of partnershipsA systematic approach

LicenseAgreements

Production


Industrial footprint by 2010Act global, think local

Support captive customers, exploit strong local partnerships in developing markets while leveraging on sourcing opportunities

1

5

6

1

3

11

1 1

11

5

2

1

3

9 Partnerships12 Owned Plants 10 R&D centers 6 Licensors

1

1

2


World-Class ManufacturingExcellence across Logistics & Production at FPT

Continuous improvement to maximize competitiveness

Involvement of all employees & suppliers

Reduction in waste & losses

Standards & methods optimization (total quality control, total productive maintenance, total industrial engineering, just in time...)

All FPT plants in premium area by 2010

Implementation underway – fully on track for 100% roll-out in 2008

Extension of the WCM Program to top 10 FPT suppliers by 2008

2010 key targets

Average hours per unit down 25% vs. ‘06

20% reduction of conversion cost* vs. ‘06

30% reduction of failure rate** vs. ‘06 level

* Gross of inflation** IPTV (Incidents Per Thousand Vehicles) in 12 months-in-service


Plant capacity utilization*

Towards 100% rate

* 6 days, 3 shifts

Captive sales development

Progressive in-sourcing of production as a result of technological leadership

International expansion

Tie-up with market development of Fiat vehicle companies

Non-captive business development

P&CV and I&M(x000 units)

Engines

Gearboxes

Axles

0.3

0.3

~0.4

Capacity utilization rate

2006 2007 2010E

78%

88%

99%

1.8

2.7 3.1~4.0

~3.0

2.2


Achieving best-in-class level

Significant changes in process organization in order to allow parallel phases of activities

Early involvement of suppliers

Integrated approach to marketing, engineering & manufacturing since early stage of development

Targeting for overall 20% reduction of development time

First implementation of new process with Small Gasoline Engine (30 months from concept to first application)

Current average competitor development time about 36-40 months

Product development processBeyond a new edge


1.8 GDI1.9 JTD Turbo Twin-Stage

Small Gasoline Engine Multiair technology

Pioneering introduction of Common rail & AMT

New LCV 2.3 & 3.0LFlex engine in Brazil

Tetra-fuel engineCNG engine1.4 T-Jet1997-99

2002-’04

2006-’07

2008

2009

A decade of leading-edge technologies...

1.3 Multijet turbo diesel(Engine of the Year 2005)

F32(Diesel of the Year 2008)

Awards for excellence


...and the commitment goes on

Sufficient, optimized R&D spend to assure leadership

R&D spend % on revenues

2006-10 R&D spend*

CAGR = 10%

2,400+ R&D headcount in 2007 (+3% vs. ‘06)

* Base & advanced engineering and vehicle integration

6.0%

5.5% 5.6% 5.6%5.3%

2006 2007 2008E 2009E 2010E


More and more stringent requirements to reduce C02& pollutant emissions

Euro6 for passenger cars and LCVs

Euro6 & Tier4 for industrial vehicles

C02 emission level is key as future base for taxation

A consolidated portfolio of advanced technologies for widespread application across Sectors within Fiat Group

Diesel technologies progressively transferred from cars to industrial engines (Common Rail, DPF, EGR)

Advanced technologies (Multiair,...) across gas & diesel families

Enlargement of product offering with CNG-powered engines (cars, LCVs, trucks)

Fully on track for next challenges

Legislation FPT technology assets


Support Group sectors meeting any future CO2 emissions limits through available technologies & new developments

Gas engines: ~7% down* (Multiair, downsizing & turbocharging, direct injection)

Diesel engines: ~2% down* (Multijet II, Multiair)

CNG engines: ~2% down* (extensive application across product lines)

Other technologies: ~3% down* (Stop & Start, energy management…)

CO2 consumption limitsDrivers at FPT

* on new cars fleet vs. current level

Limited additional costs while maintaining or even improving performance & driveability


Cost-effective NOx reduction technologies

Progressive technology transfer from passenger cars to trucks

Investing in diesel truck-specific technology evolution

Common Rail, SCR, DPF...

Alternative fuelsConsolidate portfolio of CNG engines for trucks and buses applications

Diesel hybrid propulsion promising for buses

Downsizing turbo charged

2-cylinder engine

Multijet II

Multiair® technology

Alternative fuels

Stop & Start MTA

Passenger Cars Medium & Heavy Duty Engines

Minimizing environmental impactThe Fiat’s commitments

To reach the lowest weighted average CO2 emission level by 2012

To provide a wide product portfolio matching Euro6 / Tier4 emission requirements while

optimizing total cost of ownership


Sustainable mobilityFPT at the heart of Fiat Group Automobile’s strategy

Fiat Panda Aria (Concept Car)World Premiere at 2007 Frankfurt Motorshow

(69 CO2 g/km)

Fiat 500 Aria (Concept Car)World Premiere at 2008 Geneva Motorshow

(98 CO2 g/km)


Fuel Injection

EGR

AirManagement

After-treatment

CombustionManagement

Passenger Cars Heavy-duty engines

Common Rail system

Two-stage turbo

Cooled high pressure loop EGR

Pre-mixed combustion with combustion pressure sensor

Multiple injection

Injection rate shaping

Cooled low pressure loop EGR

Variable valve actuation

Closed DPF with active regeneration

Urea selective catalytic reduction (SCR)

Progressive technology transferAn osmotic flow

The unique powertrain company with a portfolio ranging 0.9-20 liters


Gasoline enginesTechnology drivers for Passenger Cars & LCV

Fuel consumption/CO2 reduction & fun-to-drive improvements

Downsizing coupled with turbocharging technology

Electronic valve control technology (Multiair) to reduce pumping losses

Low end torque improvement

Further improved turbocharger transient response and knock resistance & control through direct injection stoichiometric technology

Optimal trade-off on performance, fuel consumption and costs

Easy packaging & installation synergies

Wide displacement & power range on same engine family

FPT key product strategy


Gasoline enginesTechnology evolution at FPT

New turbo engines

Fire 1.4 Turbo120–150hp

1.8 DI Turbo190–230hp

Multiair technologyon Fire Engine

New Small Engine (SGE)(under development)

50% emissions reduction

CO2 consumption down ~25% with greatly improved fun-to-drive

0.9 liter twin-cylinder

Naturally aspirated & turbocharged Multiair engines (65-110hp range)


Gasoline enginesProduct portfolio

A comprehensive range by 2010

New twin-cylinder for Sub-A, A & B segments

New 1.8 GDI turbocharged

1.4 Fire Multiair

40

80

120

160

200

240

280

320

100 170 240 310 380 450 520

Pow

er (

hp)

Torque (Nm)

1.21.2--1.4 FIRE1.4 FIRE

0.9 SGE0.9 SGE

New V6New V6

1.8 GDI1.8 GDI


Diesel enginesTechnology drivers for Passenger Cars & LCV

NOx reduction through combustion improvement

Mainstream to meet Euro6 emission standards with cost effective technologies

NOx after-treatment only on extreme applications

Extension of twin-stage turbo technology

Focus on fuel consumption / CO2 reduction (-15%) through downsizing

NOx after-treatment

SCR for light & heavy duty commercial vehicles

Robust project for performance boosting

High power density (hp per liter) by twin-stage application



Diesel enginesTechnology evolution at FPT

New Common Rail for modular injection

Ultra-cooled & clean EGR (low pressure EGR)

Multiair for transient EGR Control

Exhaust IntakeInjection rate


Diesel enginesPassenger Cars product portfolio

Increased product offering by 2010-11

Twin-stage turbo available by 2008 for 1.9 Multijet

New 2.0 Multijet to replace 1.9 Multijet

New 3.0 V6 as key product for US market while enlarging offering in Europe

40

80

120

160

200

240

280

320

105 175 245 315 385 455 525

Twin-stage turbo (90hp/liter)

Twin-stage turbo (90hp/liter)

Ideal size forC-Segment vehicles

Ideal size forC-Segment vehicles

Pow

er (

hp)

Torque (Nm)

1.3 Multijet1.3 Multijet




3.0 V63.0 V6


1.3 Multijet 75-95hp Euro 5

Fixed-geometry turbo engine(75hp & 190Nm)

Variable-geometry turbo engine (95hp & 230Nm)

1.6 Multijet 105-120hp Euro 5 ready

Fixed-geometry turbo engine(105hp & 290Nm)

Variable-geometry turbo engine(120hp & 300Nm)

...to round out coverage of diesel EU market

New leading-edge products...


Light-duty engines Medium-duty engines Heavy-duty engines

(x000 units including JVs) Displacement range (liter)

A wide product offering on a competitive scale

Industrial enginesExtensive common applications across sectors

+65%

+70%

+70%

2.32.3

3.0 3.0

0

200

400

600

2007 2010E

3.4 3.2

6.76.7

0

150

300

450

2007 2010E

7.8 7.8

12.912.9

0

100

200

2007 2010E


Higher comfort to enhance customer driving pleasure

Higher efficiency to reduce fuel consumption

New C635 dry dual-clutch transmission combining better comfort & efficiency at affordable cost

Dry technology for best-in-class fuel consumption


TransmissionsTechnology drivers


Uniqueness of high technology combination (28% CO2 reduction*)

City Car Delivery Van

Affordable technology to reduce*CO2 consumption by 35% and access urban traffic-restricted areas

Small gasoline engineDual clutch transmission

Electric motor generator

Electric motor generator

Automated Manual Transmission

Battery PackDiesel engine 2.3 JTD

Hybrid for urban mobilityFPT strategy

* ECE cycle


Supporting Group growth2007-10 financial targets & plan drivers

Significant rise in total volume and revenues

Strong generation of cost savings

Boost installed capacity utilization

Improve industrial competitiveness

Speed up international development program

(€bn)

2.7%

2006 2007 2008E 2009E 2010E

Actual revenues Trading margin range* - Low

Trading margin range* - HighExpected revenues*

* According to 2007-10 Plan

6.17.1

~8.0~7.5~7.0~6.5

3.6%

4.8% 5.0%5.4%

4.6%4.2%4.0%

2.8%

3.8%


Powered by FPT


Certain information included in this document is forward looking and is subject to important risks and

uncertainties that could cause actual results to differ materially. The Company's businesses include its

automotive, automotive-related and other sectors, and its outlook is predominantly based on its

interpretation of what it considers to be the key economic factors affecting these businesses.

Forward-looking statements with regard to the Group's businesses involve a number of important

factors that are subject to change, including: the many interrelated factors that affect consumer

confidence and worldwide demand for automotive and automotive-related products; factors affecting

the agricultural business including commodities prices, weather, and governmental farm programs;

general economic conditions in each of the Group's markets; legislation, particularly that relating to

automotive-related issues, agriculture, the environment, trade and commerce and infrastructure

development; actions of competitors in the various industries in which the Group competes;

production difficulties, including capacity and supply constraints and excess inventory levels; labor

relations; interest rates and currency exchange rates; political and civil unrest; and other risks and

uncertainties. Any forward-looking statements contained in this document are referred to the current

date and, therefore, any of the assumptions underlying this document or any of the circumstances or

data mentioned in this document may change. Fiat S.p.A. expressly disclaims and does not assume

any liability in connection with any inaccuracies in any of these forward-looking statements or in

connection with any use by any third party of such forward-looking statements. This document does

not represent investment advice or a recommendation for the purchase or sale of financial products

and/or of any kind of financial services. Finally, this document does not represent an investment

solicitation in Italy, pursuant to Section 1, letter (t) of Legislative Decree no. 58 of February 24, 1998,

or in any other country or state.

Safe Harbor Statement


Fiat Investor Relations team

Marco Auriemma phone: +39-011-006-3290 Vice PresidentVincenzo Torrisi phone: +39-011-006-2749Federico Donati phone: +39-011-006-2756Roberta Roccati phone: +39-011-006-2709

fax: +39-011-006-3796email: [email protected]

website: www.fiatgroup.com

Contacts

“l’ingegno è motore”...fpt key product strategy. global automotive conference - geneva -...

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