2004 SUSTAINABILITY REPORT - FCA Group...5 Highlights for 2004 6 Board of Directors 8 History 12 Organization 12 Corporate Structure 13 Management 15 Outlook for 2005 17 Corporate

Economic, Environmental and Social Responsibility

2004 SUSTAINABILITY REPORT

Contents

Economic, Environmental and Social Responsibility

4 Letter to Stakeholders

■ ■ ■ Fiat Identity5 Highlights for 20046 Board of Directors8 History

12 Organization15 Outlook for 200517 Corporate Social Responsibility and the Fiat Group18 Corporate Governance

■ ■ ■ Economic Responsibility24 Value Added25 Stockholders30 Lenders32 Human Resources33 Customers43 Suppliers

■ ■ ■ Environmental Responsibility48 Environmental Governance52 Implementing Environmental Management Systems56 Research66 Sustainable Mobility70 Environmental Performance

■ ■ ■ Social Responsibility84 Human Resources98 Community Involvement

111 Commitments for the Future

■ ■ ■ Appendix114 Methodology115 Report of the Auditing Firm117 Main Performance Indicators119 Glossary123 Assessment Questionnaire

2004 SUSTAINABILITY REPORT

01

Fiat Identity

5 Highlights for 2004

6 Board of Directors

8 History

12 Organization12 Corporate Structure13 Management

15 Outlook for 2005

17 Corporate Social Responsibility andthe Fiat Group

18 Corporate Governance18 Code of Conduct21 Compliance Program

■ ■ ■ Letter to Stakeholders

This is the Fiat Group’s first Sustainability Report: a moderntool, designed to strengthen a direct and open dialog betweenthe Group and civil society. Though not mandated by law, manyenterprises have chosen the Sustainability Report as a means ofcomplementing their financial reporting by illustrating how theireconomic performance has been achieved. Thus, it providesstakeholders with the tools they need to evaluate the performanceof our business operations with respect to their economic,environmental and social impact.

We believe that attention to sustainability does not hamperour business. On the contrary, it represents an added value interms of greater credibility and better reputation on the internationalmarkets, by inspiring greater confidence in shareholders, investorsand customers.

The Fiat Group Sustainability Report provides a balanced,integrated answer to the public’s need for information about theissues associated with management accountability, respect for theenvironment, and corporate social responsibility. It is also a furtherdemonstration of the attention that our Company has been consistentlydevoting to shareholders, employees, customers, the environment,and the communities around us for more than a hundred years.

For over a century, the Group has accompanied Italy alongthe path that has led to today’s level of economic and socialdevelopment. It put the country on wheels and provided Italianswith the means that enabled them to satisfy their right to mobilityand to a higher standard of living. It had a decisive role in thedevelopment of Southern Italy and its contribution to researchfunding was the largest made by a private enterprise (in 2004,approximately four per cent of the Group’s net revenues). Itchanneled sizable resources into improving the work environmentand set up ecologically compatible manufacturing processes.

The Sustainability Report springs from this heritage, and buildson the experience gained through the Environmental Report, theCode of Conduct, the Internal Control System, and the other toolsof corporate governance.

The section on economic responsibility makes it possible toassess our transparency and openness with regard to shareholders,employees and the market, adding further important informationto that provided in the Annual Report. For example, this sectionprovides details of how added value was achieved, loans andfinancing, salaries and the cost of labor, about customer satisfactionand relations with suppliers.

The section on environmental responsibility provides a full viewof the action we have taken to ensure sustainable manufacturingpractices at our production plants: reducing energy consumption,improving water reuse and discharge methods, recycling waste,certifying our facilities and establishing environmental safety systems.

In addition, it provides the information needed to gauge theFiat Group’s commitment to making vehicles that are increasinglycompatible with the environment. Engines running on conventionalfuels, but featuring lower-than-ever consumption and emissions,like the small 1.3-liter 16-valve Multijet diesel, or Iveco’s Cursor,Tector and HP powerplants. Alternative propulsion systems, likethe lineup of natural gas-powered vehicles that Fiat introducedseveral years ago. Experimental hybrid or hydrogen-poweredvehicles, like the Irisbus CityClass fuel cell bus.

It also provides an account of the extensive research and fieldtrials where we have joined forces with public administrations,putting our telematics expertise at their service in order to rationalizevehicle usage, improve traffic flow and increase road safety.

Finally, the section on social responsibility, which scrutinizesthe Group’s dealings with people. It presents Fiat’s hiring policies,the initiatives in favor of young people, training and development,health, safety, equal opportunities and industrial relations. Thesection concludes with an examination of our community outreachefforts, including socially-oriented programs, sustainable businessinitiatives and cooperation with institutions and associations.

The Fiat Group Sustainability Report effectively summarizesthe Group’s dedication to corporate social responsibility. It takesstock of what has been done in this area so far; even moreimportantly, it sets the goals for our future work.

Far from being an end in itself, it must thus be seen as thefirst step towards even more open and transparent communicationin an area we know to be very important, for the Group and forthe country. Its importance is confirmed by the fact that Fiat haschosen to issue its first Sustainability Report at a time when theGroup is faced with sweeping organizational and cultural changes,and just when all of us must do our utmost if the targets we haveset for economic performance and operating efficiency are to bereached.

Luca Cordero di Montezemolo

Chairman, Fiat S.p.A.

Sergio Marchionne

Chief Executive Officer, Fiat S.p.A.

(in millions of euros) 2004 2003 2002 2001 2000

Consolidated revenues 46,703 47,271 55,649 58,006 57,555

Operating result 22 (510) (762) 318 855

EBITDA 1,335 1,950 (1,341) 3,408 5,125

EBIT (833) (319) (3,955) 528 2,073

Result before taxes (1,577) (1,298) (4,817) (497) 1,050

Net result before minority interest (1,548) (1,948) (4,263) (791) 578

Group interest in net result (1,586) (1,900) (3,948) (445) 664

Net financial position positive/(negative) (4,961) (3,028) (3,780) (6,035) (6,467)

Stockholders’ equity before minority interest 5,757 7,494 8,679 13,607 15,209

Group interest in stockholders’ equity 5,099 6,793 7,641 12,170 13,320

Net invested capital 10,718 10,522 12,459 19,642 21,676

Operating cash flow (Operating result plus depreciation and amortization) 2,190 1,759 1,852 3,198 3,907

Cash flow (Net result before minority interest plus depreciation and amortization) 620 321 (1,649) 2,089 3,630

Investments in fixed assets 2,112 2,011 2,771 3,438 3,236

Research and development 1,810 1,747 1,748 1,817 1,725

Operating result/net revenues (ROS) — (1.1%) (1.4%) 0.5% 1.5%

Operating result/average net invested capital (ROI) 0.2% (4.4%) (4.7%) 1.5% 4.2%

Net result before minority interest/net revenues (3.3%) (4.1%) (7.7%) (1.4%) 1.0%

Net result/Group interest in average stockholders’ equity (ROE) (26.7%) (26.3%) (39.9%) (3.5%) 5.1%

Investments (Fixed assets)/depreciation 1.25 1.15 1.37 1.50 1.28

Number of employees 160,549 162,237 186,492 198,764 223,953

■ ■ ■ Highlights for 2004

■ ■ ■

Financial and operating highlights of the Fiat Group

■ ■ ■

5

FIAT IDENTITY

In 2004, Fiat worked hard and with determinationto overcome the obstacles in its path, as it facedstrong competition in the markets at the sametime that it was busy resolving structural problems.

It was, thus, a difficult and challenging year duringwhich the Group took a decisive step on the pathto recovery. All stated objectives were achieved:operating breakeven, lower cash outflow andmaintenance of a strong liquidity position, which

amounted to 5.3 billion euros by year’s end.But not all problems have been solved. AtDecember 31, 2004, the Group’s net financialposition was negative by about 5 billion euros,and its statement of operations showed a netloss of 1.5 billion euros, which, however, wassmaller than in 2003.

Fiat is changing its course, and 2004 will be thelast year of net losses for the Group.

■ ■ ■ Boardof Directors

■ ■ ■

6 Fiat Identity

■ ■ ■

John Elkann29 years oldVice Chairman

• Chairman of Itedi• Member of the Board of Directors

of: Exor Group SA; IFI S.p.A.;IFIL Investments S.p.A.;Rcs MediaGroup

• General partner andVice Chairman of theGiovanni Agnelli e C. Sapaz

• Vice Chairman ofthe Aspen Italian Institute

• President of the Italy-JapanFoundation, and Vice Chairmanof the Giovanni AgnelliFoundation and of the Italy-ChinaFoundation

• Director of the COTECFoundation and of the Giovannie Marella Agnelli Art Gallery

Luca Cordero di Montezemolo57 years oldChairman

• President of Confindustria• Chairman and Chief Executive

Officer of Ferrari S.p.A.• President of the Bologna

International Trade Fair• President of Luiss (Libera

Università Internazionale deglistudi sociali – IndependentInternational University of SocialSciences)

• Member of the Board of Directorsof: La Stampa; PPR (Pinault/Printemps Redoute); Tod’s;Indesit Company; Bologna Calcio

• Member of the InternationalAdvisory Board of Citigroup Inc.

• Awarded the title of Cavalieredel Lavoro

Sergio Marchionne53 years oldChief Executive Officer

• Chief Executive Officerof Fiat Auto

• Chairman of Banca Unionedi Credito

• Vice Chairman of SGS SA• Member of the Board of Directors

of Serono SA and Chairmanof its Audit Committee

• Permament member of theGiovanni Agnelli Foundation

• Member of the General Councilof Assonime (Association forItaly’s limited liability companies)and of ACEA (EuropeanAutomobile ManufacturersAssociation)

■ ■ ■ ■ ■ ■

■ ■ ■

Andrea Agnelli30 years oldMember of the Board of Directors

• After four years spent inLausanne at Philip MorrisInternational (Marketing,Sponsorships and ExternalCorporate Communication),he now works in Turin at theCorporate Development in IFIL

■ ■ ■

Angelo Benessia64 years oldIndependent Memberof the Board of Directors

• Vice Chairmanof Rcs Quotidiani S.p.A.

• Member of the Board of StatutoryAuditors of the Turin Polythecnic

• Member of the Board ofDirectors of the FondazioneIstituto Piemontese “AntonioGramsci” for Economic andSocial Sciences

■ ■ ■

Tiberto Brandolini D’Adda57 years oldMember of the Board of Directors

• General partner of theGiovanni Agnelli e C. Sapaz.

• Chairman and General Managerof Sequana Capital

• Member of the Boardof Directors and of theExecutive Committee of IFIL

• Vice Chairman and ChiefExecutive Officer of Exor Group

• Member of the Boardof Directors of VittoriaAssicurazioni and of EspiritoSanto Financial Group S.A.

■ ■ ■

Flavio Cotti65 years oldIndependent Memberof the Board of Directors

• Chairman of the Advisory Boardof Credit Suisse Group of Zurich

• Member of the Board of Directorsof: Georg Fischer AG; SocietàElettrica Sopracenerine Locarno

• Member of the Boardof the Jakobs Foundation

■ ■ ■

Luca Garavoglia36 years oldIndependent Memberof the Board of Directors

• Chairman of Davide CampariMilano S.p.A.

• Chairman of the Italian AdvisoryBoard of Fointainebleau

• Member of the ManagementBoard of AIdAF (Italianassociation of family-ownedcompanies)

• Member of the GeneralCouncil and the ExecutiveCommittee of Assonime(Association for Italy’s limitedliability companies)

■ ■ ■

Hermann-Josef Lamberti49 years oldIndependent Memberof the Board of Directors

• Member of the Board ofManaging Directors of DeutscheBank AG

• Chairman of the SupervisoryBoard of Deutsche Bank Privat-und Geschäftskunden AG

• Non-executive Director of:Euroclear SA/NV, Euroclear plc

• Member of the Supervisory Boardof Schering AG, Carl Zeiss AG

■ ■ ■

Pasquale Pistorio69 years oldIndependent Memberof the Board of Directors

• Honorary Chairman ofSTMicroelectronics

• Vice President of Confindustria forInnovation and Research

• Member of the: “ConseilStrategique pour l’attractivité dupays auprès du Premier MinistreFrançais”; Internal Advisory Councilof the Government of Singapore;ICT Task Force of the UnitedNations; International BusinessCouncil of the World EconomicForum; World Business Councilfor Sustainable Development;“Conseil Stratégique desTechnologies de l’Information”and of the European Round Tableof Industrialists (ERT)

■ ■ ■

Daniel John Winteler41 years oldMember of the Board of Directors

• Chief Executive Officer andGeneral Manager of IFIL

• Member of the Board ofDirectors of: IFIL; Worms & C.ie.;La Rinascente; Alpitour;Juventus F.C.

■ ■ ■

As envisaged in the Articles of Association,the number of members of the Board ofDirectors ranges from nine to fifteen. TheStockholders Meeting held on May 13, 2003set the number of members of the Board ofDirectors at eleven for fiscal years 2003, 2004and 2005, and they shall remain in office untilthe date of the Stockholders Meeting that willbe called to approve the 2005 Annual Report.

■ ■ ■

7Fiat Identity

■ ■ ■ History

■ ■ ■

8

1899 Fiat is born in Turin on July 11, at a time of lively industrial expansion ofthe city.

1900 Inauguration of the first factory in Corso Dante: 150 workers 24 vehiclesproduced per year.

1902 Giovanni Agnelli, former cavalry officer, becomes Chief ExecutiveOfficer.

1903 Fiat builds its first truck. The Company is listed on the Stock Exchange.

1906 The factory in Corso Dante widens, and Fiat employs 2,500 people.

1908 Fiat Automobile Co. is founded in the United States. Fiat starts producingaircraft engines.

1909 Fiat has a capital stock of 12,000,000 Italian liras, 2,500 employees andproduces 1,215 vehicles per year.

1916-1923 Fiat diversifies its activities to include the iron and steel industry, railway,electrical sectors and public transportation lines.

1919 Fiat builds its first tractor. Magneti Marelli is founded by Fiat and Ercole Marelli.

1920 Giovanni Agnelli becomes Chairman of Fiat.

1923 The Lingotto factory becomes operational. It is the largest automobileplant in Europe.

1923-1925 Numerous car models are launched, including the 501 and the 509.In these years, Fiat launches a number of social services for employees:health care services, summer camps for children, Fiat Apprentices Schooland many associations.

1924 The Moscow plant for the manufacturing of cars and trucks becomesoperational.

1926 Editrice La Stampa, issuing Turin’s newspaper, is founded.

� �

� The “501” is the first postwarlow-powered Fiat car. The pictureshows the sports version of the carin Budapest in 1923

� Children of Fiat employees readyto leave for summer holidays in Fiatcamps

Fiat Identity

■ ■ ■

9Fiat Identity

1934 The 508, better known by the nickname “Balilla”, makes its debut. It is alow-powered car with reduced fuel consumption (eight liters for every 100kilometers), destined to become a landmark in car history. 113,000 Balillaswill be produced.

1935 Fiat starts its activity in the field of machine tools.

1936 Launch of the Fiat “Topolino”, the smallest utility passenger car in theworld. 510,000 cars will be produced over twenty years. The intuition ofdeveloping mass production turns out to be a winning move.

1939 Inauguration of the Mirafiori plant, which employs 22,000 workers on two shifts.

1945 Senator Giovanni Agnelli dies.

1948 Fiat now has a workforce of more than 66,300 employees. Profits, whichstagnated during the war, begin to show an upward trend.

1953 The first cars with diesel engines are launched.

1955 The company presents its Fiat 600, which will be produced in over fourmillion units. The Fiat 600, along with the smaller 500, will become the symbolof the Italian economic boom, protagonist of the rebirth of the Country.

1957 Launch of the Nuova 500, a model which will be produced in 3,768,000 units.

1958-1960 The Mirafiori plant doubles in size.

1958-1963 New plants are built in South Africa, Turkey, Yugoslavia, Argentina andMexico.

1964 Launch of the Fiat 850, followed by the 124 and 125.

1966 Giovanni Agnelli, grandson of the founder, becomes Chairman of Fiat.

1967 New acquisitions: the Autobianchi, Om and Cmasa companies are acquiredby Fiat. The Company owns a controlling interest in Magneti Marelli, turningit into a worldwide center for automobile components. The 124 is elected“Car of the Year”.

1969 Hot autumn: social unrest and turmoil in the industrial world that will goon for a decade.Fiat strengthens its presence in Southern Italy, takes over Lancia andacquires 50% of Ferrari shares.

� The “500”, better knownby its nickname “Topolino”

� The “600”. One of the mostpopular car and a symbol of theItalian economic miracle

��

��

■ ■ ■

10 Fiat Identity

1970 The Termini Imerese plant starts its activity. The 128 is elected “Car of the Year”.

1971 Launch of the 127, the first Fiat car with front-wheel drive.

1972 The first robots come on stream at the Mirafiori plant. The 127 is elected“Car of the Year”.

1972-1974 New plants are inaugurated in Termoli (Campobasso), Cassino (Frosinone),Verrone (Biella) and Betim in Brazil.

1975 Five great European brands merge to give birth to Iveco.

1975-1980 Terrorism strikes 16 Fiat employees and worsens the atmosphere ofuncertainty present in the Company.

1978 Comau and Teksid are set up.

1979 The Automobile Sector becomes an independent Company, Fiat AutoS.p.A. It includes the Fiat, Lancia, Autobianchi and Ferrari brands.

� 1979. A Fiat “190” truck

� Launched in 1988, two years afterthe acquisition of Alfa Romeo, the“164” is a flagship, aggressive andpowerful, designed for all the Alfistiwho like sports versions

1980 After 35 days of strike and production stoppage against the Fiatreorganization plan, the so-called protest “march of the forty-thousand”workers, puts an end to the dispute. Technicians, managers and employeesmarch in the streets of Turin requesting to go back to work and changingthe social situation, in the company and in the country.The Panda is introduced and the Lancia Delta is elected “Car of the Year”.

1983 The Fiat Uno is presented at Cape Canaveral, in Florida. The car combinescutting edge technical and design innovations. Over six million units willbe produced.

1984 The Fire engine is produced. The Fiat Uno is elected “Car of the Year”.

1986 Fiat Auto takes over Alfa Romeo S.p.A. and its associated companies.

1989 The Fiat Tipo is elected “Car of the Year”.

1991 Acquisition of the tractors and agricultural equipment operations of FordMotor Co. The related Fiat Sector takes the name New Holland and securesa leading position in the tractor sector.

1993 Fiat acquires Maserati. The Melfi and Pratola Serra plants become operational.

1995 The Fiat Punto is elected “Car of the Year”. It is the best-selling car in Europe.

1996 Giovanni Agnelli becomes Honorary Chairman. The Fiat Bravo/a is elected“Car of the Year”.

■ ■ ■

11Fiat Identity

1998 The Alfa Romeo 156 is elected “Car of the Year”.

1999 New Holland acquires Case Corporation, an American company. CNH isthus set up, and it becomes a world leader in the tractor, agricultural andconstruction equipment sector.

2000 Fiat enters into an industrial alliance with General Motors. Business Solutions,grouping different Companies operating in the services sector, is set up.

2001 The Alfa Romeo 147 is elected “Car of the Year”.

2002 Fiat asks for Government recognition of a state of crisis at Fiat Auto. Thissituation will end in December 2003.

2003 Giovanni Agnelli, at the helm of Fiat for forty years, dies on January 24.On February 28, Umberto Agnelli becomes Chairman of the Group. Fiatreorganizes its industrial scope and focuses on its core automotive business:

� � Two of the most recentsuccesses of the Fiat Group: theNew Holland TM 190 tractor, “Tractorof the Year 2003”, and the Fiat Panda,elected “Car of the Year 2004”

�

Toro Assicurazioni and FiatAvio are sold. Two prestigious internationalawards are achieved: Iveco Stralis Active Space wins the “Truck of theYear” award, and the CNH TM 190 New Holland is awarded “Tractor ofthe Year”.

2004 Umberto Agnelli dies on May 27. At the top management level of theGroup, Luca Cordero di Montezemolo is appointed Chairman, John Elkannbecomes Vice Chairman and Sergio Marchionne is appointed ChiefExecutive Officer.The new Fiat Panda is elected “Car of the Year”. Ferrari wins its sixthFormula 1 World Constructors Championship and its fifth DriversChampionship title in a row.At the end of the year, the Group achieves operating breakeven.

2005 Fiat and General Motors sign an agreement to terminate the MasterAgreement and unwind all joint ventures. Fiat Auto is once again an all-Italian company.The ownership of Maserati is transferred from Ferrari to Fiat.Fiat announces the creation of Fiat Powertrain Technologies, that willintegrate all the Group’s activities in engines and transmissions.

�

■ ■ ■ Organization

■ ■ ■

12

■ ■ ■

Corporate Structure

Fiat is a huge industrial Group with more thanone hundred years' experience in the motor vehiclefield, designing, manufacturing and marketingcars, trucks, tractors, agricultural equipment,construction equipment, motor vehicle enginesand components, and production systems.

■ ■ ■

One of the pioneers of theautomobile industry, Fiat built its firstcar in 1899. Ever since then, almost87 million cars and light commercialvehicles have been produced andmany of these models markedmilestones in motoring history.

Fiat Auto100%

Ferrari56%

Maserati100%

CNH84%

Iveco100%

Fiat S.p.A.

Automotive Sectors

Magneti Marelli100%

Teksid80,5%

Comau100%

CRF (Fiat Research Center)100%

Elasis100%

Other Industrial Sectors

Business Solutions100%

Itedi100%

Non Industrial Sectors

Italenergia Bis24,6%

Mediobanca1,8%

R.C.S. Mediagroup9,8%

Main Portfolio Investments

The current Group structure is theresult of its refocusing on theautomotive business, which startedin 2003 and continued in 2004.

Automotive activities account for82% of total sales and include thefollowing business lines:

• Automobiles (Fiat Auto,Ferrari, Maserati)

• Agricultural and ConstructionEquipment (CNH Global N.V.)

• Commercial Vehicles (Iveco)

as well as:

• Components activities, includingComponents (Magneti Marelli)and Metallurgical Products (Teksid)

• Production Systems (Comau)

• Other Sectors, includingServices (Business Solutions)and Publishing andCommunications (Itedi).

On March 24, 2005, Fiat announcedthe creation of Fiat PowertrainTechnologies, a new industrial unitaimed at integrating all the FiatGroup’s activities in engines andtransmissions.

Fiat Identity

Fiat Powertrain Technologies100%

Fiat Auto operates in internationalmarkets under four brands, alldistinguished by their innovativecontent, styling and manufacturingsolutions:

• Fiat,

• Lancia,

• Alfa Romeo,

• Fiat Veicoli Commerciali.

On eleven occasions Fiat Auto modelswon the Car of the Year Award, thecar industry’s most prestigiousrecognition worldwide. Fiat is themanufacturer that won the greatestnumber of the “Car of the Year”Awards since the establishment ofthis recognition. The award was woneight times by Fiat, twice by AlfaRomeo and once by Lancia.

Ferrari, set up in Maranello in 1947,builds unique sports cars destinedto represent the excellence of Italiancars, whether on the road or onracing circuits.

Suffice it to look at its successes onthe circuits, where the ScuderiaFerrari in 2004 won its fifth Formula1 Drivers Championship and its sixthConstructors Championship in a row.

These achievements are reinforcedby sales results and the vast numberof fans that follow the races oncircuits throughout the world.

Maserati, set up in Bologna in 1914,has always manufactured fascinatingand exclusive cars built in shortproduction runs, outstanding interms of prestige, technologicalinnovation, styling and performance.

Maserati celebrated its 90thanniversary by returning to the racingcircuits. At the beginning of 2005,ownership of Maserati wastransferred from Ferrari to Fiat.

CNH, established in 1999 from themerger of two brands, New HollandNV and Case Corporation, is oneof the world leaders for productionof agricultural tractors, combineharvesters, hay and forage equipmentand grape harvesters and numberthree producer worldwide ofconstruction equipment. A largenumber of brands and one of thewidest offering in the businessenable CNH machinery to meet thevarious needs of its customers allover the world.

Iveco, established in 1975 from themerger of five leading Europeanbrands, today is one of the world’sleading companies in the roadtransport sector. Iveco designs,manufactures and markets a widerange of light, medium and heavycommercial vehicles for on-road andoff-road use. It also produces publictransport vehicles and specialvehicles for defense and civilprotection purposes, engines andfirefighting vehicles.

■ ■ ■

13Fiat Identity

Maserati

K. H. Kalbfell

Ferrari

L. Corderodi Montezemolo

Fiat Auto

S. Marchionne

CNH

H. Boyanovsky (int.)

Iveco

P. Monferino

Teksid

R: Tarantini

Magneti Marelli

E. Razelli

Elasis

N. Di Giusto

Comau

D: Pecchini

Business Solutions

F. Luppi

Itedi

A. Perricone

Centro RicercheFiat

G.C. Michellone

InstitutionalRelations

E. Auci

Communications

S. Migliarino

Chief FinancialOfficer

L. Gubitosi

BusinessDevelopment

F. Luppi

HumanResources

M. Mairano

SeniorCounsel

R. Russo

CorporateSecurity

A. Ambroso

InternalAudit

M. Di Gennaro

Group WideInitiatives

R. Pisa

GroupPurchasing

CoordinationD. Bordone

Chief Executive OfficerSergio Marchionne

BOARD OF DIRECTORSChairman Luca Cordero di Montezemolo

Vice Chairman John Elkann

■ ■ ■

Management

Fiat PowertrainTechnologies

D. Bordone

InternationalRelations

G. Frasca

InternazionaleHolding Fiat

S. Marchionne

Updated as of April 2005

■ ■ ■

14 Fiat Identity

Founded in 1919 and acquiredentirely by the Fiat Group in 1967,Magneti Marelli is now a worldwidecenter for automotive components,which guarantees top-levelcomponents and systems tomanufacturers throughout theworld.

From its founding in 1978 untiltoday, Teksid, which operatesin the field of metallurgicalcomponents for the automotiveindustry, has grown to becomeone of the world leaders in itssector. Teksid works with themain European and Americanmanufacturers in high technologicalcontent cast-iron and magnesiumcastings.

Set up in the 1930s, Comau is todayone of the few "global" suppliers inthe motor industry automation field.It is a world leader for welding systems.The Sector can guarantee customersa full service covering product andprocess engineering, productionsystems, production start-up ofmachinery lines, and maintenance toensure the correct, constant runningof manufacturing plants.

(in millions of euros) Revenues Operating Income (Loss)

Fiat Auto 20,539 (840)

Ferrari – Maserati 1,512 6

CNH 9,796 407

Iveco 9,292 357

Magneti Marelli 3,804 116

Teksid 911 35

Comau 1,716 32

Business Solutions 1,572 36

Itedi 407 12

Fiat Group 46,703 22

2004 Results

� Manufacturing processesat Magneti Marelli

� Comau’s production systems

� �

Set up in 2000, Business Solutionsoperates in the field of services tobusiness by offering companies awide, comprehensive and diversifiedrange of services and consultancy.

Itedi, Italiana Edizioni S.p.A., set upin 1980, groups all publishing andcommunication activities of Fiat,which has been present in this fieldsince 1926. Itedi operates throughEditrice La Stampa S.p.A. and, forsale of advertising space, throughPublikompass S.p.A.

Fiat Auto new products, cost cutting in non-essential areas, improvedquality and profitability of its sales, significant reduction inoperating loss

Ferrari - Maserati Maserati trasferred to Fiat; increase in market shares andprofitability; development of cooperation between Maseratiand Alfa Romeo

CNH industrial activities revenues +5%,ROS between 4.5% and 5% (pre-goodwill)

Iveco revenues +2-3%, ROS over 4%

Magneti Marelli revenues increasing by 5-6%; ROS stable

Teksid revenues increasing by 5-6%; ROS stable

Comau revenues increasing by 5-6%; ROS stable

Fiat Group positive net income after unusual itemspositive cash flow after unusual items

2005 Outlook

■ ■ ■ Outlook for 2005

■ ■ ■

15

Against this background, Fiat Autowill continue to pursue a strategydesigned to improve the qualityand profitability of its sales. TheCompany’s efforts will be aided bythe introduction of four new modelsin 2005. In the spring, the launch ofthe new Croma, which has expandedthe Fiat brand model line and markedits return to the upper-mediumsegment of passenger cars. It willbe followed in the fall by the newFiat Punto. Alfa Romeo will introducetwo new models: the 159 and theexciting Brera Coupé 2+2.

The Group will continue toimplement cost-cutting programs,which, combined with improvedsales results, should enable theAutomobile Sector to achieve itsstated objective of ending the yearwith a lower operating loss.

In 2005, CNH will seek to exploitthe full potential of its completelyrenovated product line to strengthenits position as a global company,thus improving its performanceand reporting higher revenuesand profits.

Iveco as well is expected to makefurther growth, strengthening itspresence in the market for heavyvehicles and continuing to grow asa global producer of diesel engines.The Sector’s goals are a slightincrease in revenues despite aflat market demand and furtherexpansion of its profit margins.

In 2005, the automobile market is expected tocontract in Western Europe, especially in Italy, andto expand in Brazil.

Demand for agricultural equipment is expectedto show little change in North America and contractslightly in Latin America and Europe. The forecastfor construction equipment calls for limited growthin the Americas and stability in Europe.

Unit sales of commercial vehicles should be aboutthe same as in 2004, except for a modest increasein shipments of medium vehicles.

For the Fiat Group, 2005 will be another yeardevoted to regaining its strength. The Groupexpects to report a further improvement in tradingprofit and to achieve positive net income afterunusual items.

Fiat Identity

■ ■ ■

In February 2005, Fiat announcedthat the ownership of Maserati,until then wholly owned by Ferrari,was to be transferred as soon aspracticable to Fiat. As part of this

operation Alfa Romeo andMaserati will co-operate closelytechnically and commercially –particularly in importantinternational markets. Maserati will,however, continue its co-operationwith Ferrari – especially inindustrial, technical, engine andsales network terms – which hashelped re-vitalize the marque.

■ ■ ■

At the end of March 2005, Fiatannounced the creation of FiatPowertrain Technologies, that willintegrate all the Group’s innovationcapabilities and expertise in enginesand transmissions.

The new company will startoperating with annual revenuesof 6 billion euros, 20 percent ofwhich from non-captive customers.It will operate in 12 countrieswith 26 plants and 16 researchand development centers andwill employ over 23 thousandemployees. Fiat PowertrainTechnologies will be one of themost significant players in theautomotive world.

The ability of operating in anintegrated way across a largernumber of cutting-edge researchand engineering centers will bearsignificant advantages in thedevelopment of highly innovativeand competitive products as faras performance and costs areconcerned. Thanks to the synergiesand efficiencies that will soon beachieved, Fiat PowertrainTechnologies will significantlycontribute to the improvement ofthe profitability of the Group.

On February 13, 2005 the Boards of Directors of Fiat and GeneralMotors approved a contract to terminate the Master Agreementand related Joint Ventures between the two Companies. Theagreement envisages that General Motors pays to Fiat _1.55 billionto terminate the Master Agreement, including cancellation of theput option and the unwinding of all joint ventures.

In greater detail, the agreement provides the following:

• Cash settlement to Fiat of _1.55 bn– _1.0 bn paid in February

– Remainder paid on May 13, 2005,upon unwinding of the joint-ventures

• Return of GM’s 10% equity interest in Fiat Auto to Fiat (The Group is now 100% owner of Fiat Auto)

• All joint ventures unwound:

– Fiat engine and transmission plants originally contributedto JV returned to Fiat Auto

– GM owns 50% of the diesel engine Polish plant and Fiat andGM co-own the related intellectual property (1.3 liter SDE)

– Fiat and GM co-own intellectual property on 1.9 liter JTD but:

– Fiat plant in Pratola Serra will continue to supplymost of GM’s European requirements

– GM cannot manufacture JTD Diesel enginesoutside Europe that are to be exported to Europe

• Cooperation benefits preserved:

– Both Fiat and GM will continue to support the joint development of existing platforms

– Long-term supply agreements and other purchasing cooperation agreements will remain in place

– Fiat will continue to sell engineering support to GMfor the development of diesel technology

■ ■ ■

16 Fiat Identity

Fiat-GM Agreement

■ ■ ■ Corporate Social Responsibilityand the Fiat Group

■ ■ ■

17

At the Fiat Group, corporate social responsibility is a voluntary policy, andone that is fully consistent with the Group’s top priority: creating value forits stakeholders.

Fiat pursues the necessary conciliation between sustainability and economicsuccess, and is well aware that all of its actions that do no simply meet butsurpass mandated requirements represent a competitive advantage togain its stakeholders’ support.

This is Fiat’s first Triple Bottom Line report. As such, it introduces a newapproach to measuring its performance in 2004 that strengthens itsaccountability to its stakeholders. It is also a clear demonstration ofmanagement’s commitment to the core values expressed in the Group’sCode of Conduct.

At Fiat, however, social responsibility is nothing new: ever since its foundationover one hundred years ago Fiat has contributed to the economic and socialdevelopment of Italy thereby creating an inextricable link. And this linkhas always been accompanied by a commitment to environment safeguarding:well before the term Corporate Social Responsibility was coined.

As a major automobile manufacturer, the Group is well aware of theenvironmental impacts that stem from growing demand, just as it is awareof the restrictions that congestion continues to make on mobility.Accordingly, the Group’s actions and policies center on easing congestion,convinced that this will both safeguard personal mobility and soften itsimpact on the environment.

For the future, the Fiat Group is committed to finding new ways to buildand solidify its worldwide reputation in the market: as a Group that takesgood care of the environment; as a staunch champion of the free movementof people, goods and ideas; as an active supporter of social initiatives in thecommunities where it operates, while continuing to seek new tools formanaging and enhancing stakeholder relations that measure up tointernational best practice.

■ ■ ■

A major challenge will be to ensurethat a solid culture of sustainabilitytakes root at the Group, helping itachieve the goals it pursues throughcontinual, welcome interchangeswith the ideas, values, legal systems,practices and customs it encountersin the world, where diversity hasbecome the norm.

One such goal is the enterprise-wide implementation of a policy ofuncompromising respect for peopleneeds, combined with concretemethods of determining whetherthe principles enshrined in the FiatCode of Conduct are put into effect.And that means many things.Recognizing the pivotal importanceof the individual, increasingworkplace safety, a reinforcedcommitment to equal opportunityfor everyone, all are stepping stonesto this goal.

Fiat Identity

Fiat is partner of the consortiumOsif, Osservatorio sulla Sostenibilitàdell’Impresa (Monitoring Center forBusiness and FinancialSustainability), which aims at focusingon, analyzing and clarifying thescientific knowledge on the issues ofsustainability and its applications.

■ ■ ■ Corporate Governance ■ ■ ■

18

■ ■ ■

Code of ConductIn order to strengthen its CorporateGovernance system, the Fiat Groupimplemented a renewed Code ofConduct in line with internationalbest practice.

The Code of Conduct attests to thevoluntary commitment of the FiatGroup to conduct its business in afair and impartial manner.

Applied in Italy and in all thecountries in which the Groupoperates, and published in eightlanguages, it restates the need toestablish all business relationshipswith integrity and loyalty, and withoutany conflict of interest betweenbusiness and personal affairs.

The Code contains the Fiat principlesthat all employees in the countries wherethe Group operates are required tocomply with to ensure that the Group’smission is pursued in full respect oflaws, contracts, business ethics andby paying attention to the socialenvironments in which Fiat operates.

The Code provides the guidelines forFiat activity in its relations with all itsstakeholders: individuals, communities,organizations and people aware ofinfluencing the operations of theFiat Group or suffering, directly orindirectly, the repercussions.

Responsibility for disseminating theCode throughout the Group and toall other individuals who operateexternally (suppliers, consultants, etc.),lies with the management team,whose conduct should be anexample of its concrete application.

Approved by the Board of Directors in2002, as a replacement of the Code ofEthics for business conduct adopted in1993, the text is aligned with internationalbest practice and represents theoperative framework of the Group,in full compliance with the applicablelaws and embodying the valuesshared by the people who, internallyor externally, operate with the Group.

Core Values

Being a Group

Customer satisfaction

Enhancement ofand respect for people

Respect for the environment

Value creation

Leadership

Guiding Principles

Integrity and uprightness

Promoting interchanges

Proactiveness

Professional competence

Timeliness and determinationin decision-making

Will to surpass oneself

Execution

The Fiat Group adopted and abidesby the Corporate Governance Code,which is mentioned as a model in theregulations issued by Borsa Italiana(Italian Stock Exchange) on corporategovernance.

Furthermore, as an issuer of financialinstruments listed on variousinternational markets, including theNew York Stock Exchange, Fiatadopted a system of corporategovernance in line with the principlesof international best practice and inparticular United States laws, whichwere recently updated by theSarbanes-Oxley Act.

The corporate governance structureis comprised by a system ofmanagement and control and thestockholders meeting. Pursuant tolaw, external auditors are responsiblefor accounting audits.Fiat adopted a system ofmanagement and control based ona Board of Directors and a Boardof Statutory Auditors.

The Board is comprised by threeexecutive directors and eight non-executive directors – that is, who donot hold delegated authority orperform executive functions in theCompany or the Group – five ofwhom are independent.

The qualifications of the independentdirectors are reviewed annually andbased on the absence of investmentin or economic relationships with theCompany, its executive directors, itscontrolling companies or subsidiaries,or kinship ties to the executivedirectors of these companies such asto compromise their independentjudgment. The Board established theNominating and CompensationCommittee and the Internal ControlCommittee.

For more detailed information on thisissue, please refer to the Annual Reporton Corporate Governance, availableat the section Investor Relations ofthe website www.fiatgroup.com.

Fiat Identity

■ ■ ■

19Fiat Identity

39 violations of the Code werereported and sanctions were imposedaccordingly.

In 2005 monitoring will be basedon a system to be activated uponwhistleblowings or report of irregularevents.

The implementation of an earlywarning system is being developedto monitor travel and representationexpenses.

The Code of Conduct was widelydisseminated within the Group: allcompanies have adopted the Codeupon approval of the same by theirrespective Board of Directors. Fiatalso provides adequate informationand training support.

In all its Sectors, the Group promotedmeetings aimed at presenting andspreading the Code to managersand professionals. The house organsand the Intranet site devoted muchattention to the implementation ofthe Code and conduct principles.

The Code is distributed to all newemployees and is personallysubscribed by senior managers whoare also required to disseminate theethical principles contained in theCode to the people working undertheir supervision.

The Code is made available to allemployees by means of noticeboards at the Company premisesand the Group Intranet portal (directlyfrom the home page). Copies arealso available from Personnel Offices,Legal Departments and ComplianceOfficers.

The Code of Conduct can be foundand freely downloaded from theGroup’s website:www.fiatgroup.com.

As an expression the principles ofbusiness ethics that Fiat recognizesas its own, the Code applies to FiatS.p.A. Board members, to allemployees of Companiesbelonging to the Group and to allother individuals or Companies whoact on behalf of one or moreCompanies of the Fiat Group.

The Group encourages compliancewith its values on the part of thosethird parties with whom it entertainsbusiness relationships of a lastingnature such as suppliers, advisors,counsels, experts, agents and dealers.

The Code of Conduct constitutes afundamental element of the FiatGroup Internal Control System andof the Compliance Program pursuantto Legislative Decree n. 231 that theFiat Group is constantly committedto strengthening and developing.

It is important to underline, atleast in the framework of Italiancompanies adopting Codes ofEthics, that the Code is “consideredto be an integral and important partof each Group employee’s contractof employment.” Consequently, theGroup expects all employees tostrictly comply with the provisionsof the Code. The Groupencourages employees to consultthe Legal Department forexplanations regardinginterpretations of the Code.

All stakeholders may report violationsof the Code through a monitoringsystem established in 2004.

In 2004, Fiat Revi, the GroupCompany in charge of the InternalAudit, monitored the enforcementof the Code of Conduct through 31Business Ethic Audits, that involvedthe main Companies belonging tothe Group. Particular attention waspaid to the dissemination modalitiesof the Code.

■ ■ ■

Procedure for interpretation or reporting of violations

A) Interpretation

EMPLOYEES LEGAL DEPARTMENT

EMPLOYEES THIRD PARTIES

DIRECT SUPERVISOR COMPLIANCE OFFICER

BOARD OF DIRECTORS(INTERNAL CONTROL COMMITTEE)

REPORT OBLIGATION

B) Reporting

■ ■ ■ Business conduct policies

• All employees are strictly required to comply with insidertrading legislation under any jurisdiction.

• The expertise developed by the Fiat Group is a fundamentalresource which every employee and recipient is calledupon to protect.

• The Fiat Group, its employees and the other recipients ofthe Code are committed to the highest standards ofintegrity, honesty and fairness in all internal and externalrelationships.

• The Fiat Group and its employees shall never be engagedor involved in any activity which may imply the laundering(i.e. the acceptance or processing) of proceeds of criminalactivities in any form or manner whatsoever.

• The Fiat Group recognizes the paramount importance ofa competitive market and is committed to comply withany anti-trust legislation in force in the countries where itoperates.

■ ■ ■ Employees

• The Group recognizes that motivated and highlyprofessional people are an essential factor for maintainingcompetitiveness and for the creation of shareholder valueand customer satisfaction.

• The Code is considered to be an integral and importantpart of each Group employee’s contract of employment.

• Any individual who acts as a leader, supervisor or managershall act by way of example and provide leadership andguidance in accordance with the business and ethicalprinciples of the Code, and shall act in such a way as todemonstrate to employees that respecting the Code isan essential aspect of their work.

• The Group is committed to providing equal opportunitiesto all its employees, both on the job and in their careeradvancement, avoiding any form of discrimination basedon race, sex, age, nationality, religion and personal beliefs.

• Harassment of any kind, which has the purpose or theeffect of violating the dignity of the person who is thevictim of such harassment, is totally unacceptable to theGroup whether it takes place inside or outside theworkplace.

• All employees shall take such steps as are necessary tomaintain a good working environment in which the dignityof all is respected.

• Employees shall use those company assets and resourcesto which they have access or which are in their care in anefficient manner and using ways that are appropriate toprotecting their value.

■ ■ ■ External relationships

Customers: the Companies belonging to the Group aredirected at achieving the objective of developing andmaintaining profitable and lasting relationships withcustomers, by offering safety, service, quality and valuesupported by continuous innovation.

Suppliers: the Group selects suppliers that offer the bestcapabilities in terms of quality, innovation, costs and service.

Public Institution: relations with public institutions shall bemanaged only by duly designated departments andappointed individuals; such relations must be transparentand inspired by Group values.

Trade Unions and Political Parties: any relationship of the FiatGroup with Trade Unions, Political Parties and representativesor candidates thereof shall be inspired by the highest levelof transparency and fairness.

Communities: the Fiat Group and its employees are stronglycommitted to behave in a socially responsible manner, byrespecting the uncompromisable values of a cleanenvironment and healthy and safe workplace, such as toobserve and respect the cultures and traditions of eachcountry in which it operates.

Communication and Corporate Information: the Grouprecognizes the vital role that a clear and effectivecommunication plays in sustaining internal and externalrelationships. It is therefore necessary for these activitiesto be organized with clear, uniform criteria, which take intoconsideration both the requirements of the various businesslines and the economic and social role of the Group as awhole.

Media Relations: all information concerning the Group mustbe supplied in a truthful and uniform manner and only bythose employees with the responsibility for mediacommunications.

■ ■ ■ Health, safety & environment

The Fiat Group accepts no compromise in the field of healthprotection and as regards the safety of its employees in theworkplace.

The Group is committed to and recognizes that good health,safety and environment is critical to the success of the Group.

The Group operates an effective environment managementsystem which complies with all relevant national andinternational legislative requirements. It adopts the followingfundamental principles: never pollute; optimize the use ofresources at all times; and develop products that are evermore environmentally compatible.

The Group desires to maintain public confidence in the integrityof its operations by openly reporting on and consultingwith others.

Code of Conduct

■ ■ ■

20 Fiat Identity

■ ■ ■

21

Legislative Decree no. 231/2001,entitled “Standards governingthe Administrative Liability ofLegal Entities, Companies, andAssociations, including thosewithout Legal Personality,”introduced for the first time in Italya regime of administrative (but defacto criminal) liability of companiesfor crimes against public agencies(bribery, extortion, etc.) and whitecollar crimes (false accounting, etc.)committed by company directorsor senior managers or otheremployees in the interest or for thebenefit of the aforesaid companies.

Domestic provisions were thusharmonized with the legislation of themain countries and treaties adopted.

In order to ensure the respect of theDecree provisions, the Fiat Groupadopted a new ComplianceProgram based on the guidelinesset by Confindustria (Confederationof Italian Industries).

The new Compliance Program,which is consistent with theprovisions of the Code of Conductand is an essential part of the InternalControl System, aims at adoptingpre-emptive measures in order toprevent the commission of anycriminal offense. By adopting andimplementing the ComplianceProgram the Company conformswith the principles set out in theLegislative Decree no. 231/2001 andit improves the Group CorporateGovernance, thereby reducing therisks of criminal offenses beingcommitted.

When identifying risks, theExecutive Directors will haveto focus on risks with a highpotential impact on the Company.

The following criteria will haveto be the basis for riskassessment:

• nature of the risk, particularlyas regards financial andcompliance risks, and those risksthat could adversely impact thereputation of the Company

• high likelihood of riskmaterializing

• Company’s limited ability toreduce the incidence and impactof risks on its business

• significant entity of the risk.

Identifications of risks

Fiat Identity

In 2003, the Company launched anon-line training project in order todisseminate correct and exhaustiveinformation about the Decree andthe implications of its application.The main objectives of this programare two-fold:

• supply a general framework of theactions defined by the Fiat ParentCompany and its subsidiaries inorder to strengthen itsmanagement and control system;

• increase the awareness of thepeople of the Fiat Group on theissue of company processescontrol to ensure an “active”prevention of criminal offenses asdefined in the Decree.

The three-year project is addressedto all Sectors and Companiesbelonging to the Group, in particularto those operating on “sensitiveprocesses”. Given the importanceof the issues that are tackled, a testis organized at the end of the courseto certify attendance and learning.

Up to now, 2,957 employees havebeen involved and 2,489certifications have been issued.

The Internal Control System is anessential element of the CorporateGovernance system and it plays akey role in identifying, minimizingand managing risks that aresignificant for the Fiat Group,contributing to the safeguarding ofstockholders’ investments and theFiat Group’s assets. Moreover, theInternal Control System helps ensurethe reliability of disclosure to financialmarkets and compliance with lawsand regulations.

■ ■ ■

Compliance Program

02

EconomicResponsibility

24 Value Added

25 Stockholders25 Financial Performance26 Stockholder Base27 Stockholder Protection28 Relations with Stockholders

30 Lenders30 Volume and Uses

of Debt and Bonds30 Rating31 Low-Rate Loans

32 Human Resources32 Labor Cost Trend32 Incentive Systems

33 Customers33 Sales Volumes

and Market Share 38 Relations with Customers42 Advertising42 Litigation with Customers

43 Suppliers43 Supplier Portfolio43 Relations with Suppliers45 Purchasing Processes45 Business Ethics45 Litigation with Suppliers

■ ■ ■ Value AddedECONOMIC RESPONSIBILITY

■ ■ ■

24

Value Added is the wealth createdduring the fiscal year and distributedamong stakeholders, and iscalculated as the difference betweenrevenues generated and externalcosts incurred during the year.

In 2004, the Fiat Group created netvalue added totaling 9,488 millioneuros.

(in millions of euros) 2004 2003

Revenues from sales and services (1) 46,703 47,271

Value of production from regular operations 47,310 48,659

Cost of raw materials and services (2) 37,465 39,380

Gross value added from regular operations 9,845 9,279

Investment income 9 22

Adjustments to financial assetsand foreign exchange gains (losses) (72) (125)

Other items (3) 569 808

Gross value added 10,351 9,984

Total extraordinary income/ (expenses) (863) 347

Net value added 9,488 10,331

Distribution of net value added:

Stockholders — —

Lenders (4) 673 1,032

Employees 6,369 6,688

Government (5) 443 303

Corporate system 2,003 2,308

of which: Amortization, depreciation and writedowns 3,895 3,762

Gain (loss) before minority interest (1,548) (1,948)

Other (6) (344) 494

(1) Includes revenues of insurance companies and income and revenues from financial services companies, netof change in contract work in progress.

(2) Includes “Insurance claims and other insurance costs” and “Expenses of financial services companies”.

(3) Difference between “Other income and revenues” and “Other operating costs”, the latter net of “Indirectand other taxes”.

(4) Difference between Income/Interest and other financial expenses, excluding financial services companies.

(5) Includes IRAP (Italian regional tax on production activities), other taxes, and indirect and other taxes.

(6) Deferred taxes due in the fiscal year.

Distribution of value addedcreated by the Fiat Group

78.9% of the wealth created by theFiat Group was distributed tolenders, employees and thegovernment, while the remaining21.1% was reinvested in thecorporate system.

Employee compensation totaled6,369 million euros, while lendersreceived 673 million euros.

The resources made available tothe corporate system amounted to2,003 million euros, while 443 millioneuros in taxes were paid to thegovernment.

Economic Responsibility

Corporate system

Lenders

Government

5%

21%

67%

Employees

7%

Highlights per share (in euros) 2002 2003 2004

Cash flow per share (**) (2.911) 0.407 0.633

Earnings per share (6.660) (2.412) (1.620)

Dividend per share (*)

ordinary and preference shares – – –

savings share – – –

Stockholders’ equity per share at 12/31 13.489 8.623 5.209

Market price per share at 12/30/02 12/30/03 12/30/04

ordinary shares 7.704 6.142 5.897

preference shares 4.348 3.704 3.976

savings shares 4.183 3.957 4.243

(*) Reflects the distribution of earnings attributable to the respective year.

(**) Net result + depreciation and amortization.

The Fiat Company is listed on theBorsa Italiana, i.e. the Italian StockExchange, and on the New YorkStock Exchange (NYSE) throughADR (American DepositaryReceipts).

An ADR is a tradable receipt, similarto a stock certificate, issued by aUS depository bank, and representsthe stock of a non-US company, theAmerican Depositary Sharedeposited with the same bank.

In general, the recovery of theleading European stock marketsthat began in 2003 continued in2004. The improvement inperformance ranged fromapproximately +6% and +7%,respectively, for Paris and Londonto approximately +13% and 15%,respectively, for Frankfurt andMadrid. Milan rose byapproximately 16% in 2004.

In particular, the Europeanautomotive sector was impacted bythe problems caused by themacroeconomic situation. Thesector index (Dow Jones EurostoxxAuto) remained unchanged in 2004,following a strong recovery(approximately 14.5%) during theprevious year.

Fiat stock slipped by approximately4% during the year. Theperformance of Fiat stock reflectsmarket expectations of thecompletion and restructuringimplementation of the IndustrialPlan.

■ ■ ■

Financial Performance

■ ■ ■

25

■ ■ ■ StockholdersPerformance of Dow Jones, Mibtel, Nasdaqand DJ Euro Stoxx indexes in 2004 (1/1/04 = 100)

Performance of Fiat stock with respect to Mibtel indexand Eurostoxx Auto in 2004 (1/1/04 = 100)


DecNovOctSepAugJulJunMayAprMarFebJan

100

110

120

90

80

DJ Euro StoxxMibtelDow Jones

DecNovOctSepAugJulJunMayAprMarFebJan

100

110

120

90

80

DJ Eurostoxx Auto Mib 30 Fiat Ord.

Nasdaq

Fiat stock is included in 63 StockExchange indexes in Europe andglobally. The weight of Fiat stockon them is illustrated by thefollowing table:

■ ■ ■

26 Economic Responsibility

Stockholder distributionby geographical region

Stockholder distributionby investment style

■ ■ ■

Stockholder Base

By year-end 2004, Fiat had morethan 300,000 stockholders. At theend of 2004, ordinary sharesamounted to 800,417,598.Stockholders with more than 2%are the following:

IFIL Investments S.p.A. 30.06%

TIAA Cref 4.12%

Generali Group 3.25%

Lybian Arab Foreign Inv. Co. 2.71%

Mediobanca 2.65%

SanPaolo IMI Group approx. 2%

Italian InstitutionalInvestors approx. 11%

InternationalInstitutional Investors approx. 10%

Other Stockholders approx. 34%

Fiat Group’s commitment to SocialResponsibility, summarized in thisfirst edition of the Report, aims alsoto make Fiat stock attractive tothose categories of Funds– particularly US and British ones –which invest in Companies on thebasis of their corporate socialresponsibility.

In addition, Fiat is implementing aninternal monitoring system of thesustainability performance so as toobtain positive assessments byrating agencies for ethical behaviorin order to be included insustainability indexes: SAM for DJSI,EIRIS for FTSE4 GOOD, Vigeo forASPI Index.

Index Percentage

Milan MIB Telema 0.75%

Milan MIB30 Inde 1.01%

S&P/MIB Index 1.16%

Bloomberg Europe 0.08%

BE500 Autos Inde 3.96%

DJ Euro Stoxx ¤ 0.13%

DJES Aut&Prt ¤ P 3.37%

MSCI Euro 0.15%

MSCI World/Cons 0.16%

MSCI EMU/Cons DI 1.20%

S&P Euro Index 0.14%

S&P Europe 350 I 0.07%

S&P Eur 350 Auto 3.27%

S&P Global 1200 0.02%

FTSEuroFirst Aut 3.51%

FTSEuroFirst 300 0.07%

Source: Bloomberg. 12.31.2004

USA

UK

Other

Italy

10%

39%

31%

Other UE

Core

Value

Index

5%

10%

45%

30%Hedge & Other

18%

2%

GARP 10%

■ ■ ■

Number of meetings held

during the reference fiscal year

Board of Directors 10

Internal Control Committee 6

Nominating and CompensationCommittee 5

■ ■ ■

27Economic Responsibility

■ ■ ■

Stockholder Protection

Internal Nominating andNumber of other Control Compensation

positions held Committee Committee

Office held Members Executive Non-Executive Independent *** * ** *** ** ***

Chairman Luca Cordero di Montezemolo • 100% 5

Vice Chairman John Elkann • 100% 4 • 100%

Chief ExecutiveOfficer Sergio Marchionne • 100% 3 • 100%

Director Andrea Agnelli • 100% –

Director Angelo Benessia • • 100% 1 • 100%

Director Tiberto Brandolini d’Adda • 100% 6

Director Flavio Cotti • • 100% 2 • 80%

Director Luca Garavoglia • • 100% 1 • 100%

Director Hermann-Josef Lamberti • • 100% 5 • (1)

Director Pasquale Pistorio • • 100% 1 • (1)

Director Daniel John Winteler • 100% 4 • 100%

Members of the Board of Directors and their respective qualifications

In compliance with the governanceinstruments previously cited and Fiat’sadoption of the principles of theCorporate Governance Code forListed Companies (Preda Code), theBoard of Directors of Fiat S.p.A. iscomprised of three executivedirectors and eight non-executivedirectors – that is, who do not holddelegated authority or performexecutive functions in the Companyor the Group – five of whom areindependent.

The Board of Directors establisheda Nominating and CompensationCommittee and an Internal ControlCommittee.

The Nominating and Compensation

Committee is comprised of fivedirectors, three of whom are non-executive, and among these, two areindependent.

Among its tasks, the Committeesubmits to the Board of Directors, inthe absence of the interested parties,proposals with respect to thecompensation plans for theChairman, the Chief Executive Officerand other Directors vested withparticular offices. In addition, itparticipates in the definition anddrawing up of stock options plans.

The Internal Control Committee iscomposed of at least threeindependent directors and its role isto assist the Board of Directors indischarging its own duties byproviding it with advice and proposalsfor: the accounting system and

financial information regarding thereliability of such data, the InternalControl System, the selection andsupervision of projects entrusted toexternal auditors, and the supervisionof Internal Audit activities.

In compliance with the provisionsprovided by the Italian StockExchange, Fiat adopted a DisclosureRegulation by relevant personsconcerning “internal dealing”transactions. The envisageddeadlines and quantities requireprompt reporting by relevant personsfor individual transactions whosecountervalue exceeds 80,000 eurosand those whose aggregate amountexceeds 15,000 euros monthly.

No “internal dealing” transaction wasreported in 2004.

* This column shows the number of director or statutory auditor positions held by each director inother companies whose shares are listed on Italian or foreign regulated markets and in financecompanies, banks, insurance companies and large corporations in general. A detailed listing ofthese positions is provided in the Annual Report on Corporate Governance.

** A • placed in this column shows that the corresponding director is a member of the Committeelisted at the top of this column.

*** This column shows in percentage terms the attendance record of each director at Board of Directorsand Committee meetings.

(1) Appointed on December 23, 2004.

■ ■ ■

28

■ ■ ■

Relations with Stockholders

Fiat has a primary interest to createand maintain a constant dialog withits Stockholders. The Group’sInvestor Relations pursues a policyof open communication withindividual and institutional investors.

During the course of the year,Investor Relations organizespresentations after the regularpublication of Group results or otherevents requiring directcommunication with the market.

In addition, Investor Relations holdsseminars aimed to provide morein-depth understanding of theoperating performance andstrategies of the Group Sectors,and meetings and roadshows inorder to permit a direct relationshipbetween the financial communityand the Group’s top management.

In 2004, Fiat presented a newversion of its website www.fiatgroup.com providing itwith updates, new content and

Toll-free telephone number in Italy: 800 804027

Website: www.fiatgroup.com

E-mails: [email protected]

[email protected]

For holders of Fiat shares:

services to better respond tostakeholder needs.

The Investor Relations websitesection is an important channel toensure timely and proper disclosureof information on what is presentedand discussed during the corporateevents. The website providescorporate publications, financialreports and data, regular andextraordinary events, the calendarof company meetings andCorporate Governance in itsentirety.

In 2004, communication tostockholders and the financialcommunity was as follows:

• 10/15 calls a day (analysts andstockholders)

• about 100 one-on-one meetings

• 5 group meetings

• Rating Agencies meetings (incollaboration with the capitalmarkets functions)

• actively participated in 7conferences held by financialinstitutions

• over 50 press releases issued

• 4 conference calls and webcastsfor the presentation of quarterlyresults (over 100 participants onaverage)

• 1 annual meeting with analystsand investors

• meetings at the principalEuropean financial centers (Milan,London, Paris, Amsterdam, Berlin,Zurich).

Toll-free telephone numberin the USA and Canada: 800 9001135

Outside the USA and Canada: 781 5754348

Website: www.adr.com

For holders of ADRs:

Conference calls participants

Rest ofItaly Europe

Event

Open 4 5

Closed 34 101

Presentations 9 7

Analyst meetings 1 —

Total 48 113

Fiat attendance

Chief Executive Officer 11 5

Chief Financial Officer 18 23

Investor Relations 35 42

Type of meetingsand number of participants


Bankers

Portfolio managers

Rating agencies

Sell side analysts

11%

50%

20%

Buy side analysts

Others

2%

1%

16%

Date Event Main Speakers Remarks

January 12-13 London-Group meeting CFO/IR team Meeting

February 27 FIAT Q4 & full year results CFO Conference Call

March 1 FIAT Q4 & full year results CFO Conference Call

1-2 Merrill Lynch Automotive Conference - Geneva CEO/CFO/IR team Presentation

2-3 Geneva Autoshow Analyst Group meeting CEO/CFO/IR team Meeting

22-23 Paris-Frankfurt Group meeting IR team Meeting

April 1 Barclays-Group meeting IR Presentation

28 Turin Citigroup meeting CFO/IR team Meeting

29-30 London Group meeting CFO/IR team Meeting

May 11 FIAT Q1 results CEO/CFO/IR team Conference Call

17 Turin JPMorgan meeting CFO/IR team Meeting

19-21 UBM conference CFO/IR team Presentation

26-27 JPMorgan conference CFO/IR team Presentation

June 3-4 Berlin Group meeting IR team Meeting

July 6-7 Amsterdam Group meeting IR team Meeting

26 Q2 & Analyst day CEO/CFO/IR team Conference Call

September 3 London Group meeting CFO/IR team Presentation

22 UBS Conference Paris CFO/IR team Presentation

23-24 Paris Autoshow Analyst Group meeting CEO/CFO/IR team Presentation

October 1 Mediobanca conference CEO/CFO/IR team Presentation

1 Bank Bellevue meeting CEO/CFO/IR team Presentation

13 IAFEI CEO/IR team Presentation

28 FIAT Q3 results CEO/CFO/IR team Conference Call

November 8 London Group meeting IR team Meeting

9 London Group meeting IR team Presentation

25 Milan-Intermonte conference IR team Presentation

29 London Group meeting CEO/CFO/IR team Presentation

December 16 Turin Exane meeting IR team Meeting

■ ■ ■


Tel. +39 011 00 62709

Fax +39 011 00 63796

E-mail: [email protected]

Website: www.fiatgroup.com

Investor Relations – Contacts

The calendar of events promoted in 2004 by Fiat Group Investor Relations included:

Short-term Long-term Outlook

S&P B BB- negative

Moody’s Not prime Ba3 negative

Fitch B BB- negative

Net debt of the Group (debt,relative accruals and deferrals, netof cash and securities) totaled 13.9billion euros at December 31, 2004,about 1.7 billion euros less than atDecember 31, 2003, thus reflectingthe downward trend started in 2001.

Gross debt, equal to 19.2 billioneuros at the end of 2004, decreasedby 3.4 billion euros, of which 2.7billion euros in consequence of thereimbursement of bonds, includingthe bond for approximately 1 billioneuros issued by Fiat Finance &Trade and the bond exchangeablefor General Motors shares for 2.2billion dollars, equal toapproximately 1.8 billion euros.During 2004 a bond equal to 500billion dollars was issued by CNHInc. (367 billion euros).

In 2005, bonds for approximately1.9 billion euros will expire, while inthe first half of 2006 thereimbursements will amount toapproximately 1.7 billion euros.

■ ■ ■

Volume and Usesof Debt and Bonds

■ ■ ■ Lenders

As for bonds, during the year thecapital collection on the marketreported bond issues for a totalamount of approximately 125 billioneuros in Europe (233 billion eurosin 2003), of which approximately 15billion euros from Italian groups (13billion euros in 2003) and 156 billioneuros in the USA (127 billion eurosin 2003), of which 4.8 billion eurosfrom Italian issuers (3 billion eurosin 2003).

The Fiat Group collected resourceson the American capital marketthanks to a CNH five-year bondissue for a total amount of 500million US dollars. There were noissues under the EMTN (EuroMedium Term Note) Program.

Fiat Group gross debt(in millions of euros)

Bond debt maturity(in millions of euros)

Bond debt broken down by currency

■ ■ ■

Rating

The major international ratingagencies (Moody’s, Standard andPoor’s and Fitch Ratings) haveassigned a rating to the securitiesissued by Fiat Group companies.

At present, these ratings refer tothe “non-investment grade”category with a negative outlook.

■ ■ ■


2004

2003

9,000

2002

15,418

2001

20,613

18,289

28,923

22,034

19,200

32,697

10,200*

6,616

8,310

14,408

short term

long term

(*) 4,200 – Mandatory Convertible Facility& Italenergia(convertible into shares)

2008

2007

2006

2005

CNH

Fiat Finance and Trade

2009

2010

2011

2016

2021

0 250 500 750 1000 1250 1500 1750 2000 2250 2500

Fiat Finance North America

Fiat Finance Canada

Fiat Finance Luxembourg

USD

Other

JPY

5%

77%GBP

Euro 18%2%

3%

In its use of public funds, the FiatGroup has always pursued policiesthat promote local development byhelping build a sound scientific,technological and entrepreneurialfoundation in the so-called“economically depressed areas andthose suffering from industrialdecline”. In doing so, the Group hassteadfastly implemented itsprograms in full compliance withmandatory legal requirements andEU guidelines, reaching theobjectives envisaged by the varioustypes of financing facility providedto it.

Definition, coordination andaccounting of financing projectspresented by Fiat Group companiesare managed at the central level.

During 2004, a major effort wentinto research and developmentprograms, for which the Fiat Groupincurred costs totaling 1,810 millioneuros at the consolidated level.

For its most important R&Dprojects, the Group has applied forfinancing from public agencies, asprovided for by current legislation.

■ ■ ■

Low-Rate Loans

In the same period, multi-yearresearch and innovation projectsapproved by Italian and Europeaninstitutions received 22 million eurosin low-rate loans and 52 millioneuros in grants, for a total of 74million euros.

Financing facilities for research anddevelopment projects are broken downby Sector as follows:

Fiat Group Low-rateR&D expenditures loans and grants

(in millions of euros)

2003 1,747 84

2004 1,810 74

■ ■ ■


The Group also made significantinvestments in depressed areas andareas suffering from industrialdecline. Projects in such areasreceived grants totaling 53 millioneuros.

Specifically, these grants financedFiat Auto’s investments inmodernizing and expanding itsplants in Pomigliano and Melfi nearNaples and Cassino near Frosinone,as well as investments made byMagneti Marelli for its Bari facility.

Outside Italy, the Fiat Groupreceived a 78 million euro grantfrom the Banco Nacional deDesenvolvimento Economico eSocial – BNDES in Brazil. Part of thisfunding was earmarked for CNH,while the remainder supportedinvestments in fixed assets by otherSectors which do business in thatcountry (Fiat Auto, Iveco andMagneti Marelli).

Iveco

Fiat Auto

Ferrari

CRF(Fiat Research Center)

6%

49%

15%

Elasis

Teksid

Comau

3%

1%

Magneti Marelli

5%

10%

11%

A large portion of the Group’sresearch is concentrated in Italy, andfocuses on the highly specializedactivities which are essential toincreasing the manufacturingsectors’ know-how and improvingtheir competitive edge.

The Fiat Group’s planned programsfor 2005 will address:

- Strategic research in topics ofinterest to the EuropeanCommission.

- Strategic research in technologicaland scientific areas supported byMIUR, the Italian Ministry ofEducation, Universities andResearch, through the latter’snational research programs.

- Other research and developmentprograms for improving theGroup’s potential for innovation,and which are eligible for theexisting facilities provided by theItalian government (MIURresearch funding and Ministry forProduction Activities funding fortechnological innovation).

- Other programs eligible for theregional funding available forprojects which increase localinnovation capabilities.

At December 31, 2004, the Grouphad 160,549 employees, comparedwith 162,237 at the end of 2003. TheGroup hired a total of about 14,600new employees in 2004 — 3,600 inItaly and 11,000 in other countries.A total of 18,400 employees (6,300in Italy and 12,100 in other countries)left the Group. Business acquisitionsand disposals resulted in a netincrease of 2,100 employees. Thenet change is mainly the result ofadditions stemming from theconsolidation of the ElectronicSystems operations by MagnetiMarelli, offset in part by reductionsattributable to the sale of FiatEngineering and the Midasoperations and by transfers ofemployees from Comau Service toassociated companies.

■ ■ ■

Incentive Systems

■ ■ ■ Human Resources

With its Compensation System, theFiat Group strives to:• reward talent• focus on performance• attract valuable recruits• motivate employees, ensuring that

they identify with the company’sgoals.

This is accomplished through aworldwide Group policy which setsout common guidelines, andcountry-specific corporate policiesthat ensure a prompt, consistentresponse to the labor market andbusiness conditions in eachmanufacturing area.

Fiat Group compensation includes:

Basic compensation: In each country,basic compensation levels areestablished in order to ensure thatthey are competitive with localmarket practice, taking theconstraints and opportunitiesenvisaged by nationwide andcompany collective bargainingagreements into account. Annualpay increases are determined on thebasis of local labor market trends,

■ ■ ■


scheduled renewals for collectivebargaining agreements, and specificrequirements for protecting key skillsand enhancing employees. Inaccordance with the Group’s policyof rewarding talent, pay increasesover and above those mandated bylaw or contract are linked to eachindividual’s professional level andperformance.

Short-term variable compensation:In addition to the fixed componentof total compensation envisaged bycollective bargaining agreements,the Fiat Group’s approximately24,000 professionals around theworld receive an annual variablecomponent tied to theirperformance and that of thecompany.If the company performance issatisfactory, the maximum annualbonus thus awarded will depend onthe employee’s role in the company,his or her individual performance,and recruitment market conditionsin the country concerned.

Long-term compensation: Startingfrom 1999, the Group’s 604executives are eligible to participatein stock option plans; options maybe granted directly by Fiat S.p.A. orby the employing company.

(in millions of euros) 2004 2003 2002

Salaries and wages 4,462 4,707 5,457

Social security contributions 1,168 1,249 1,365

Employee severance indemnities 187 244 256

Employee pensions and similar obligations 178 185 100

Other costs 374 303 376

Total personnel costs 6,369 6,688 7,554

Labor cost trends

■ ■ ■

Labor Cost Trend

Personnel costs amount to 6,369million euros in 2004, a decrease of4.8% compared to 2003, mostly dueto the effects of the change in thescope of consolidation.

“Customer value” is an importantindicator of a company’s worth. Itis an indicator that is also theproduct of:

• Ease of customer access to thecompany before, during and afterthe purchase

• Open relationships

• Honest, clear, timely andcomplete communication

• The company’s closeness tothe customer before, duringand after the purchase.

Customers appreciate thesefactors just as much as qualityand the price of the productor service.

■ ■ ■

33

■ ■ ■ Customers


For the automotive Sectors,customer portfolio and salesvolumes are assessed on the basisof the number of units soldduring the year.

Fiat AutoIn 2004, Fiat Auto’s sales increasedby 4.2% over 2003 to a total of1,766,000 units. In particular,vehicle sales in Western Europetotaled 1,193,200 vehicles, a 1.2%rise that was largely due to higher

The Fiat Group aspires to fully meet the expectations of the endcustomer. The Group considers it essential that its customers alwaysbe treated fairly and honestly.

The internal procedures of each Group company are directed atachieving this objective by developing and maintaining profitable andlasting relationships with customers, offering safety, service, qualityand value supported by continuous innovation.

■ ■ ■ Code of Conduct

volumes in Italy, where the successof new models translated into a4.9% increase.

By contrast, volumes shrank onthe other major Europeanmarkets.

In Brazil, sales rose by 12.7%, afigure that was well above themarket average, while Polandsuffered from a sluggish market thatpushed sales down by 13.8%.

Units sold by geographical area (automobiles and light commercial vehicles)(in thousands of units) 2004 2003 % change

France 73.2 80.4 -8.9

Germany 107.8 118.7 -9.1

Great Britain 86.7 92.3 -6.1

Italy 704.3 671.2 +4.9

Spain 72.4 75.2 -3.7

Rest of Europe 148.8 141.6 +5.0

Western Europe 1,193.2 1,179.4 +1.2Poland 60.6 70.3 -13.8

Brazil 358.1 317.7 +12.7

Rest of the world 154.1 128.1 +20.3

Total units sold 1,766.0 1,695.5 +4.2

Units sold by brand(automobiles and light commercialvehicles)(in thousands of units)

■ ■ ■

Sales Volumes and Market Share

2003

Alfa Romeo (-7%)

Light commercialvehicles (+9.8%)

Fiat (+4%)

Lancia (+14%)

2004

1,181

102

165

247

1,695

1,225

117

153

271

1,766

■ ■ ■

34

In Western Europe as a whole, FiatAuto’s share of the automobilemarket dropped to 7.2%, or 0.2percentage points less than in 2003.The market share in each of themajor European markets wassubstantially in line with that for theprevious year: in Italy, for instance,Fiat Auto’s slice of the market wasvirtually unchanged at 28%.

Significant changes occurred inPoland, where market share wasdown 0.7%, and in Brazil (down1.6 percentage points).

On the light commercial vehiclemarket, Fiat Auto sold a total of271,000 units, a gain of 9.8% overthe previous year that confirmedFiat’s leadership in Italy and manyother countries.

% market share

In 2004 Ferrari and Maserati attainedimportant objectives both in termsof sales and sports results. The mostnoteworthy achievements includerecord unit sales, which enabled theSector to report revenues that, at morethan 1.5 billion euros, were the highestin its history (about 20% higher thanin 2003), and winning the WorldConstructors Championship for thesixth consecutive year and the WorldDrivers Championship for the fifth yearin a row.

Sales to end customers totaled 9,565units, 35% more than in the previousyear.

Ferrari sales to end customersamounted to 4,975 units (+17%) andconfirmed the United States as themain market with 1,440 units, up 7%compared with 2003.

A total of 2,689 units (+15.5%) weresold in Europe. The main branchesupped their sales by 18%, with 1,542shipments. Germany once againranked as Europe’s largest market andthe second worldwide with 739 units(+14%). Sales in the Eastern countriesgrew by an impressive 44%, and Italiancustomers purchased 515 units.

Maserati sales to end customerstotaled 4,590 units, an increaseof 62% with respect to theprevious year. The most importantmarkets were the United Stateswith 1,128 units (+16.9%)and Germany with 848 units (+72.7%).Italy accounted for 594 units(+61.4%).

At the end of 2004, Ferrari’s shareof its market segment stood at 15%in the eight main markets (USA,Germany, UK, Italy, France,Switzerland, Japan and Australia),rising to a peak of 52% in Italy andhitting 31% in France, 27% inSwitzerland, and 24% in Japan.

Units sold by geographical area

Ferrari Maserati

Units sold by brand


Revenues performance(in millions of euros)

Ferrari - Maserati

Automobiles

Poland

Brazil

Italy

Western Europe (*)

28.0

7.2

17.1

23.5

Light commercial vehicles

42.4

10.7

26.0

24.3

Poland

Brazil

Italy

Western Europe (*)

Rest of Europe

Rest of the World

Italy

17%

44%United States

10%

29%

16%

46%

13%

25%

2003

Ferrari (+17%) Maserati (+62%)

2004

4,238

2,839

7,077

4,975

4,590

9,565

(*) Italy included

2004

2003

2002

1,512

1,261

1,208

■ ■ ■

35

In 2004, Iveco sold a total of 162,300vehicles, an increase of 10.9%worldwide. In Western Europe,vehicle sales increased by 8.3%over the previous year to a total of129,200.

Iveco’s market share in WesternEurope was 11.1%. Thanks inparticular to the new Eurocargo,Iveco strengthened its leadershipon the medium-vehicle segment,bringing its market share in thisarea to 28.2% or 0.8 percentagepoints above 2003.

In the bus segment, Irisbus reacheda market share of 25.8% in WesternEurope, an increase of 0.7 pointsover the previous year.

Commercial Vehicles sold by geographical area(in thousands of units) 2004 2003 % change

France 20.4 17.8 +14.6

Germany 16.3 14.0 +16.5

Great Britain 14.6 13.8 +5.9

Italy 38.7 38.3 +1.1

Spain 16.8 14.8 +13.4

Rest of Western Europe 22.4 20.6 +8.7

Western Europe 129.2 119.3 +8.3Eastern Europe 10.8 9.7 +11.9

Rest of the world 22.3 17.5 +27.7

Total units sold 162.3 146.4 +10.9

Commercial Vehicles sold by productsegment(in thousands of units)

% market share


CNH increased its total salesof agricultural equipment comparedwith 2003, but performance variedby market segment. In NorthAmerica, tractor sales were upstrongly, rising at a faster rate thanthat of the market (+13%).

Performance was also good in LatinAmerica and the rest of the world.Demand for combines slackenedin Western Europe, where tractorsales also dropped.

Rising demand for constructionequipment enabled CNH toincrease total sales.

On the important North Americanmarket, growth rates outstrippedthose of the market as a whole,reaching 28%. In Latin America,where demand rose by 48%, CNHposted significant increases in allproduct lines.

In Western Europe, on the otherhand, sales slowed for all its majorproducts.


Revenues by geographical area


21.1

2004

2003

2002

9,796

9,418

10,513

CNH

2003

Light (+11.6%)

Busses (*)

Heavy (+14.1%)

Medium (+9.1%)

2004

32.9

19.3

81.5

8.6

146.4 162.3

Total commercial vehicles

12.6

5.9

11.1

Light (2.8-6.0 tons)

10.4

5.6

9.4

Medium (6.1-15.9 tons)

29.8

19.4

28.2

Heavy (>16 tons)

Rest of Europe

Western Europe

Key markets(Italy, France,Germany,UK and Spain)13.4

3.9

11.1

4.0

37.6

91.0

8.64.0

Special Vehicles (**)

(*) Irisbus(**) Astra, Defense and Firefighting vehicles

North America

Western Europe

Latin America

Rest of the World

14%

33%

8%

45%

2004

2003

2002

9,292

8,440

9,136

Iveco

■ ■ ■

36


Magneti Marelli posted revenuesof 3.8 billion euros for the year.The increase over the 3.2 billionachieved in 2003 was due inparticular to product improvementsand new technological features thatenabled the Sector to strengthenits relationships with majormanufacturers and book a significantnumber of orders for new models.



In 2004, Teksid posted 911 millioneuros in revenues, an increase of 8%over the previous year thanks to thelarger sales volumes that both businessunits were able to achieve despitethe euro’s rise against the dollar.

Meridian Technologies (Magnesium)continued to concentrate on theNorth American market, whichaccounted for 80% of revenues, witha 4.9% increase in total volumes.


The Cast Iron Business Unitincreased its volumes by 11%.From the standpoint of sales,the Unit broadened its customerbase in the automotive industry,acquiring contracts from Japanesemanufacturers in China, increasingshipments for General Motors inBrazil, and forging stronger linkswith Renault and PSA in Europe.

Magneti Marelli

2004

2003

2002

3,804

3,206

3,288

Details about the single businessunits are as follows:

Automotive Lighting increased itsrevenues by 7% on a comparableexchange basis, from 1,027 millioneuros in 2003 to 1,804 million eurosin 2004.

This increase was largely due to thenew high intensity discharge xenonheadlamps and adaptive frontlighting systems. Important neworders were received from BMW,Mercedes-Benz, Chevrolet, Audiand Volkswagen.

The increase in revenues postedby Engine Control mainly stemmedfrom the introduction of the DieselBuy system. Revenues for 2004totaled 775 million euros, as against742 million euros in the previous year.

Revenues for Cofap AutomotiveSuspension totaled 1,002 millioneuros as against 970 million euros in2003. On a comparable exchangebasis the increase amounted to 4.6%and was spurred by the increasedvolumes for the Panda. New orderswere received from PSA PeugeotCitroën and Mercedes in Europe,GM in the United States, and DCX,Ford, GM and Volkswagen in Brazil.

The Electronic Systems unit wasacquired in 2004, and madesignificant sales as a result ofthe widespread introduction ofa new telematic product for PSA.Many important orders from majormanufacturers were receivedduring the year, including the“Nanoflorence” system for Fiat’sStilo and Ducato, instrument panelsfor PSA Group light trucks andpassenger cars, and units for Audiand Volkswagen vehicles.

For the Exhaust Systems unit,ramped-up production of the new1.3 SDE (Small Diesel Engine) andstrong sales of the Panda did muchto boost revenues. On a comparableexchange basis revenues increased5.8% to total 365 million euros asagainst 346 million euros in theprevious year. New orders wereacquired for the exhaust gasaftertreatment system for the newFiat 1.6 MDE (Medium Diesel Engine)outfitting Fiat, Lancia and Alfa Romeovehicles, and for the exhaust systemwhich will be installed on the newFiat Ducato.

2004

2003

2002

911

844

1,539

47%

41%

Teksid

Europe

USA, Canada and Mexico

Rest of the WorldItaly

Rest of Europe

Rest of the World

32%

49%

18% 12%


■ ■ ■


Business Solutions posted revenuesof around 1.6 billion euros, down 13%from 2003. This decrease was chieflydue to changes in the scope ofoperations of the Sector, and inparticular the divestiture of FiatEngineering. On a comparable basis,however, revenues were substantiallythe same as in 2003.In 2004, Business Solutions broughta further impetus to its efforts to

concentrate on the captive market.For the Human Resources unit,services generated revenues totaling261 million euros, of which 77% werefrom non-captive customers. Thetemporary employment providerWorknet was sold in February 2005.Sales volume for the FacilityManagement unit amounted to254 million euros, 57% of whichfrom non-captive customers.Revenues for the Administration andProcurement unit totaled 299 millioneuros, 77% of which from captivecustomers.The Information & CommunicationTechnology unit posted revenuestotaling 728 million euros, 51% of whichcame from Fiat Group companies.


Comau’s revenues for the year were1.7 billion euros, down 25% from2003 as a result of the transfer ofmaintenance operations to FiatAuto and Fiat-GM Powertrain, aswell as the difficulties that prevailedon the Sector’s reference market.Comau received new orderstotaling 1,463 million euros, anincrease of 10% over the previousyear on a comparable basis.


Revenues by business unit


In 2004 Itedi posted revenuesof 407 million euros, an increaseof more than 6% over 2003.This improvement stemmed fromincreased revenues byPublikompass, sales of the weeklymagazine “Specchio”, andbrand-stretching initiatives.Editrice La Stampa reported anaverage daily circulation of 339,000copies, generating revenues


of 78 million euros for the year,or 2 million euros more than in 2003.

Publikompass booked advertisingbillings of 330 million euros,compared with 307 million eurosin the previous year. This increasewas due to new licensingagreements.

In December 2004, a plan wasapproved to invest in new weboffset presses, which starting inJanuary 2007 will make it possibleto produce a full-color 96-pageproduct in the new compact31x45 cm format.

Revenues by business unit

2004

2003

2002

1,716

2,293

2,320

Growth was particularly strong inthe NAFTA area (USA, Canada andMexico).

The order book at December 31,2004 amounted to 1,042 millioneuros, an increase of 7% over 2003.

Orders from Fiat Group accountedfor 20% of all orders, while 80% werefrom other manufacturers.

At the end of 2004, the new Smartrobot received one of the mostimportant international qualityaccolades: the Ford Q1 Award,which the Ford Motor Companygives to suppliers who have shownoutstanding performance inproduct quality and service.

9%

33%

24%

34%

Italy

Europe(excluding Italy)

USA, Canada and Mexico

Rest of the World

2004

2003

2002

1,572

1,816

1,965

Human Resources

Facility Management

Administrationand Procurement

ICT – Information andCommunicationTechnology

17%

16%

2%

46%

15%

Diversified Services

2004

2003

2002

407

383

360

Comau Business Solutions Itedi

Publikompass

Editrice La Stampa

19%

81%

■ ■ ■

Relations with Customers

■ ■ ■

38

Customer satisfaction is one of thefundamental values underpinningall of the Group’s work.

For the automotive Sectors,particular attention focuses on thesales networks, which are monitoredto ensure a high standard of qualityin customer relations, as well as tokeep track of volumes.

Sales systemsand access channelsFor Fiat, it is essential thatcustomers have multiple channelsof access.

The sales system is based on anetwork of dealers who, incompliance with the Fiat Group’sprinciples and values, strive toachieve customer satisfaction in allthe stages of sales and after-salesprocesses, where they combine triedand tested relationship-buildingtechniques with the opportunitiesoffered by new communicationtechnologies.

Fiat Auto sells its vehicles through2,577 dealerships around the world:1,836 in Europe and 741 in othercountries. These dealerships arebacked up by a network of 63importers.

In 2002, a dealership renewalprocess was undertaken with theaim of enhancing each brand’svisual identity. In 2004, Fiat Autolaunched an important initiativeto strengthen and increase theprofessionalism of dealerships toenable them to better face theprogressive liberalization of themotor vehicle distribution systemand the program for the launchof new models.

Building customer loyaltyFiat Auto builds customer loyaltythrough a broad-based strategythat encompasses a wide variety ofservices and initiatives.

Fiat Auto’s operations in this areainclude its 41 highway service centers– the only initiative of its kind inItaly – and the Customer Careservice, which is based in Italy andserves sixteen European countries,handling 700,000 contacts a year.Fiat Auto customers can contact theCustomer Care service by phone,calling the “Customer Relations”service operated by each brand;by e-mail, using the “Contact Us”section featured on each Fiat,Lancia or Alfa Romeo website;or by regular mail.

Even after purchasing a vehicle, allcustomers receive regular informationabout new products and after-saleoffers that can best suit individualneeds: guarantee extension, seasonaloffers, transparent price conditionsfor repairs, offers on overhaul servicesand revolving and fidelity credit cards.Overall, about three million contactsa year.

Fiat Auto customers can alsopurchase accessories and specialproducts through the brands’websites or at internal and externalsales outlets.

Customers of Fiat, Lancia and AlfaRomeo in Italy will be offered theopportunity of obtaining a revolvingor fidelity credit card for free in 2005.

Ferrari sells its vehicles throughapproximately 200 dealerships onfive continents.

Maserati employs two distributionchannels: selling through the Ferraribranches for Italy, the United States,Western Europe, the UnitedKingdom, Switzerland andGermany, and through importersfor all other countries. At the endof 2004, dealers numbered 274, asagainst 236 in the previous year.Network quality standards werereviewed in 2004 as part of aprogram that started with Europeandealers and will later be extendedto all other markets.

CNH sells its products throughapproximately 12,000 dealershipsin 160 countries. Agriculturalmachinery is marketed by 9,360dealers, including 3,387 in Europe,2,538 in North America and 657in Latin America. Constructionequipment is sold through 2,315dealers: 727 in North America, 502in Europe and 215 in Latin America.CNH implements a program forassessing and improving itsdealerships, and awards prizes tothe best dealers every year.

Iveco operates through 844 dealersin over one hundred countries.Of these dealerships, 372 arelocated in Western Europe,85 in Eastern Europe, 158 in Asia,130 in Africa and the Middle East,82 in Central and South America,and 17 in North America.


Fiat 199 61 61 61www.fiat.com

Lancia 199 62 62 62www.lancia.com

Alfa Romeo 199 63 63 63www.alfaromeo.com

Customer Care Fiat Auto

■ ■ ■


it is an invaluable source ofinformation for developing newproducts.

For customers who prefer to turndirectly to CNH, a CustomerResponse Center (CRC) has beenset up to solve all problemssystematically. The service focuseson New Holland brands, whichserve the largest portion of thecompany’s clientele. The CRC willprovide customers with the requiredinformation or notify them whenthe problem has been solved.

Iveco has launched a customerloyalty program involving organizedcontacts with customers throughmailing or telemarketing campaignsthat provide information about thecompany’s special offers andpromotions, announce forthcomingprize contests, conduct surveys andoffer new accessories and services.

The Company also promotesnumerous initiatives for its dealersand end customers.In Spain, for example, Iveco’scustomers can join the Iveco ServiceClub, an Internet-based points andrewards program offered incollaboration with dealers. Thisprogram enables customers toparticipate in current campaignsand promotional offers.

Ferrari developed a new CRM(Customer RelationshipManagement) platform that ensurescomprehensive customerrelationship management, and alsokeeps track of owner profiles anddemographics. This informationmakes it possible to tailor servicesto the customer’s needs and bringmarketing initiatives into betterfocus.

The main point of contact is thewww.owners.ferrari.com website,which receives 10,000 messages peryear from over 19,000 registeredFerrari owners. On the site,customers can obtain documentsabout vintage and classic Ferraris,find out more about cars andgenuine spare parts. They can alsoaccess special events for Ferrariowners, such as motor shows, F1trials, unveiling ceremonies, factorytours, and Formula 1 Grand Prix.

Moreover, Ferrari merchandisingproducts are available for saleon the Internet website(www.ferrariworld.com) and inFerrari Stores.

Ferrari has also built up a thrivingnetwork of contacts with Owners’Clubs around the world, andmaintains call centers for 17European countries.

Maserati inaugurated a CRMsystem that assesses the qualitativefeatures of the customer-companyrelationship to be usefullyemployed in strategic and businessdecision-making.

The main communication channelsare the call and contact centers(toll-free phone number in Italy:800 008 008), which cover seventeenEuropean countries. The Maseratiwebsite at www.maserati.comprovides e-mail access and a‘Maserati Owners’ section with

In July 2004, the Maserati Club wasfounded. It is recognized by theASI, Automotoclub Storico Italiano,Italian historic automobile andmotorcycle club.

CNH has developed a sophisticatedonline diagnostics system calledASIST which is used by all of thecompany’s dealers around theworld. When necessary, dealers canenlist the support of CNH servicetechnicians and the design andmanufacturing experts who dealwith current products.

Once solved, the problem isentered in the ASIST system, where

special services. Approximately3,500 owners are currently registered.

In 2004, Maserati organized anumber of special events for itscustomers, racetrack test drivesand “Maserati weekends”, as wellas a lavish event that broughttogether Maserati owners fromaround the world to celebrate themaker’s “90 Years in History”. Inaddition, customers can visit thehistoric plant in Viale Ciro Menottiand take delivery of their new carright at the factory.

A snapshot from the celebrationthat was held in Modena forMaserati’s “90 Years in History”

Customer satisfactionFor the Fiat Group, as for anybusiness, customer satisfaction isthe primary focus: the key tocontinued growth and profitability.

To stay one step ahead of themarket’s needs, the Group’s Sectors:

• Monitor customer expectationsand desires on a regular basis.

• Organize occasions for contactingcustomers and listening to theirviews.

• Develop indicators for gauginghow products and services meetexpectations and accord witheach Sector’s mission, strategiesand goals.

• Systematically measureeconomic performance andcustomer satisfaction in absoluteterms and by comparison withthe competition, benchmarkingtheir processes, products andservices.

■ ■ ■


Fiat Auto carries out surveys tomeasure the general satisfactionof its end customers and dealers.Many of these surveys addressgeneral aspects, and areconducted once a year in the majorEuropean countries. Others, whichare carried out on a continuity basis(daily survey, monthly reporting),are more specific and focus on thecustomer satisfaction for a singleproduct or services provided bythe sale or assistance networks.

Results from various researchesconducted on the main Europeanmarkets reveal that, during 2004,the general customer satisfactionincreased or remained unvariedfrom the previous year. Theincreased satisfaction for productquality as perceived by customerswas a key factor to improvement.

From analyses of historical seriesin the various markets it emergesthat perceived quality accountsfor 70% of the global satisfaction(the remaining 30% depends onsatisfaction for services).

The new Fiat Panda was the modelthat positively thrust perceivedquality.As far as services are concerned,results in the commercial networkwere almost unchanged from 2003,while the assistance network posteda significant improvement.

Ferrari and Maserati conduct yearlysurveys of customer satisfaction.Those carried out in 2004 painteda very promising picture, showingoverall ratings from 4.2 to 4.6 on ascale of 1 to 5 (1= unsatisfactory; 5= excellent).

Lungo Stura Lazio, 1910156 Turin - Italy

Tel. +39 011 2740866

Fax +39 011 2740972

+39 011 2741062

E-mail: [email protected]

Internationaltoll-free number: 00 800 82 74 73 68

UK Freephone: 0 800 590 509

Iveco Customer Center

Every three months, customersreceive a statement detailing thenumber of points they have earned,together with information aboutnew offers.

At the end of 2004, the Iveco ServiceClub had 134,000 members andhad distributed 9,700 prizes.

In France, Iveco introduced its"Club Stralis", whose approximately1,800 members are eligible forbenefits including brandedmerchandise, special sales termsand in-house magazines.

Moreover, Iveco has a year-round,24 hour a day internationalmultilingual call center, whichreceives customer calls andcoordinates service activitiesin 25 European countries.

On average, only 16 seconds go bybetween the moment a truck driverdials the toll-free number and thetime the center answers the call.After another 15 minutes, the repairshop has been informed and thetow truck is on its way, arriving withinthe hour. In fifty percent of all cases,the vehicle is repaired on the spotin less then three hours: only themost severe cases need to be takento the service center. And no matterhow serious the problem, truckdowntime is kept to the absoluteminimum – an average of slightlyover nine hours.

CNH measures customersatisfaction through a numberof channels. General satisfactionand brand perception surveys arecarried out annually in NorthAmerica, Western Europe, LatinAmerica and Australia.

Even before the product designstage, the product platform benefitsfrom ideas and suggestions fromcustomers, ensuring that theirspecific needs are taken intoaccount. Specific Quality Trackinginvestigations are also carried outregularly, using telephone interviewsabout the purchasing process togauge customer satisfaction withthe product and identify areasneeding improvement.

In 2004, the company alsocontinued to carry out surveys onthe Web to determine dealers’satisfaction with their relationshipswith CNH and with its products.

Iveco conducts yearly surveys tomeasure customer satisfaction. In2004, these surveys included thosefocusing on the quality of sales andassistance services, and satisfactionfor the Iveco product lineup. Resultshighlighted a number of strongpoints, such as the approximately2% improvement in satisfactionindexes achieved in Great Britain,Germany and other Europeancountries.

■ ■ ■


Quality initiatives at Fiat Auto

Process quality is an essential prerequisite for ensuring maximum customer satisfactionwith products and services.

OrganizationQuality management personnel are an integral part of all corporate functions andoperate on major processes with a view to spreading the knowledge and applicationof specific methods and ensuring a sharp focus on how quality creates opportunitiesand brings success.In the three years between 2002 and 2004, nearly 60 training courses in quality methodswere held each year, involving approximately 700 people.

Major company-wide projectsThe Six Sigma method is now being extensively applied. This structured approachtranslates company priorities into an improvement plan and provides guidance in solvingproblems using a rigorous methodological approach and statistical tools. The methodis applied both to improve the performance of existing processes and products, andto design new ones. Results will be available in the course of 2005.A project was launched that will make it possible to ensure that corporate processesare consistent with customer expectations, as set forth by UNI-ISO standards, byfollowing the clear rules set out in the Quality Management System. The plan will becompleted in 2007.

The new model development processIn the development process, attention focuses on: prevention, shared accountability forresults, transparency regarding objectives and implementation plans. All quality toolsand methods are extensively used. Constant monitoring is carried out, with physicalchecks on activities and processes inside and outside the company and at suppliers, upto the product certification from the customer standpoint. All of this guarantees newproduct quality levels that meet market expectations, robust design, manufacturingprocesses of proven capacity, and compliance with delivery deadlines.Concrete results were achieved with the new Fiat Panda and Lancia Ypsilon models for2004. For the Panda in particular, market analyses showed a 35% reduction in fieldcomplaints, bringing customer satisfaction to highly competitive levels.

The production and product management processAll production processes that are critical from the standpoint of the internal or externalcustomer are qualified with an operative system and overseen by professionals providedwith appropriate tools to reduce recovering activities in the final inspection in a significantway. Suppliers are directly involved in this process to ensure that problems can be dealtwith proactively and solutions can be introduced in real time.Investments in the tools and resources needed to guarantee the quality of productsand processes are included in the budgets drawn up by the plants and manufacturingdepartments.Links with the sales network and customer assistance centers have also been strengthenedto ensure that support is prompt and effective, identify and eliminate weak points, andspeed up response times between the moment a problem arises and the moment thesolution is available (halving them by 2005) through clear information flows and technicaland economic escalation processes that are the most effective and efficient possible.

Supplier processesTo guarantee full integration and consistence with in-house processes, suppliers aresupported by qualified Supplier Quality Engineers, or SQEs, from the development ofnew models to the production and life cycles phases.

Settlements reached Suits pending

Fiat Auto 38 39

Ferrari - Maserati — 4

CNH 4 34

Iveco 9 39

Magneti Marelli 3 18


Fiat Auto 190 273

Ferrari - Maserati 1 10

CNH 80 444

Iveco 40 367

Magneti Marelli 1 1

Teksid 1 —

Comau 2 19

Business Solutions 4 129

Fiat S.p.A. affiliates 138 43

The Fiat Group recognizes the socialrole of communication. In all itsoutward-directed activities, theGroup has voluntarily chosen toadopt positive, responsible valuesand attitudes that reflect the sameethical principles that inspire its workin other areas.

Introduced in 1993 and continuallyupdated since then, the Fiat GroupAdvertising Code of Ethics aims atestablishing the reference rules.

Advertising brings heightenedvisibility and customer recognitionto the Group’s products and services,improving their image.

Investments in communication alsokeep all stakeholders informed:journalists and the businesscommunity through public relationswork; dealers through conventions;customers through media campaigns,informational material and catalogs.

Launch campaigns are organized tointroduce new models to the public.For products already on the market,promotional campaigns are carriedout to propose special offers suchas favorable financing or purchaseterms to potential buyers.

In 2004, Fiat invested 898 millioneuros in advertising. Of this amount,460 million went for advertising inconventional media such astelevision, posters and billboards,radio, the press and movies. Therest was invested in below-the-linemarketing activities such aspromotional events, conferences,and sponsorships. The majority ofthe Group’s investments in this areawere made by Fiat Auto with 753million euros, or 84% of the total,followed by Iveco and CNH, with63 and 28 million euros respectively.

■ ■ ■


Litigation with dealers

Data shown in the tables apply toall Fiat Group Companies aroundthe world.For the automotive Sectors andMagneti Marelli, customers havebeen broken down into dealers andend customers.

Litigation with end customers

■ ■ ■

Advertising

■ ■ ■

Litigation with Customers

For end customers, 37% of all litigationconsisted of legal proceedingsbrought in order to recoverreceivables due to the Sectors.Counting the suits filed in 2004, thelevel of litigation with customersdid not change significantly.

In 2003, a Group-wide centralpurchasing coordination unit wasset up in order to leverage the bestpractices of all Sectors. Procurementactivities became even moreeffective in September 2004, whenGroup Purchasing Coordination(GPC) was established. GPC’s roleis two-fold:

• it promotes initiatives by formingcross-sector work groups for eachmajor commodity class, thusbringing the best skills availableat each Sector and in the marketswhere they do business to bearon the purchasing process, and

• constantly monitors operationsto ensure they meet objectives.

■ ■ ■

43

■ ■ ■ Suppliers


The supplier system plays a fundamental role in improving the FiatGroup’s overall structural competitiveness.

The Group selects suppliers that offer the best capabilities in termsof quality, innovation, costs and services.

Employees are required to select suppliers in accordance with appropriate,objective methods, taking into account the values outlined by the Codein addition to the quality, innovation, costs and services offered.

Employees are also invited to establish and maintain stable, transparentand cooperative relations with suppliers.


In 2004, the Fiat Group madepurchases totaling 37.3 billion euros,equivalent to approximately 80%of its revenues. These figures givean idea of how fundamental thetask is that each purchasing functionis now called upon to perform:ensuring optimal suppliermanagement.

The activities performed by thepurchasing functions in 2004focused chiefly on strengtheningthe Group’s partnerships with itsstrategic suppliers and, moregenerally, on pursuing a suppliermanagement approach that buildslong-lasting relationships and jointlyimplements global sourcingstrategies.

The Group’s operating Sectorshave long worked to establishpartnerships with strategicsuppliers, sharing in-house skills tocut costs and achieve technologicalexcellence at the same time.

Breakdown of direct materials

Raw materials,supplies andmerchandise 28,951

Services 7,984

Leases andrentals 364

Total 37,299

Purchasing data(in millions of euros)

■ ■ ■

Supplier Portfolio

■ ■ ■

Relations with Suppliers

Chemicals

Electrical

Metallic

Others

2%

28%

20%

50%

Design to Cost (DTC) has becomethe method of choice in the Groups’long-term relationships withsuppliers, because both partiesbenefit from sharing technologicalskills, thus staying ahead of themarket in developing products orsystems that can be put into large-scale production.

In general, the goal has been tobuild more structural supplierrelationships through long-termcontracts and shared accountabilityfor business.

The Group implements globalsourcing policies to make the mostof the new opportunities offered byemerging markets and best-costcountries whose economies aremore competitive in terms ofcost/quality ratios.

The Sectors’ worldwide span, infact, makes it possible to achievesignificant synergies. Here, theapproach is not only to ensureconsistency in assessing andcertifying quality at all Sectors,but also to support suppliers incountries with a high cost of laborin their programs for movingoperations offshore.

In 2005, the Sectors will redoubletheir combined efforts in each ofthese areas, making even moreeffective use of the potentialsynergies available to them in termsof skills and volumes.

The methodological supportprovided by the results of thePurchasing Best Practice projectimplemented by each Sectoron the basis of its specificcharacteristics, and completedin the first half of 2004, made itpossible to optimize each step

■ ■ ■


in the purchasing process, thusensuring:

• Systematic exploration of the bestpurchasing opportunitiesavailable on potential sourcemarkets in terms of price, quality,and reliability over time

• Early assessment of the technicaland organizational capabilities ofpotential suppliers

• Early assessment of componentvalue from the competitoranalysis point of view, design witha view to cost reduction, entailingcarry over options andmethodological standardization

• A high degree oftechnical/economicproactiveness on the partof the supplier pool, with thedevelopment of shared actionplans that optimize componentquality and costs

• Uniformity in supplier performanceassessment and the associatedmanagement databases (prices,quality, service, productdevelopment capabilities, etc.)

• Traceability of internal andexternal decision-makingprocesses.


Fiat Auto 15 11

Ferrari - Maserati — 6

CNH 4 3

Iveco 2 5

Magneti Marelli 1 9

Teksid 1 —

Comau 7 31

Business Solutions 2 15

Fiat S.p.A. affiliates 5 21

Each Sector has its own worldwidepurchasing processes which meetthe varied needs of differentgeographical markets.

The macro structure of the FiatGroup’s purchasing processes canbe summarized as follows:

• Establishing purchasing policiesand strategies

• Specifying supplier pools

• Performing assessment andqualification approval

• Assigning material codes andidentifying purchaserequirements and tenderprocedures

• Carrying out market surveys andidentifying potential suppliers

• Analyzing bids from a technicaland commercial standpoint andselecting suppliers

• Issuing and approving orders

• Assessing supplier performanceand updating supplierclassifications.

In view of current strategies forinternationalizing the supplierpools, particular attention wasdevoted to supplier qualification,gauging each vendor’s qualitysystem, specific manufacturingprocesses and products. As part ofthis effort, Group-wide approachesand synergies were developed foroverall quality system assessment.

The Group’s central auditing serviceand the internal auditing units ateach Sector continuously overseeand monitor the entire structure ofpurchasing processes andoperating procedures.

Of all litigation with suppliersrelated to all Fiat Group Companiesaround the world, 101 are pendingsuits.

37 settlements were reached in2004. Considering the suits filedduring the year, the level of litigationwith suppliers did not changesignificantly.

■ ■ ■


In 2004, suppliers were informed ofthe Group’s adoption of theCompliance Program pursuant toLegislative Decree 231/2001 and ofthe Code of Conduct outlining theethical principles adopted by Fiat.

For the Fiat Group, it is offundamental importance that itspartners share the principlesembodied in the Code. Accordingly,suppliers are selected in accordancewith appropriate, objectivemethods taking into account the

values outlined by the Code inaddition to the quality, innovation,costs and services offered.

The new supply contracts drawn upin 2005 and those currently beingrenewed will include specificcontractual provisions referencingthe principles embodied in theCode of Conduct and theCompliance Program.

■ ■ ■

Purchasing Processes

■ ■ ■

Business Ethics

■ ■ ■

Litigation with Suppliers

03

EnvironmentalResponsibility

48 Environmental Governance49 Environmental Policies49 Environmental Management

System

52 Implementing EnvironmentalManagement Systems

56 Research57 Research in 2004:

Focus and Achievements61 Research in 2004:

Applications65 Implementation of EU

Regulations

66 Sustainable Mobility66 Mobility Initiatives68 Safety Initiatives

70 Environmental Performance70 Reporting Criteria72 Performance and Efficiency

Indicators

An integral part of the Fiat Group’sstrategy is to take into account thecomplex environmental trends in thecountries where it operates, so asto reduce the impacts that allmanufacturing activities entail.

This is the fundamental propositionthat has guided the Company’sindustrial operations as well as theresearch and development worksince 1989.

In 1993, the Fiat GroupEnvironmental Report was issuedfor the first time. The Report waspublished every year to informstakeholders, and particularly theenvironmental associations, of allthe steps that have been taken tomitigate the effects that productsand manufacturing processes haveon the environment.

In 1992, the Group codified theEnvironmental Policy Principles.They were updated in the FiatGroup Values and Policies in 1997,and reinforced with the Fiat GroupCode of Conduct approved by theBoard in 2002.

1989 Fiat Group • Single umbrella organization set up to deal with all environmental issues.

1990 Fiat Group • Fiat mobility policies. • “Fenice” delegated to manage waste at all sites.

1991 Fiat Auto • Environmental and Industrial Policies Department established.

1992 Fiat Group • Fiat’s official environmental policy formulated for all Group Sectors.

1993 Fiat Group • Agreement with Italy’s national pipeline operator, SNAM, to extend the natural gas refueling network.

• The Fiat Group Environmental Report is published for the first time.

1994 Fiat Auto • “Perpetual Motion” program launched in Italy’s middle schools. • “Serene” program for energy efficiency gets under way.

1995 Fiat Group • Italy’s public relations institute IRP awards Fiat a prize for the year’s bestenvironmental reporting initiative.

• Fiat’s work for the environment presented at the European Parliament.

1996 Fiat Auto • Introduction of “Motus Vivendi”, a highway safety program for high school students.

1997 Fiat Group • Fiat environmental policy updated.Fiat Auto • Marea Bipower launched on the market.

1998 Fiat Group • All ecological and energy management activities at Fiat plants assignedto Fenice.

Iveco • New environmentally-friendly engines for trucks and buses.

1999 Iveco • New natural gas vehicles introduced.

Fiat Group • Amount of waste sent to landfills reduced by 4.5%.

2000 Fiat Auto • Average fuel consumption of the entire range reduced by over 4%.Iveco • Fuel cell buses designed.

2001 Fiat Auto • Fiat Stilo complies with EURO 4 emissions limits (2005).Fiat Group • Nationwide plan inaugurated for promoting the use of natural gas

vehicles.CRF • Fiat Seicento Elettra H2 Fuel Cell prototype awarded a prize for (Fiat Research Center) environmentally-friendly innovation from Legambiente, Italy’s premier

environmental watchdog group.

2002 Fiat Group • Fiat Group Code of Conduct outlines the general principles to be observed for Health, Safety and the Environment.

CRF, Fiat Auto • New Euro 4-compliant fuel-saving low emissions engines developed.CRF • The FRC, Fiat Auto and Iveco join forces in developing “telematic

fleets”.CRF • Presentation of Ecodriver, hybrid engine prototype, acclaimed by

Legambiente as the most promising technology for reducing fuel consumption and emissions in the short term.

2003 CRF • New hybrid spark ignition/diesel-electric power plants developed.CRF • Cogeneration system installed at the corporate cafeteria receives first

prize in the EUROSOLAR Italy competition.Fiat Auto • Punto natural Power put on the market. The new natural gas car

completes the Fiat Group’s lineup of environmentally-friendly vehicles.Fiat Auto • New Multijet engines cut consumption by 10% and emissions by 50%.

2004 CRF • New EGR (Exhaust Gas Recirculation) technology reduces diesel nitrogenoxide (NOx) emissions.

CRF, Irisbus • New natural gas storage system achieves higher levels of safety.Iveco • Italy’s first hydrogen-powered city bus starts field trials in Turin.

48

■ ■ ■ Environmental GovernanceENVIRONMENTAL RESPONSIBILITY

■ ■ ■

Milestones in Fiat’s Commitment to the Environment

This approach makes it possible toprevent risks, manage them whenthey occur, and minimize theirimpact.

Each Group Company has a specificstructure that ensures thatmanufacturing processes aremanaged in full compliance with theenvironmental policy.

■ ■ ■

Environmental Policies

The environmental compatibility ofits products and manufacturingprocesses is a key factor in thedevelopment of the Fiat Group, asit not only satisfies one of the basicneeds of the end customer,preserves the harmony of theGroup’s operations with the needsof society and helps improve thecorporate image, but also enhancescompetitiveness and the creation ofvalue.

Each Group Company is directlyresponsible for the environmentalimpact of its products and processes,and makes every effort to preventharmful consequences by followingthree basic rules:

• Preventing pollution, usingenvironmentally-friendly materialsby preference.

• Conserving resources, using adesign for the environmentapproach that minimizesenvironmental impact by takingevery stage of the product andprocess life cycle into account.

• Reducing waste generation andsorting used materials so that theycan be recovered.

A team-based approach ensures thatenvironmental needs are built intoevery management decision.

Environmental management goalsare detailed in plans prepared byeach Group Sector, and kept up todate at all times.

Prepared with an eye to economiccompatibility, the Group’senvironmental plans stem fromcooperation with government toensure that the benefits they bringtranslate into broader advantagesfor the general public.

■ ■ ■

Environmental ManagementSystem

Fiat’s Environmental ManagementSystem – or EMS – includes all thepeople, rules and actions designedto lessen the impact that corporateactivities can have on theenvironment and contribute cost-effectively to achieving the goalsset by management at eachmanufacturing site.

The guidelines underlying theEnvironmental Management Systemare the following:

• Achieving higher levels of safety inmanaging processes, products andstocks of raw materials in order toprevent harmful effects on thesurrounding environment.

• Ensuring a greater awareness ofenvironmental issues, so that allemployees know how to apply thetechnical, organizational andprocedural measures adopted foreach work area.

• Training and informing all levels ofthe organization, developing acommon language and knowledgebase which are fully integrated inthe tools used to guide and controlthe entire production process.

Implementing this System involvesfactoring environmentalaspects into process organizationright at the outset, thus providingadvantages in terms oforganization of synergies springingfrom optimized use of resourcesand simplification of managementand control processes.

■ ■ ■

49Environmental Responsibility

■ ■ ■

50 Environmental Responsibility

Established in 1987, Sirio hasmaintained a presence in the FiatGroup plants throughout Italy since1999.

The organization consists of 1,462people: senior and middlemanagers, professionals, whitecollars and blue collars. Of theseemployees, 236 are specialists inpreventing fires and environmentalemergencies.

The Consortium prevents suchproblems in three major ways:

• Performing regular checks on allprevention systems to ensurethey are fully operational.

• Formulating standards for regularand preventive maintenance,

Once the EnvironmentalManagement System has beenimplemented and compliance hasbeen assessed, the manufacturingplants conduct internal audits inorder to determine whetherprograms have been efficient andeffective, pinpoint areas that needimprovement, and identify theprocesses that should beconsolidated.

This makes it possible to:

• Bring working methods andtargets up to date

• Raise employee awareness andenhancing skills

• Promote communication andtraining initiatives

• Introduce the technicalimprovements needed to achievehigher standards of protectionwhile boosting production factors.

Training

Specific training and awareness-raising programs ensure that theprinciples of good environmentalmanagement permeate the entireorganization, starting from seniorand middle managers, corporateprofessionals, and all the peoplewho are responsible for putting theGroup’s environmental policies intopractice.

Training is also provided forsuppliers and the sales network.

In addition, customer outreachprograms encourage responsibleproduct use.

77,900 checks on fire extinguishers

8,600 checks on fire-fighting systems

27,000 checks on hydrants, valves, fire hoses, etc.

12,900 miscellaneous checks (emergency response kits, stretchers, fire barrier doors,etc.)

SIRIO Consortium

Types of emergency

Training activities

From battling the flames to averting ecological disasters

including recourse to qualifiedconsultants.

• Coordinating emergencyresponse to fires andenvironmental incidents.

In 2004, the Consortium completedat total of 126,400 inspections inthe Group’s plants, broken downas follows:

In addition, the Consortiumperformed 1,300 preventiveinspections, assisted in handlinghazardous substances on 1,700occasions, and issued 22,000authorizations for flame cuttingand welding equipment.

These checks made it possible to:

• Establish scheduling priorities

• Develop more detailed safetyprocedures and train personnelin their use

• Implement regular monitoringprograms.

The information obtained throughmonitoring programs – which willbe continued in the comingyears – has already borne fruit instimulating initiatives for:

• Reducing the risks involved inhandling chemicals

• Extending the training activitiesscheduled for 2005, which willinvolve around 50% of the Sirioworkforce.

Flood

Electric

Atmospheric events

Fire6%

2%

8%

5%

6%

Spreading

Vehicle accidents

Rescue service

Other interventions

Fire

Environment

Accident prevention

250

662

300

250

Staff to be upgradedin 2005

10%

3%

60%

Employees

■ ISO 14001– Organizational principles– Activity planning

■ Selective waste collection■ Handling chemicals■ Emergency response measures■ Interpreting signs■ Assessment test

People involved 43,142

Total hours 84,990

Senior managers - Middle managers- Professionals

■ Environmental policy


■ Environmental factors– Chemicals– Air– Water– Waste– Noise emissions– Soil contamination– Ozone depleting substances– Potentially harmful substances– Emergency management

■ Assessment test

People involved 5,291

Total hours 20,973

Internal Auditors


■ List of internal procedures■ Environmental Management System

Self-assessment check list– Work areas;– Operation and maintenance

manuals;– Worker training, information and education;– Emergency management;– Risk detection and evaluation.

■ Assessment test

People involved 423

Total hours 4,370

■ ■ ■


■ ■ ■

2004 – Training: Planning and Content

��

� A training session inside theproduction plants

� Some of the quality certificationson the Environmental ManagementSystem

Implementing the EnvironmentalManagement System also involvesinterfunctional meetings at themanufacturing plants in order topromote a strong sense of theimportance of ensuring thatproduction activities are consistentwith environmental protection, andto ensure that all employees arefamiliar with environmentally-oriented programs, improvementmeasures and goals.

Training programs address thefollowing major topics:

• System operation

• Current and plannedimprovement techniques

• The main indicators used togauge efficiency andeffectiveness, together withbenchmarking and achievementanalysis methods.

In addition, a constant flow ofinformation to the general public,the press, universities and schoolshelps raise awareness aboutenvironmental topics.

In 2004, 48,856 people participatedin environmental training programsfor a total of 110,333 hours.

Certification

In 2004, 84 Fiat Group plantsachieved ISO 14001 certification(as against 46 in 2003), including 40plants in Italy and 44 in the rest ofthe world. A further 8 plants arecurrently engaged in the certificationprocess.

By the end of the year, peopleworking at ISO 14001-certifiedsites numbered 86,310, or 71.5% ofthe Group’s 120,700 plantemployees around the world,including both production workersand the people performing otherplant functions.

■ ■ ■ Implementing EnvironmentalManagement Systems

In addition, the use of newelectrodialysis units featuringcircular rather than flat cells will helpcut demineralized wastewater byaround 2 m3/h.

The introduction of a new heatexchanger will reduce the amountof industrial water needed to coolthe water tank after the degreasingprocess (10 m3/h less wateremployed).

Plans have also been made toexpand the current wastewatertreatment plant, which will make itpossible to treat and reuse around17% of all wastewater.

■ ■ ■

52

�

For many years, the Fiat Group has demonstrated its worldwide commitmentto environmental protection through continual improvements in its productsand the way it manufactures them. These improvements stem from a varietyof initiatives, including the implementation of ISO 14001-certifiedEnvironmental Management Systems at all manufacturing plants, andrefurbishing the production equipment and processes.

The major initiatives that were completed or introduced in 2004 arereviewed below.

�

� � Robots installed in the painting(base coat and clear coat) cabins atthe Fiat Auto plant in Poland

� The new Ferrari’s painting facilityin Maranello

■ ■ ■

Fiat Auto plant,Tychy (Poland)

Sixteen new paint robots (10 basecoat units and 6 clear coat units)were installed at the plant. Capableof far more freedom of movementthan the old reciprocating sprayersthat moved back and forth along astraight line, the robots not onlyimprove product quality, but alsocut paint consumption by 20 to 25%per unit. In turn, this reduces paintwaste from overspray losses byaround 35%, and brings emissionsto the atmosphere down byapproximately 5 to 7 g/m2.

■ ■ ■

Sevel plant,Atessa (Italy)

A new paint circuit was installedwhich introduces state-of-the arttechnologies for curbing volatileorganic compound (VOC) solventemissions and reducing industrialwater consumption.

Thus, the new circuit made itpossible to achieve anapproximately 28% reduction inindustrial/demineralizedwastewater.

Environmental Responsibility

■ ■ ■


■ ■ ■

Ferrari plant,Maranello (Italy)

A new paint system was installedthat more than doublespotential capacity: 14,000 carsper year instead of the 6,000using the old system.

The new system boasts themost advanced technology andfeatures a highly innovative bodyshell paint cycle that uses powder-coat primers and water-basedpaints.

This system improves environmentalperformance, with ultra-lowemission levels and better workingconditions.

The plant and the systemsinstalled in it were designedusing an open layout whereeverything is exposed to view,thus facilitating maintenance andmanagement.

■ ■ ■

CNH plants(Italy and Belgium)

New systems were deployed toimprove water management.

In Belgium, CNH’s Antwerp plantinstalled a Sequencing BatchReactor, or SBR, to removedissolved chemical oxygen demandfrom wastewater. The SBR approachdiffers from continuous systems inthat each step takes place insequence, so that microorganismsare subjected to controlled, regular

variations. This allows simplermanagement and lower costs.

The Lecce plant installed a newreverse osmosis system fordemineralized water production.

At San Mauro (Turin), CNHintroduced a wastewater recoverysystem that ensures that the waterdischarged after washing excavatorsprior to painting can be reused.

■ ■ ■

CNH plants(Italy, Belgium and India)

Great progress was made in solidwaste management.

The Antwerp plant significantlyincreased its use of reusablepackaging.This not only cut packagingwaste (saving around 12 tonsof wood), but had a positiveimpact on safety and operatingcosts. In 2004, the plantbegan sorting all wastepaper

produced in offices throughoutthe site, and installed trashcompactors that made it possibleto adopt better – and moreeconomical – waste handlingprocedures.

At the San Mauro plant (Turin),sorting wastepaper, cardboardand wood reduced landfilldisposals by 73%.

At New Delhi, the plant wasauthorized to use certain typesof waste to produce buildingbricks.

�

■ ■ ■

CNH plants(Italy, France and India)

A number of steps were taken toprevent and circumscribe spills:at the Croix plant in France,outdated wastewater treatmenttanks were replaced with moderndouble-compartment tanks,while at San Matteo (Modena), fournew above-ground tanks wereinstalled in the tractor testing area.The Modena plant introducedmeasures to prevent soilcontamination at the time productsfor the wastewater treatmentsystem are delivered, and the

■ ■ ■

54

��

� Double-compartment tanksinstalled at the CNH plant at SanMatteo (Modena)

� Wastewater treatment facility atthe Iveco Irisbus plant in Valle Ufita,in the province of Avellino


New Delhi plant developed adouble containment system at itspaint shop and significantlyimproved the EmergencyManagement Plan.

■ ■ ■

CNH plant,St. Valentin (Austria)

The plant reduced noise generatedin the tractor assembly area bynearly 12 dB(A), replacing itspneumatic slide-hammer driverswith new stations employingelectronically controlled electricpower drivers.

■ ■ ■

Irisbus plant,Valle Ufita (Italy)

Before the end of 2006,the plant will introduce cathodicelectropainting for all busbodies, a technological innovationwhich will improve end-productquality and also have aneffect on the quality of the plant’seffluents.

The associated industrial watertreatment system will also beupdated, bringing its capacity upto 15 m3/h.

■ ■ ■

Iveco plant,Suzzara (Italy)

Several improvements were madewith a view to achieving ISO 14001Certification:

- Improvement in waste sorting;

- Enlargement of disposal facilities,with addition of areas for collectinggeneral plant refuse and specialwaste. Bases of storage platformsare isolated from the ground toprevent soil contamination andrunoff.

■ ■ ■

Iveco plant,Valladolid (Spain)

Work performed in preparation forISO 14001 Certification includedinstalling containment basins to trapany leakage from the e-coatingsystems. In addition, the area setaside for storage tanks wassurrounded by concrete curbingand coated with impermeableresins.

■ ■ ■

Magneti Marelli plants(Italy and USA)

Numerous projects were initiatedwith a view to achieving energysavings, resource conservation andwaste reduction.

At the plants in Corbetta, Bari andBologna, disposable packaging wasreplaced with longer-lastingsolutions that can be recycled andreused more effectively.

Magneti Marelli Powertrain, thebusiness unit that producestransmissions and enginemanagement systems, introduceda series of initiatives designed to:

■ ■ ■


• Improve energy governance.

• Conserve resources,rationalizing energy performanceand monitoring waterconsumption.

• Increase employee awarenessthrough informationcampaigns and efforts to boostparticipation in all areas of theCompany.

The Sanford plant, North Carolina(USA) inaugurated the “EnergyConservation Program 2004”,which aims to reduce energyconsumption by approximately6% at the same levels of activity.

The Crevalcore plant (Bologna)installed a new heating andcooling system which, once fullyoperative, will cut natural gasconsumption by around 20%during the winter months whilemaintaining the same level ofcomfort for employees.

■ ■ ■

Comau plant,Turin (Italy)

The Grugliasco site near Turin setup a new temporary waste storagearea to ensure that collectionactivities can be managed moreeffectively and prevent rainwaterrunoff from contaminating the soil.

In addition, the insulation wasrenewed on all energy distributionsystems located outside the plantbuildings.

� Surge tanks of the thermal powerstation at the Comau plant inGrugliasco (Turin)

�

In Powertrain, cooperationbetween Comau’s plants in Castres,France, and Grugliasco, Italy,led to the introduction of aninnovative semi-dry machiningtechnology for mechanicalcomponents in 2004. Known asMQL, or Minimum QuantityLubrication, this system was fine-tuned as part of the nationwideprogram entitled “AutomotiveComponents ServiceManufacturing” promoted by

Comau and the Italian NationalResearch Council.

The innovative technologymakes it possible to limit the useof coolants – which wouldotherwise have to be disposed of– as well as to reduce energyconsumption and noise emissions.The new product is slatedto make its entry on the marketbefore the end of 2005.

In Body Welding and Assembly,Comau is following up on thesuccess of the Agilaser weldingsystem (based on the remotecontrol of the laser beamthrough the handling of reflectingmirrors) by developing a newremote laser welding system

integrated with ananthropomorphic robot from theComau range. This high-outputwelding cell will be capable ofdoing the work currentlyperformed by two welding stationswith four robots, or by twoconventional robotized spotwelding cells. In addition, the useof a new-generation solid statelaser, called a disc laser, will makeit possible to slash energyconsumption by around 20%.

During 2004, Comau developed newcontrol architectures for bodywelding and assembly lines basedon technologies that employ digitalsignal and data interchange systemsinstead of the classic multi-corecable. This approach reduces thenumber of cables, electricalenclosures and conditioning systemson the lines by approximately 70%,as well as bringing significantbenefits in terms of lower powerconsumption and noise pollution.

■ ■ ■ ResearchGuaranteeing and promotingenvironmental protection is one ofthe main objectives of the FiatGroup’s research activity.

In 2004, the Group developed andlaunched new products on themarket that were characterized by afurther reduction in theenvironmental impact in terms oflower fuel consumption andemissions and improved efficiency.

Each Sector has its own internalfacilities for research anddevelopment, whose work isintegrated with the highly innovative,cross-organizational researchconducted by the Group’s twoscientific hubs, the CRF and Elasis.

In 2004, Fiat’s research anddevelopment work involvedapproximately 12,400 people at 121centers in Italy and abroad. R&Dinvestments totaled 1,810 millioneuros (as against 1,747 million in2003), or almost 4 % of net revenues.

Thanks to this intensive work, theGroup has been able to guaranteetechnology transfer to the Sectorsand make significant achievementsin bringing out new, environmentallyfriendly products and manufacturingprocesses.

An enormous amount of effort alsowent into developing new vehicleswith minimum environmentalimpact. Foremost among suchvehicles are those powered bynatural gas, which Fiat sees as thebest short-term answer to the needfor sustainable mobility. Alongsidethis work on natural gas, the Groupis also developing and testing hybridtechnologies and hydrogenpropulsion systems.

The CRF pursues automotive excellenceby promoting, developing and transferringnew products, processes and methods.Established in 1976 as a comprehensiveengineering center providing R&D servicesto Fiat Group Companies, the CRF providesits clients with effective, creative solutionsat competitive prices.

Environment, energy and sustainablegrowth are the main research areas.Environmental protection is pursuedthrough the development of new solutionsaimed at obtaining ecological and safevehicles, clean and efficient engines,navigation and infotainment systems fortraffic and mobility improvement, moreefficient industrial processes having a lowerenvironmental impact.

At the end of 2004, the CRF boasted thefollowing features:

470 products, manufacturing processesand methods under development

1,211 active patents

948 pending patent applications

51 trademarks and proprietary software programs

280 Fiat Group clients

150 clients from outside the Group

198 projects awarded as part of the EUFifth Framework Program

69 projects awarded in the EU Sixth Framework Program

780 partners in cooperative programs

The CRF has a workforce of 930employees, of whom 57 % havedegrees in disciplines such as engineering,the sciences, mathematicsor economics.

In 2004, the Center continued toencourage young people to take aninterest in research and development,providing around 170 studentswith assistance and guidance incompleting their theses and dissertations,and offering post-graduate trainingcourses.

In addition to its headquarters inOrbassano on the outskirts of Turin,the CRF has five branches in Bari,Naples, Catania, Foggia and Trento,holds a majority interest in the Plasticsand Optics Research Center in Udine,and has a network of connectionswith leading research institutes andorganizations around the world.This network strengthens the Center'sglobal innovation strategies,ensures that it can implement specificoperations at the local level,and helps it create skills and monitor itscompetitiveness and growth.

During the year, the CRF received anumber of awards, includingthe “Italy 2004 – Best Innovator Award”promoted by A.T. Kearney to honoroutstanding achievements in strategicinnovations.

CRF (Fiat Research Center)

56

■ ■ ■


Elasis is a highly specialized centerthat concentrates on appliedautomotive research anddevelopment. It investigates newmethods for advanced testing anddesign, and applies them to productsand processes with a highlyinnovative content and minimumenvironmental impact.

Elasis has two research facilities insouthern Italy (Pomigliano d’Arcoand Lecce), where it employs 804researchers and technicians.

It is provided with sophisticatedcomputer-aided design tools andadvanced physical and virtual testingequipment which is based on theability to develop and manageinformation systems that puts Elasisin the front ranks of the world’s R&Dcenters.

Elasis’s goal is to improve the FiatGroup’s competitiveness and to helpstrengthen the entire Italian researchsystem by working together with theItalian Ministries of Education,Universities and Research,Production Activities, and theEnvironment, as well as with majorpublic and private research

Institutions in Italy and abroad.

In 2004, Elasis continued to hone itsskills in Product LifecycleManagement by developingapplication solutions and integratingsystems and process analysis with aview to developing commonstandards for the Fiat Group.

In addition, work continued ondeveloping an innovative designsystem based on archetypes, or inother words on parametric modelscontaining engineering know-how inthe form of design rules.

Virtual product analysis techniqueswere used in the areas of occupantcompartment design andoccupant/pedestrian impactprotection, as well as to assessvehicle body aerodynamicperformance and interior flowdynamics. For the new models thatwill be put on the market in 2005,the Virtual Car simulator made itpossible to reduce validation timesfor electrical and electroniccomponents, and meet customerdemand with more dependable on-board infotainment and navigationsystems.

Diesel engine research

Current research aims at achievingthe significant reductions inemissions needed to satisfy theEuropean Union’s goals for 2005-2012, when fuel-neutral emissionsstandards will require that emissionslevels be met regardless of the typeof fuel used.

The first step towards meeting thesegoals will involve cutting oxides ofnitrogen by around 40% comparedto the levels permitted by theregulations that came into force onJanuary 1, 2005.

Low-pressure EGR

The Fiat Research Center has designedand developed a new EGR (ExhaustGas Recirculation) system whichsignificantly lowers oxides of nitrogen(NOx) pollutant emissions. The systemreduces temperatures in thecombustion chamber by using exhaustgas which is virtually “clean”, since itis tapped downstream of the particulatefilter and mixed with fresh air. Aftercompression, this uniform mixture isthen cooled in the intercooler. Theprocess makes it possible to achieve asignificant reduction in charge air/fueltemperature, and thus effectively cutsNOx emissions.

■ ■ ■


Elasis

Drastic reductions in dieselparticulate matter will also berequired: so drastic as to call for theuse of a special filter to trap theseexhaust emissions.

Through a voluntary agreementbetween the European Commissionand ACEA, the EuropeanAutomakers Association, an equallydetermined effort is being made toreduce fuel consumption, and hencecarbon dioxide (CO2) emissions.

This goal is being pursued togetherwith continual improvements inperformance, such as the increasesin low-end torque and peak powerthat add to both safety and drivingenjoyment.

Current technological developmentsinclude:

• further advances in electronic fuelinjection control, integrating it withelectronic valve control andinduction air management

• improvements to injection systemhydraulic components

• optimized EGR (Exhaust GasRecirculation)

• further developments inparticulate filters and filterregeneration.

Fuel Efficient Low-EmissionPowerplants (Spark Ignition,

Diesel, Natural Gas)

■ ■ ■

■ ■ ■ Research in 2004: Focus and Achievements

■ ■ ■


are already available today.

This is an area where the UNIAIRelectro-hydraulic valve controltechnology can make a majorcontribution. Thus, productengineering is now focusing on fine-tuning new actuation architectures

Reducing consumptionfor the FIRE engine

Elasis continued to work on improvingthe Fire series of engines.

For the 1.4-liter unit in particular,consumption was trimmed 7% byreducing friction and pumping lossesand increasing volumetric efficiency.In addition, a turbocharged 1.4-literFire engine was developed and testedthat not only offers higher performancethan conventional powerplants – eventhose with larger displacements – butalso uses 9% less fuel.

Spark ignition engine research

Researchers are working to reducefuel consumption and carbondioxide (CO2) emissions withoutsacrificing the spark ignitionengine’s performance, ride comfortand driveability, and leveraging thereliable, low-cost exhaust gasaftertreatment technologies that

and advanced combustion controlstrategies.

Accordingly, the UNIAIR technologywill be integrated with theturbocharging system in order totake advantages of the synergiesthat can be achieved in terms offurther reductions in consumptionand CO2, while, at the same time,

boosting performance anddriveability.

For direct injection systems, workon injector technology isproceeding apace. Here, theprimary objectives are to increaseperformance and reliability, and tobring manufacturing costs down.

Other applications that showpromise for cutting consumptioninclude special auxiliaries such asthe BAS, or Belt-driven Alternator-Starter, which, by operating as bothan extremely efficient electricalgenerator and a starting motor,makes it possible to optimizeengine shutoff and restarting duringstart-and-go city traffic.

Natural gas engine researchNatural gas is the only technologythat can be applied right away toimproving the quality of air in citiesand towns. And alongside theirenvironmental advantages, natural

Safer natural gas storage

Working together with Iveco Irisbusand component suppliers, the CRF (FiatResearch Center) developed a safersystem for storing natural gas on buses.The new safety kit monitors gaspressure inside the tank, generatingaudible and visual warning signals ifpressure approaches a predeterminedthreshold. A pressure limiting valveguarantees that hazardous levelscannot be reached.

�

� � Inside Fiat’s research centers:a laboratory and a testing roomwhere engines are tested

� The Fiat Panda Hydrogenprototype

�

gas vehicles also bring substantialeconomic benefits, thanks to lowoperating costs and sticker pricesthat are comparable to those ofcars using conventionaltechnologies.

Further advances in gas injectiontechnology and emissions controlsystems will bring CO2 output, fuel

consumption and tailpipe emissionsdown yet again, while optimizinggas storage systems will make itpossible to broaden the natural gasrange of applications to additionalcategories of vehicle.

■ ■ ■


This prototype is an excellent exampleof low-cost approach to cuttingconsumption, because it maintains thesame comfort and driving ease as thecar’s standard production counterpart.Savings of 13% in the mixed NEDC(New European Driving Cycle) and of25% in the ECE urban cycle wereachieved through functional integrationbetween the internal combustionengine, the automated manualtransmission and the BAS (Belt-drivenAlternator Starter). The unit’s controlalgorithms are patented.

Hydrogen-powered vehicles

In the long run, hydrogen will proveto be the key to meeting energyneeds sustainably. In the field ofhydrogen power, Fiat has chosen toconsider hydrogen primarily as anenergy carrier for fuel cells. Inaddition, hydrogen’s potential foruse in internal combustion engines

Alternative PropulsionSystems and Vehicles

■ ■ ■

Reducing transportation’senvironmental impact is one of themajor challenges facing allauto makers today, as is reducingtheir products’ dependence onnonrenewable energy sources in thelonger term. In this context,developing new propulsion systems,and hence new vehicle architecturesthat integrate or replace the internalcombustion engine, absorbs asizeable portion of the resourcesthat the Fiat Group earmarks forresearch.

Low-cost ultra-minimal hybridpropulsion systems

In the medium term, one of the mostpromising prospects is hybridtechnology. Coupling an internalcombustion engine with an electricmotor, both controlled andregulated by sophisticatedelectronics, makes it possible toachieve substantial reductions in fuelconsumption and emissions,especially in city traffic.

Current testing programs arefocusing on two different fronts:hybrid trucks and simple, low-costarchitectures for city cars (Stop&Startand micro-hybrid).

– either alone or mixed with naturalgas – is also being evaluated.

In 2004, the CRF continued toimprove the supply andhumidification systems that willenable the fuel cell engine toincrease its durability andperformance. The new powerplantlends itself to modular solutionsthat can be applied to the new FiatPanda and, in a hybrid configurationwhich also features batteries, tovans and Iveco’s Europolis buses.Starting in 2006, small fleets ofprototypes will be built and testedin order to provide answers to themany questions that remain openregarding hydrogen power’sreliability, safety, costs, infrastructurerequirements, and so forth. Inaddition, the test campaign willmake it possible to evaluate anumber of logistic andorganizational issues – includingpublic response – under real-worldconditions.

Towards industrial use of Hydrogen

Together with a number of Europeanautomakers and component manufacturers,the CRF is participating in two projects co-funded by the European Union which haverecently got under way. The objective:promoting the introduction of hydrogen-powered vehicles.

The first of these projects, called Hytran(Hydrogen and fuel cell technologies forroad transport), will develop two fuel cellsystems over a five-year period: a systemfor traction power by an 80 kW directhydrogen PEM fuel cell system implementedon a passenger car, and a 10 kW APU(Auxiliary Power Unit) supplied by a reformerfor both light-duty and heavy-duty trucks.

The second project, called Zero Regio (zero-emissions region), focuses on fleet testingto validate hydrogen technologies, assessinfrastructures and investigate safety-relatedissues. Mantua and Frankfurt have beenselected as test cities.

Fiat’s primary research goal is tomake continuing improvements incomfort levels, ease of operationand active safety. Theseimprovements are brought aboutby designing and developinginnovative vehicle structures, chassiscontrol systems, and external controlsensors.

Introducing new systems thatcould potentially involve an increasein the vehicle’s weight and hence inits fuel consumption calls forparticular attention in choosingmaterials. At the same time,innovative processes must bedeveloped so that overall vehicleweight can be reduced.

Making Cars Safer, Lighterand More Comfortable:Architectures and Technologies

■ ■ ■

Punto “Stop & Start” prototype

�

Selespeed transmissionsget better and better

■ ■ ■


Safe vehicles

Integrated safety – an approachwhich takes the vehicle, the driverand the infrastructure into account– is pursued through a combinationof impact absorbing materials andarchitectures (passive safety),intelligent occupant restraint systemsand advanced driver aids based onon-board sensors andcommunication with roadinfrastructures (integrated active andpreventive safety).

In this area, Fiat researchers havedeveloped sensor systems thatinform the driver of approachingobstacles as well as operating andenvironmental conditions, intuitiveand predictable driver assistancefunctions, and ergonomic feedbackand control systems, some of whichemploy by-wire technology, i.e.without mechanical connections.

Elasis continues to hone the skills itapplies to Selespeed robotizedtransmissions, which in auto mode makeit possible to optimize gear selectionand shifting in order to minimize fuelconsumption. Particular attention is alsodevoted to developing innovativemethods that optimize the physicalparameters associated with driveabilityand road feel, and to combine fueleconomy with driving enjoyment. Theknow-how thus gained has beentransferred to the Selespeed transmissioninstalled on many models, including suchcompact jewels as the Lancia Ypsilon“DFN” (Dolce Far Niente).

Comfortable vehicles

Comfort is essential to driveralertness and safety, and dependson a number of factors: effectiveclimate control, ergonomicallydesigned seating, readilyunderstood controls, full access toinformation, and low vibration andnoise levels.

The CRF work focuses on continualimprovements in all of these factorsin order to provide a safe,comfortable in-car environmentwhile at the same time increasingthe vehicle’s efficiency.

A prototype vehicle was equippedwith a Dual Clutch transmission – afurther advance on the Selespeedunit – which improves ride comfortby eliminating torque interruptionsduring gear shifts while retainingthe efficiency of a conventionalmanual transmission.

An advanced heating, ventilatingand air-conditioning (HVAC) systembased on an innovative temperaturesensor and special control strategiesimproves vehicle climate controlwhile eliminating all risk of windowfogging, and consumes 50% lessthan ordinary systems.

New energy-absorbing front endsensure that even the smallest citycars can be just as crashworthy asvehicles in upper segment.

In a joint project with MagnetiMarelli, a low-cost active suspensionsystem that will improve vehiclehandling while optimizing ridecomfort has reached an advancedstage of development.

Lightweight vehicles

Vehicle downsizing contributessignificantly to reducing fuelconsumption, and makes it possibleto compensate for the weight

increases associated with the evermore lavish equipment levelsfeatured on today’s cars.

Research is striving to achieve thebest compromise betweendownsizing and cost containment.Work now being carried out in thisarea includes studies addressingthe use of new high strength steelsfor vehicle structures, and metal-plastic vehicle interior componentssuch as dashboards and seats. Inaddition to careful selection ofmaterials, this research addressesinnovative architectures that makethe best use of each material’sproperties, forming and assemblyprocesses, and design optimizationusing simulation techniques.

The subsystems constructed as aresult of this work havedemonstrated that weights can bereduced by 10% at a cost of lessthan one euro for each kilogram ofweight saved.

Stilo HEAC

The High Efficiency Air Conditioning(HEAC) system developed by the CRFprovides more comfortable occupantcompartment temperatures whilesignificantly reducing the fuelconsumption penalty associated withclimate control. All of this is achievedthrough the intelligent use of a variabledisplacement compressor and newoccupant compartment climate controlstrategies. Compressor activation, infact, is triggered by an infrared sensorin conjunction with a solar radiationsensor.The system showed excellentperformance during tests under meanEuropean summer climate conditionsat 28ºC: the air conditioner’sconsumption was half that of aconventional HVAC unit, thus cuttingfuel consumption by 5%.

■ ■ ■ Fiat Auto

Multijet engines

Reducing emissions and fuelconsumption is essential in orderto improve the quality of air andkeep the greenhouse effect undercontrol. Fiat Auto pursues this goalthrough continual improvements toits spark ignition and dieselpowerplants.

During 2004, Fiat Auto rounded outthe range of vehicles equipped withthe new 1.3-liter 16-valve Multijetdiesel engine, which already meetsthe Euro 4 emissions limits that willapply to cars registered fromJanuary 1, 2006 onwards. Featuredon entry-level Fiat and Lanciamodels, the new diesel unit putsout around 50% fewer emissionsand consumes approximately 10%less fuel than the 1.9-liter Unijetengines it replaces. Not only is thisan intrinsically clean-burning low-consumption engine, it is smoothand reliable to boot.

As regards consumption reduction,Fiat Auto has pledged to complywith the voluntary agreementbetween the European Commissionand Europe’s automakers, wherebymanufacturers will reduce emissionsof carbon dioxide (CO2), which aredirectly linked to consumption andfuel type, by 25% from 1995 levelsbefore the end of 2008. New carsregistered in the target year willthus emit an average of only 140grams of carbon dioxide for everykilometer traveled.

European carmakers have alreadymade major strides towards thisgoal: in 2003, average CO2

emissions of new cars throughoutthe EU were 163 g/km, down 2 g/kmfrom 2002.

Fiat Auto has made significantcontributions to cutting CO2

emissions: over 85% of the vehiclesmarketed in 2004 emitted less than160 grams of carbon dioxide perkilometer.

On the technological front, the 1.3-liter Multijet engine was joined byadditional applications forelectronically controlled Dualogicor DFN robotized transmissions,

which in eco-auto mode providefuel savings of around 4% comparedto manual transmissions.

Natural Gas ProjectThis Italian initiative got under wayin December 2001 with a ProgramAgreement drawn up between theItalian Ministry of the Environment,Fiat and the Italian oil industryassociation Unione Petrolifera.Designed to encourage demand fornatural gas powered vehicles, theproject provides purchase incentivesfor businesses, tradespeople andenterprises who reside or dobusiness in the 934 Italian

■ ■ ■


The small 1.3-liter Multijet dieselengine reduces emissions by 50%and fuel consumption by 10%

Reducing CO2 emissions: voluntary EU-ACEA agreement(average ACEA manufacturers)

(g/km)

■ ■ ■ Research in 2004: Applications

150

160

170

180

1995 2003 2008

185

163

140

Total

Gasoline

Diesel

■ ■ ■


municipalities participating in theprogram. The agreement alsoallocates funds for extending thecountry’s network of refuelingfacilities. As of December 31, 2004,Italy had 471 natural gas refuelingstations (51 more than in 2003), andanother 40 were under construction.

In addition, the Ministry ofProduction Activities also promotedan important initiative that providesprivate individuals with incentivesto purchase natural gas vehicles. InSeptember 2004, the program wasextended to legal entities as wellas private customers.

Fiat Auto continued to expand andupdate its range of dual-fuel naturalgas and gasoline cars and lightcommercial vehicles marketed asthe environmentally friendly“Natural Power” line. Workingtogether with local administrations,Fiat Auto promoted and organizedevents in a number of Italian citiesto help areas with little previousexposure with the benefits ofnatural gas get acquainted with thenew technology.

Göteborg goes for the FiatPunto Natural Power

Interest in Fiat’s natural gas vehiclesis also increasing in other Europeancountries such as Germany and France,and even as far afield as Sweden.In October 2004, the City of Göteborgtook delivery of 20 Fiat Punto NaturalPower vehicles, the first of the 200natural gas powered Puntos producedfor the Swedish market.Göteborg is just one of the growingnumber of local administrationsthroughout Europe who arepurchasing fleets of minimum-impactvehicles to improve the quality of theair in downtown areas.

■ ■ ■ CNH

Guidance systems

Being able to guide farm machinerymore accurately improves fieldcoverage and reduces consumptionof chemicals, fertilizers, fuels andother inputs by eliminating costlyskips and overlaps. As part of a longline of advances in guidance systemtechnology, Case IH has developedthe new Case IH EZ-Guide® Pluslightbar guidance system, whosemany improvements over previousversions include a 120x160 pixelLCD screen that is perfectlyreadable in bright sunlight. Inaddition, the EZ-Guide® Pluslightbar uses differential GPS(Global Positioning System)information to monitor how far fromthe desired path the machine istravelling, which substantiallyreduces consumption.

Biodiesel

CNH approved the use of fuelblends of up to 5% biodiesel (B5)meeting ASTM 6751 standards onits products.

Biodiesel has a number ofadvantages: it is derived fromagricultural products, and fromrapeseed and sunflower oils inparticular, and is thus biodegradable.It helps reduce smoke emissionssince it does not contain aromaticcompounds, and boosts demandfor the crops it is made from.

Using biodiesel – at least in blendsup to 5% - has no drawbacks as faras engine operation and wear areconcerned. Performance is entirelycomparable to that attained withordinary diesel fuel, guaranteeingefficiency and dependability. Andsince biodiesel is free from sulfurcompounds, catalytic converterswork better and last longer.

The major cities that participatein the program agreement(934 municipalities at December 2004)

Brescia

Verona

Padua

Venice

Parma

Ferrara

Ravenna

Rimini

Forlì

Bologna

Modena

Reggio Emilia

Bari

Milan

Verbania

Biella

Novara

Turin

Vercelli

Cuneo

Asti

Alessandria

Genoa

Piacenza

Livorno

Pisa

Prato

Florence

Rome

Naples Palermo

Messina

Reggio Calabria

Catania

■ ■ ■ Iveco

Engines

Iveco reached an important goal in2004, when it certified complianceof its 316 kW Cursor 10 and 353 kWCursor 13 engines with the Euro 4emissions requirements which willcome into effect in October 2006,and the Euro 5 requirements slatedfor introduction in October 2008.Both powerplants are combined withexhaust gas aftertreatment systemsfeaturing SCR (Selective Catalytic

■ ■ ■


� Refueling with natural gas at oneof the 471 stations existing in Italyat the end of 2004

� The new guidance systemdeveloped by Case IH, equippedwith GPS for monitoring how farfrom the desired path the machineis traveling

�

Reduction) which use urea injectionto lower tailpipe emissions.

These engine versions werepresented at the HannoverInternational Motor Show and willequip Iveco’s Stralis trucks, thussatisfying the forthcoming Europeanexhaust limits before they come intoeffect.

Together with the SCR catalyticconverter and SCR-T catalyticconverter/particulate filter systems,the Cursor 8 engines which will beput on the market in 2005 will alsomeet Euro 4 and Euro 5 limits andreduce actual on-road emissions. InIrisbus applications in particular, thenew engines cut emissions by asmuch as 75% compared to their Euro3-compliant predecessors.

Cursor powerplants which meet theUS Tier 3 off-road emissionsstandards have also been

developed, and are now beingtested on a range of farm machines– including harvesters, combinesand all-wheel drive tractors –operating on three differentcontinents.

The range of Cursor marine engineswas also expanded to include a 404kW Cursor 8 unit and a 566 kWCursor 13, both satisfying US Tier 2standards. These engines will bemarketed early in 2005.

Also in 2004, Iveco developed the132 kW 4-cylinder Tector engine,

which was certified to the upcomingEuro 4 and Euro 5 standards incombination with a urea injectionSCR system. In addition to beingeligible for local incentives programs,this solution cuts fuel consumptionunder actual road conditions by 6%.

A Tier 2-compliant seagoing versionof the 6-cylinder Tector engine whichoffers excellent performance forpleasure boating applications wasalso introduced, while developmentcontinued of a full range ofEurocargo models featuring SCRexhaust gas aftertreatment, whichwill be available on the market earlyin 2005.

Iveco’s range of vehicles for off-roadapplications will also be completedin 2005, introducing low-cost EGR(Exhaust Gas Recirculation) systems.

A 3-liter displacement, 100 kWversion of the F1C engine equipped

with a WG turbocharger enteredproduction in 2004. This powerplantis installed on Daily vehicles rangingfrom 3.5 to 6.5 metric tons. Bycomparison with the Sofim 8100 unitpreviously used on these models,the new engine reduces curb weighby 20 kg and consumes up to 10%less fuel.

Since January 2005, this engine hasalso been available in a 122 kWversion equipped with a variable-geometry turbocharger.

In 2005, both F1A and F1C engines

will be available in a Euro 4-compliant version with EGR andparticulate filter that can trap over90% of the solid particles emissionsproduced by diesel combustion.

Exhaust gas aftertreatmentField trials on the SCR catalyticreduction aftertreatment systemsneeded to achieve Euro 4 emissionscompliance are well under way.

For bus applications in particular,tests are being conducted on SCR-T combinations, where acontinuously regenerated particulatefilter accompanies the SCR catalyticconverter. This configuration satisfiesthe most stringent EEV(Environmentally Enhanced Vehicles)emissions limits.

The 2004 trials also achievedencouraging SCR efficiency levelsand a high degree of accuracy in

�

Experimental vehicles

After lab and track testing, a fuel cell-powered Iveco Irisbus CityClass bus receivedtype-approval and started to ply its regular city route along the streets of Turin inNovember 2004.

The bus is equipped with hydrogen tanks located on the vehicle’s roof which supplythe fuel cells. In the fuel cells, the hydrogen combines with oxygen in an electrochemicalreaction to produce electricity, which is stored in batteries. This energy supplies theconverter and the electric drive motor.

The bus can do up to 12 hours of service before refueling, while top speed is 60 kph.

The CityClass Fuel Cell, the first hydrogen-powered bus registered to operate in Italy,will be put through a six-month field trial without passengers to assess performanceand gather operating data: a great opportunity to demonstrate just how far fuel celltechnology has come.

■ ■ ■


controlling the amount of urea whichis injected, thus ensuring that thereare no collateral emissions.

Work is now being conducted thatwill produce further improvementsin SCR system efficiency through theuse of special static mixers installedin the exhaust piping. These devices

Technological development

Iveco participates in a number ofcooperative projects together with othermanufacturers and European universities.In the ELEGT (Electric Exhaust GasTurbocharger) Project, for example, IVECOand its partners are working on severalversions of an electric motor/generatorintegrated with a turbocharger. Theprototype was unveiled at the IAA inHannover. Development of the associatedcontrol strategy will be completed in 2005,and the design will be applied to a Cursor8 engine to determine achievable energysavings and recovery.

ensure that the injected urea iseffectively mixed with exhaust gasand hydrolyzed.

Public transit vehicles

Major efforts were made to optimizethe performance of vehiclespowered by compressed natural gas(CNG), an area where Irisbus canboast more vehicles in service thanany other manufacturer in Europe.

Low environmental impact designswere also developed for vehiclespowered by conventional dieselpowerplants, where particularattention was devoted to the particlesproduced by diesel fuel combustion,which build up in the lower strata ofthe atmosphere. Emissions of thisparticulate matter can be reducedby 90% through exhaust gasaftertreatment using a ContinuouslyRegenerating Trap, or CRT.

■ ■ ■ Magneti Marelli

Integrated enginemanagement system

Magneti Marelli Powertrain hasdeveloped a new integrated enginemanagement system called MIU, orMarelli Integrated Unit, which willmake it possible for motorcycles toachieve compliance with the Euro 3limits scheduled to come into effectin 2006, which call for a 50%reduction in exhaust emissions fromthe previous Euro 2 levels.

Diesel particulate filter

In 2004, Magneti Marelli ExhaustSystems started production of a newexhaust system component calleda Diesel Particulate Filter, or DPF.

In the version now in production,this innovative, continuouslyregenerated unit is located in anunderfloor position and traps almostall – around 98% – of the PM10 fineparticulate matter in exhaust gases,around 0.1 to 0.2 grams of which areproduced for every kilometertraveled. By operating in synergywith a catalytic converter, theparticulate filter also lowers oxideof nitrogen (NOx) emissions.

From the performance standpoint,the particulate filter makes it possibleto boost engine efficiency, and thusto achieve significantly better fueleconomy while complying with thefuture Euro 5 standards now beingdeveloped.

The DPF will be installed on new1,600 cc displacement engines ratedat 90 to 120 HP starting in 2007, threeyears before the new emissionsstandards come into effect in 2010.

■ ■ ■ End-of-Life Vehicles

To implement the European Unionrequirements outlined in CouncilDirective 2000/53/EC governing end-of-life vehicles, the Fiat Sectorsinvolved – Fiat Auto, Ferrari, Maserati,Iveco – have set up vehicledismantling networks or participatein the networks established by othercompetitors.These networks rely on the followinginformation systems: the InternationalDismantling Information System (IDIS)and the International Material DataSystem (IMDS).

IDIS – International DismantlingInformation System

With this procedure, vehiclemanufacturers provide contracteddismantlers with a dismantlingmanual in electronic format. The IDISconsortium brings together 24 vehicleproducers, and currently providesapproximately 900 different models.The IDIS program features thefollowing functions:• Vehicle components are detailed

(in graphic and/or text form) in 21languages

• Components consisting of plasticssuch as polypropylene, ABS, etc.are listed together with thosecontaining the amounts ofhazardous materials permitted bythe Directive

• Safety precautions (e.g., airbag

■ ■ ■


■ ■ ■ Keeping VolatileOrganic CompoundEmissions Under Control

The move to transpose the EuropeanUnion solvents emissions directiveinto national legislation involves all ofthe Group Companies who usesolvents in their manufacturingprocesses: Fiat Auto, Ferrari, Maserati,CNH and Iveco.

The primary objective is to reducethe quantity of solvents used inprocessing, which will have a positiveimpact on the volatile organiccompounds released to theatmosphere.

The new directives can be summarizedas follows:

• Compliance with the new limits forvolatile organic compoundemissions in waste gases (also calledstack emissions) and fugitiveemissions.

• Preparation of a report describingemissions and, if the mandatedthresholds are exceeded,

implementing the reductionscheme no later than the end of2007.

• Compilation of a solventmanagement plan on an annual (ormore frequent) basis, using aspecified method that ensures thatemissions from different installationsand at different times can becompared.

■ ■ ■ Implementation of EU Regulations

detonation procedures) areoutlined

• Dismantling sequences aredescribed.

IMDS - International Material

Data System

Complementing the IDIS model, theIMDS data base was set up in 1999to catalog hazardous materialscontained in vehicle components.

Today, the system manages 18,000Fiat drawings, a number that will growto around 35,000 once the system isfully implemented.

In 2001, the system was offered toother European automakers in anattempt to standardize circulation ofthe growing amounts of informationit entails. Japanese and Koreanvehicle manufacturers also decidedto participate.

Recovered externallyOther types of discharge

Sold as/in productsProduct contaminationIn effluentsIn waste

Fugitive emissions

(*)

Stackemissions

Processinputs

Recoveredand reusedin process

Destroyed

Installation

The solvent management plan

Input flowsStack output flowsFugitive output flows

(*) Any fugitive emissions in collected waste(determined after appropriate analysis)

Iveco End-of-Life VehiclesThe Daily chassis-cab unit is an example of Iveco’s attention devoted to bringing outproducts that satisfy EU requirements even before they come into force, and of anintegrated approach to environmental stewardship in compliance with the End-of-LifeVehicle directive.

Thus, 92% of the material used in the Daily is reusable and recyclable (1750 kg out ofa total weight of 1900 kg): well over the 85% that the European Union ELVS Directive2000/53 requires for the period from 2006 to 2015. In addition, all the plants where thevehicle and its mechanical components are manufactured are certified to ISO 14001.

■ ■ ■ Sustainable Mobility

For many years, the Fiat Group hasbeen conducting studies andresearch to achieve a new kind ofmobility: a sustainable, integratedmobility that puts people and theenvironment first.

The strategy for reaching this goalstarts from full integration betweenecological vehicles and intelligentsystems like the new infrastructures,on-board telematics, and sensorsthat help increase safety and ridecomfort.

Fiat’s automotive businesses havedevoted years of effort to producingenvironmentally-friendly modelspowered by alternative propulsionsystems, and to building theprototypes needed to put greentechnologies through their paces.Fiat is convinced that natural gasvehicles are the best near-termanswer to pollution in congestedcities and towns. This is becausenatural gas technology matches itsenvironmental benefits with equallyattractive economic advantages.

The Group’s many low environmentalimpact vehicles include Fiat Auto’s"Natural Power" line, a completerange of bi-fuel vehicles running onboth natural gas and gasoline; IvecoIrisbus constellation of natural gas-powered city buses, zero-emissionselectric buses, and hybrid vehicles;Iveco’s trash compactors for urbanrefuse collection.

66

■ ■ ■

Today, sustainable mobility is atthe top of most countries’political, economic and socialagendas. There is a clear needto integrate economic growthand demand for mobility in acontext that becomes more andmore problematic with everypassing year.

The challenge for the next fewyears is to satisfy thecontemporary world’sexpectations through policiesand public/private initiativesthat can ensure full mobility forpeople, goods and ideastogether with higher levels ofsafety and environmentalstewardship.

Fiat Auto packages many of its newideas for ecologically compatiblevehicles in concept cars wherepainstaking research and feasibilitytests first bear fruit. With their road-ready designs for future productionmodels, these vehicles bring all thepower of telematics to bear oninventing new ways for improvingpersonal and public mobility.

Fiat Auto also works together withgovernment and publicadministrations to limit the negativeimpacts of mobility withoutinterfering with freedom ofmovement or denying access tocities. In Italy, the many initiativesspringing from this commitmentinclude:

• the Elettra Park facilities wheredrivers can park their cars and rentan electric runabout.

• the Atena Project. This project,which takes its name from theItalian acronym for NaplesTelematic Traffic Environment, wasinaugurated in 1999 incooperation with the City ofNaples and the Ministry forScientific Research to investigatethe benefits of using minimumenvironmental impact vehiclessynergistically together withtelematic monitoring, trafficmanagement and driverinformation systems.


■ ■ ■ Mobility Initiatives

Matrix, the traffic supervisor

■ ■ ■


• Turin’s Car Sharing program,which provides participants withvehicles in shared-use lots dottedaround the city. The service, whichcomplements public transport, isdesigned to improve mobility andthe environment.

Car Sharing

With car sharing, it is possible touse a car without having to ownone: users can choose the car theyneed, go wherever they need togo – even on days when the streetsare closed to less ecologicalvehicles – and they can even parkfor free. Then, they simply dropthe car off at the shared-use lot.This improves mobility, since itreduces the number of carsclogging the city’s parking places.It is also good for the environment,because the cars used in theinitiative are chosen for their lowenvironmental impact, and itsafeguards individual freedom ofmovement.

Telematics is another effectivetool for improving urban mobility,as it helps save time, reducescongestion, makes travelingsafer and less stressful, cuts fuelconsumption and reducesenvironmental impact.

Fiat’s initiatives in this field aremanifold: developing equipmentfor new models, participating inresearch projects, and taking partin mobility management andplanning.

Fiat’s Center for the Study ofTransportation Systems (or CSST, inits Italian acronym), which hasbeen active in national andinternational research, planningand engineering applied to passengerand freight transport since 1969,has developed the MATRIX (ModelplAtform, TRaffic Information, dataeXchange) information system formanaging and improving urban andhighway traffic flow.

The Matrix application programfeatures a modular structurecapable of performing differentfunctions:

• Traffic monitoring over the entirenetwork through fixed roadsidesensors together with dynamicsensors installed on vehicles.

• Traffic data processing both for on-line management and for transportplanning using mathematical modelsor traffic microsimulators.

• A user-friendly GUI (Graphical UserInterface) that combines all of theapplication’s functions in a singleenvironment, including videocamera management andenvironmental monitoring.

• Automatic constraint-baseddetermination of the best overalltraffic control strategy from mobilitydemand, management policies andtraffic safety maximization policies.

• Continually updated informationabout road and traffic conditions,which is then distributed over avariety of media. Automaticmanagement of the VMS (VariableMessage Signs) system displayingtraffic information for drivers.

Matrix is already being used on anumber of highway routes and urbanareas, including the city of Stockholm,and will be implemented during suchmajor events as the Turin 2006 WinterOlympic Games.

■ ■ ■


Fiat’s research and developmentactivities are performed by the FIATSafety Center. One of the mostadvanced facilities of its kind in theworld, the Center is equipped forphysical and virtual testing of entire

Safety Graphics

CNH is the first agricultural andconstruction equipment manufacturerto use reflective paint as a standardfeature on its vehicles.In 2004, Case introduced special decalswith this type of paint on all its newmodels, significantly increasing safetywhen visibility is poor.

vehicles and their systems andsubsystems. In cooperation withtechnical departments and suppliers,the Center studies, develops andtests solutions that deliver themaximum performance madepossible by the latest advances inproduct and process technologies.

Since 1976, the Safety Center hasmade major strides in reducingautomotive hazards.

In the last ten years, the Center’swork has laid the foundations fortesting such innovative driverassistance systems, such as:

• Adaptive Cruise Control: systemsthat keep the car at a set speedwhile maintaining a safe distancefrom the vehicle ahead;

• Chameleon: sensor systems thatcan detect an impending collision

�

� � Technicians and researchersat work at CRF (Fiat Research Center)laboratories, where vehicle anddriver assistance systems aredeveloped

�

■ ■ ■ Safety Initiatives

and activate occupant restraintsin time to be more effective;

• Protector: innovative radar orvideo camera-based sensortechnologies that can identifyvulnerable obstacles such aspedestrians, bicyclists andmotorcyclists.

An enormous array of safety-relateddevices are now being readied formarket introduction in the next fewyears. Once they pass grueling testsand field trails, the new devices willbe type-approved and installed onproduction vehicles.

■ ■ ■


A Safety Car version of the Fiat Stilo,specially equipped for the Infonebbiafog warning project

Safer roads through vehicle-infrastructure interaction

The Infonebbia fog warning system

At the end of 2004, the Infonebbia fogwarning project set up its first test siteon the A4 highway between theDowntown Brescia and East Brescia

exits. Jointly developed by the FiatResearch Center and ANAS, the Italiannational highway administration, theinitiative is based on an innovativestrategy for cooperation between“smart highways ” and “smart cars”.

In order to dialog and exchangeinformation, the section of roadinvolved and the vehicles traveling onit must be equipped with appropriatesensor, signaling and data transmissiontechnologies.

The highway is provided with innovativevariable message signs (VMS),lightguides and telematic architecturesthat can dialog with on-vehicle systemsand roadside electronic control stations.

A fleet of “safety cars” was equipped

with anti-collision systems and is

telematically connected at all times

with the control center. Under foggy

conditions, the system dispatches the

safety cars to guide groups of vehiclesthrough the mists at a safe speed.

The European Safe Tunnel project

The Fiat Research Center and its other

European project partners successfully

tested this integrated system in the

Frejus tunnel between Italy and France.

Vehicles are equipped with a mobile

telematic system that can detect any

malfunctions of on-board systems and

identify potential fire hazards caused

by critical parts such as the brake

system. A control center, which

monitors vehicles via a wireless

network, alerts drivers of any such

problems and stops malfunctioningvehicles from entering the tunnel.The center also transmits informationregarding recommended speed anddistance from the vehicle ahead. Thisinformation can either be viewed bythe driver, or used to increase ordecrease the vehicle’s speedautomatically.

Highway safety

In partnership with Southern Italy’shighway administration AutostradeMeridionali, Elasis is conducting aresearch project co-funded by theItalian Ministry of Education,Universities and Research aimed atproviding the infrastructure with atelematic monitoring, control andinformation system for active safetymanagement on the A3 highway, in thesection running between Naples,Pompei and Salerno.

The Summit project

The Summit project, which focuses oninnovative models and methods forroad user safety, was inaugurated byElasis together with the Province ofMilan for the latter’s SISS (Road SafetyIntegrated System) control center. Inaddition to supplying information abouttraffic safety status, the project willdevelop a software program that willacquire accident data in real time andsuggest appropriate action.

influenced by changes in inflationand exchange rates.

Total manufacturing costs arecalculated as the sum of threevariables: cost of labor, amortizationand depreciation, and energy costs.

The environmental performanceindicators given below are based onthe set of metrics and methods thathas been used since 1992 and arepresented in the same manner as inthe 2003 Environmental Report.

The environmental performanceindicators that are affected bymanufacturing costs are shown onlyfor the Italian plants. The figures forthe rest of the world are not takeninto consideration, as they are heavily

In fact, this parameter is consideredthe most effective starting point forassessing the environmentalperformance of each manufacturingSector, and at the individual plantlevel in particular, as it is readily

■ ■ ■

70

■ ■ ■ Environmental Performance

�

� The engine assembly departmentat the Pratola Serra plant (Avellino)

� A bus chassis at the Valle Ufitaplant (Avellino)

�


calculated and can be adjustedfor inflation and extraordinary items.

This approach is less appropriate forComau, most of whose work involvesdesigning and installing facilities atsites outside its own factories.

Consequently, the Company’s levelsof activity cannot be expressedsimply by the water and energy ituses and the waste it generates. ForComau, metrics have been shownonly in absolute terms, withoutcalculating indexes.

■ ■ ■

Definition of Terms and Indicators

Water use. The amount of waterneeded for manufacturingprocesses. In plants wherewastewater is not recovered andreused, water use and water intakeare the same.

Water intake. The amount of intakewater metered at manufacturingfacilities and taken from municipal

■ ■ ■

Reporting Criteria

Manufacturing costs at Italian plants (millions of euros, at constant prices)

1,581.9Fiat Auto

2003manufacturing cost

548.2

158.6

405.6

—

76.9

263.7

3,034.8

1,509.3

556.2

126.7

423.6

—

80.5

315.1

3,011.4

Iveco

CNH

Magneti Marelli

Comau

Teksid

Ferrari - Maserati

Total

2004manufacturing cost

Sector/Company

■ ■ ■


Fenice: a partnership for ecoefficiency

or industrial supplies, surface water,or on-site wells. Data concerningwater intake and waste include civiluse.

Waste. Any non-product outputgenerated by a manufacturingprocess. It does not include watereffluents and emissions to air.Materials that are reused in themanufacturing process at the sameplant that generated them are notregarded as waste.

Acquired energy carriers. Thosenot directly produced by theSectors, but purchased fromexternal suppliers: thermal energy,refrigeration energy, compressedair.

Other fuels. This category includes:gas oil, LPG, High Sulphur ContentOil, Low Sulphur Content Oil, coal.

The following indicators calculatedon an annual basis are used in thisReport:

• Specific energy consumption,expressed in ton of oil equivalent(TOE) per million euros ofmanufacturing costs.

• Specific water consumption,expressed in cubic meters ofwater per thousand euros ofmanufacturing costs.

• Specific waste generation,expressed in metric tons of wasteper million euros ofmanufacturing costs.

• Waste recovery and recycling, i.e.the ratio of the amount of wasterecycled to the total amount ofwaste generated duringmanufacturing, multiplied by onehundred.

Unless otherwise indicated, datawere provided by each Sector’saccounting and control services.

Fenice is a highly qualified specialistin designing, constructing andmanaging waste and wastewatertreatment systems, producing anddistributing energy carriers, andproviding environmental consultingservices.

When the Fiat Group set out tocoordinate its industrial activities inthe early Nineties, it became awarethat there was a need to optimize andreorganize the environmentalprotection and energy-relatedactivities if it was to be able to boostproduction, cut costs, and implementits sustainable growth policies.

The Group thus embarked on a top-priority study of solid and liquid wastetreatment systems. Called the “FeniceProject”, the study also addressedusing cogeneration systems at theGroup Companies’ plants to produceenergy carriers.

To put this project into practice, Fiatdecided to assign responsibility for allof the activities involving ecology andenergy at the Group’s sites to a singlespecialist by transferring theassociated business units. The newcompany thus formed took the nameFenice S.p.A., and took over all of theGroup’s technical and designmanagement skills in this area.

Starting in 1997, the Group’smanufacturing units in Italy and abroadbegan to channel the facilities andresources involved in producing,processing and distributing energycarriers, as well in providing ecologicalservices (handling and treating intakewater, effluents and wastewater,ecological waste areas for waste pre-treatment and multi-functionalplatforms for waste treatment) toFenice SpA as part of an internaloutsourcing initiative.

At the same time, all specialized designand management activities weretransferred to Fenice, as were theconsulting services, research, andchemical/physical analyses of the

environmental impact ofmanufacturing processes formerlycarried out by Fiat’s ecologicallaboratories. In this framework, theFenice Environmental Services Center(CSE) was established.

At the end of 2001, Fenice becamepart of the EDF – Electricité de FranceGroup. In 2003, the formerMontedison Environmental ResearchCenter in Ravenna joined forces withthe Fenice Environmental ServicesCenter, strengthening Fenice’s abilityto provide outstanding environmentalconsulting services.

Most of the systems owned by Feniceare located in the Fiat Group’sindustrial complexes. Transactionsbetween the Group Companies andFenice are now governed by contractsbased on a service charter wherebyFenice has pledged to comply withFiat’s quality standards and sustainablegrowth principles.

In particular, Fenice guarantees respectfor the environment through itscommitment to:

• Optimizing the use of energysources and renewable resources

• Encouraging all forms of wasterecovery and reuse

• Implementing environmentalqualification approval proceduresfor all its suppliers

• Ongoing efforts to developecologically compatibletechnologies

• Training and motivating employeesin ecologically responsible workpractices.

To strengthen this commitment, Fenicecertified its Environmental and QualityManagement Systems to ISO 9001and ISO 14001 in July 2002, and alsohad its laboratories certified by SINAL,Italy’s national accreditation system.

Further information about Fenice andits work is available atwww.fenicespa.com.

■ ■ ■


Fiat Group■ ■ ■

For comparison of quantitative data,the main plants of the Fiat Grouparound the world for a total of 127sites, 48 of which in Italy, wereanalyzed.

When taking the number ofemployees as a reference, the surveycovers a sample corresponding to91 % of the total number.

The increase in energy and waterconsumption and in the amount ofgenerated waste is mainly due tothe variation in the scope of thesurvey, which included 118production sites in 2002, 120 in 2003and 127 in 2004.

Variations occurred are illustratedfor each Sector.

The figures in the tables are shownseparately for Italy and the world(Italy included).

■ ■ ■ Performance and Efficiency Indicators

Italy

Energia unità di misura 2002 2003 2004

Energia totale consumata tep/anno 658,209 665,828 686,562

Di cui: Energia elettrica di acquisto tep/anno 335,813 332,083 362,665

Metano tep/anno 84,539 88,010 90,031

Altri combustibili tep/anno 5,034 3,502 3,645

Vettori energetici acquistati tep/anno 232,824 242,233 230,221

Consumi energetici specifici tep/milione di euro 215 219 228

Acque unità di misura 2002 2003 2004

Fabbisogno idrico 103m3 104,360 99,300 98,619

Prelievo idrico 103m3 30,289 24,929 24,557

Scarico idrico 103m3 22,451 21,249 18,932

Indice di ricircolo % 71.0 74.9 75.,1

Prelievi specifici m3/migliaia di euro 9.9 8.2 8.2

Residui unità di misura 2002 2003 2004

Totale residui generati t 523,087 443,960 518,050

Di cui: assimilabili agli urbani t 25,570 20,498 16,999

industriali t 497,517 423,462 501,051

Totale riciclati t 406,185 367,672 430,669

Indice di riciclo % 77.7 82.8 83.1

Smaltiti con termovalorizzazione t 8,992 5,674 9,713

Smaltiti con trattamento t 63,690 34,018 32,426

Smaltiti in discarica controllata t 37,720 33,004 49,830

Percentuale di invio in discarica % 7.2 7.4 9.6

Indice di generazione specifico t/milione di euro 171,2 146,3 172,0

Emissioni unità di misura 2002 2003 2004

Emissioni di solventi in verniciatura g/m2 77.4 72.4 74.1

World


Energia totale consumata tep/anno 1,276,708 1,260,927 1,358,945


Metano tep/anno 153,383 173,200 183,478






Scarico idrico 103m3 28,293 27,196 25,152

Indice di ricircolo % 74.9 77.6 78.8


Totale residui generati t 1,271,545 1,156,066 1,390,301


industriali t 1,213,629 1,110,937 1,341,948









Energy Unit of measure

Total energy consumption toe/year

of which: Purchased electric power toe/year

Natural gas toe/year

Other fuels toe/year

Other energy carriers toe/year

Specific energy consumption toe/million euros

Water Unit of measure

Water use 103m3

Water intake 103m3

Wastewater discharges 103m3

Wastewater recovery and reuse %

Specific water consumption m3/thousand euros

Waste Unit of measure

Total waste ton

of which: General plant refuse ton

Industrial waste ton

Total recycled waste ton

Waste recovery and recycling index %

Incineration with energy recovery ton

Treatment and disposal ton

Controlled landfills ton

Percentage of waste sent to landfills %

Specific waste generation index metric ton/million euros

Emissions Unit of measure

Paint shop VOC emissions g/m2








Water use 103m3

Water intake 103m3




Total waste ton











■ ■ ■


Fiat Auto■ ■ ■

Even though the number of the plants consideredremained unchanged over the years, in 2004 thescope of the survey was subject to changes dueto the insourcing of activities previously carriedout (and consolidated) by Comau.

Reducing the energy used for lighting

At the Tichy plant in Poland, installing energy-saving bulbs cut the amount of electricityused for plant lighting by 33.5%.

Reducing waste disposal

Waste management was improved at theTofas plant in Turkey, where sorting andrecycling efforts were stepped up. The totalamount of waste sent to landfills orincinerators is now about 50% less than in2000.

Reducing energy consumption

The Mirafiori Bodywork plant madesignificant cuts in its specific energyconsumption by improving processsaturation, rationalizing system operatingschedules and by keeping close tabs on theenergy expended during system start-upand stand-by as well as that delivered byprocessing utilities during non-workingperiods.

Plants in Italy: 8




Metano tep/anno 25,319 24,373 22,557

Altri combustibili tep/anno 6 6 3






Scarico idrico 103m3 12,492 11,567 10,055






industriali t 178,668 179,251 180,069







Indice di generazione specifico t/milione di euro 111.0 119.8 125.6



Total number of plants around the world: 12




Metano tep/anno 35,492 36,014 35,192






Scarico idrico 103m3 14,327 13,191 11,825



Totale rifiuti generati t 338,959 316,519 334,726


industriali t 317,192 297,560 316,393









toe/vehicle

0.065

0.061

0.079

0.080

2004 goal

2004

2003

2002

13.5

14.8

17.5

19.3

23.2

kg/vehicle

2004

2003

2002

2001

2000

7,254

7,254

7,556

9,728

2004

2003

2002

2001

200010,485

MWh/year

– 7.2%

– 22.3%

– 4.0%









Water use 103m3

Water intake 103m3





Total waste ton



















Water use 103m3

Water intake 103m3




Total waste ton











■ ■ ■


FerrariMaserati■ ■ ■

The paint cycle at Ferrari’s new Maranelloplant was designed with particular attentionto saving energy and limiting emissions.

Using state-of-the art technology, the systememits only 35 g/m2 of volatile organiccompounds per square meter of body shellin the entire cycle, well below the45 gVOC/m2 limit mandated by CouncilDirective 1999/13/EC for new installations.

With the system operating at full capacity,overall VOC emissions are around 32% belowthose of Ferrari’s earlier paint shop.

All paint spray booths are equipped withlatest-generation wet scrubbers that use anair-paint separation system to ensure thatparticulate emissions are below 5 mg/Nm3

and also reduce noise levels in the workenvironment.

The increase in energy consumption and wasterecorded in 2004 is attributable to:– increase in production– increase in the scope of operations (new

paint shop)– increase in air-conditioned production areas.

Plants in Italy: 3




Metano tep/anno 9,009 10,084 13,273


Vettori energetici acquistati tep/anno 0 0 0



Fabbisogno idrico 103m3 n.d. n.d. n.d.

Prelievo idrico 103m3 312 299 348

Scarico idrico 103m3 243 140 250

Indice di ricircolo % n.d. n.d. n.d.





industriali t 7,839 7,629 11,079



Smaltiti con termovalorizzazione t 0 0 0


Smaltiti in discarica controllata t 48 52 1,065













Water use 103m3

Water intake 103m3





Total waste ton












■ ■ ■


CNH■ ■ ■

The ISO 14001-compliant EnvironmentalManagement System that CNH implementsin order to reduce its plants’ environmentalimpact uses a Process EfficiencyImprovement (PEI) index to gauge processingefficiency. Calculated month by month, theindex is used to track progress in reachingimprovement targets.

The PEI index measures the amount ofindustrial waste generated, volatile organiccompound (VOC) emissions from painting,and water usage on a production-adjustedbasis by comparison with the baseline year.

Every year, CNH assigns AchievementAwards to plants that meet or exceed PEIindex goals, as well as Excellence Awards tothe sites that achieve the best performancein a particular area.

Reducing water usage

At the Burlington plant, Iowa (USA), improvedcooling towers and a system which recoversand recycles rinse water from theelectrocoating facility reduced annual waterusage by around 12 million gallons(approximately 45 thousand m3/year).

Improving air quality

The Zedelgem (Belgium) plant madesignificant improvements in air quality byintroducing low-VOC two-component paintat its top coating facility.

Plants in Italy: 5




Metano tep/anno 8,655 9,757 8,765

Altri combustibili tep/anno 1,492 223 147





Prelievo idrico 103m3 958 1,005 1,175

Scarico idrico 103m3 935 1,522 791






industriali t 22,585 20,841 12,503







Indice di generazione specifico t/milione di euro 177.3 139.1 107,5



Total numbers of plants around the world: 30




Metano tep/anno 44,275 50,711 52,954


Vettori energetici acquistati tep/anno 1,899 899 814




Scarico idrico 103m3 2,211 2,716 2,075





industriali t 93,474 112,165 90,149









2004

Kg of water/tons of product

3.64

20034.60

20024.94

20017.64

2004

g of VOCs per m2 painted

17

200326

200256

200144









Water use 103m3

Water intake 103m3





Total waste ton



















Water use 103m3

Water intake 103m3




Total waste ton











Iveco■ ■ ■

In 2004, Iveco made significant improvementsin managing the factors that have thegreatest impact on the environment and oncost per unit of product produced.

Reducing diesel fuel consumptionThe renewed range of engines and theintroduction of more reliable processesreduced diesel fuel consumption andemissions to the atmosphere.

Reducing power consumptionAt the Magirus Ulm Donautal plant, usingmore efficient light bulbs help cut electricityconsumption.

■ ■ ■


Reducing oil consumptionBy introducing TPM (Total ProductionMaintenance) programs and other measures,the plants in Turin, Bourbon Lancy and Foggiaachieved a further reduction in the amountof neat and emulsified oils used in machiningoperations.

Plants in Italy: 10




Metano tep/anno 18,452 20,929 19,783







Scarico idrico 103m3 5,429 4,940 5,090






industriali t 77,739 73,065 70,243










Total numbers of plants around the world: 24




Metano tep/anno 27,006 39,797 38,866






Scarico idrico 103m3 6,108 5,754 6,074





industriali t 103,610 103,881 104,437









TurinSpecific consumption (kg/worked hour)

2002 1.76

Cutting fluids and coolants

0.97

2003 1.460.85

2004 1.540.87

Sofim FoggiaSpecific production (kg/engine)

2002 3.271.95

2003 2.711.84

2004 2.851.27

Bourbon LancySpecific consumption (kg/engine)

2002 6.126.16

2003 5.965.51

2004 6.004.90

Hydraulic fluids

kWh/vehicle

2004 1,000

2003 1,165

2002 1,150









Water use 103m3

Water intake 103m3





Total waste ton



















Water use 103m3

Water intake 103m3




Total waste ton











Magneti Marelli■ ■ ■

■ ■ ■


Improvement programs chiefly focused onthe responsible use of natural and energyresources.As an example, several of the achievementsmade at the Magneti Marelli Powertrainplant in Corbetta (Milan) are describedbelow. This plant was also the first facilityto have its Integrated Environmental andQuality Management Systems certified toOHSAS 18000.

The main indicators increased as aconsequence of the changes in the scope ofoperations. During 2004 one foreign plant wasdismissed while seven other plants, one ofwhich in Italy, were consolidated.

Reducing wasteNew procedures for packaging wastedrastically reduced the amount of this typeof refuse generated through manufacturingoperations.In addition to increasing the use of reusablepackaging, the plant introduced ecodesigncriteria for selecting the materials it usesand identifying appropriate recoverymethods.

Water managementThe use of more efficient technologies andclosed loop systems for water coolingsignificantly improved environmentalperformance.

Plants in Italy: 15




Metano tep/anno 7,060 6,432 8,626


Vettori energetici acquistati tep/anno 0 3,530 6,601





Scarico idrico 103m3 2,601 2,354 1,976






industriali t 30,986 22,870 30,274


Indice di riciclo % 62,7 76,2 80,4










Metano tep/anno 10,032 9,660 14,189


Vettori energetici acquistati tep/anno 0 3,530 6,601




Scarico idrico 103m3 3,166 3,045 2,641





industriali t 68,852 53,754 58,523



Smaltiti con termovalorizzazione t 1,472 561 1,788




g/product unit

200429.14

200370.35

200278.66

l/product unit

200437.82

200348.42

200260.37









Water use 103m3

Water intake 103m3





Total waste ton

















Water use 103m3

Water intake 103m3




Total waste ton









Teksid■ ■ ■

■ ■ ■


Reducing general plant refuseAt the Crescentino plant (near Vercelli),selective collection and sorting proceduressignificantly reduced the amount of generalplant refuse sent to controlled landfills.

Increasing foundry sand reclamationWith the foundry sand regeneration facilityoperating at full swing, the Crescentino plantwas also able to achieve a significant increasein the amount of sand that can be reusedon site, which in turn appreciably reduceddisposal costs.

Plants in Italy: 2




Metano tep/anno 15,790 16,221 16,888












Di cui: assimilabili agli urbani t 954 893 688

industriali t 176,379 116,770 195,105




Smaltiti con trattamento t 20,551 1,141 536



Indice di generazione specifico t/milione di euro 2,372.3 1,531.0 2,433.4





Metano tep/anno 27,315 26,720 27,500






Scarico idrico 103m3 2,058 2,180 2,183





industriali t 619,141 532,546 759,087







kg/tons of net cast metal

2004 629

2003 823

2002 836

tons

2004

2003

200293,892

10,944

57,553

4,564

50,606

57,820

Internal recovery of foundry sand

Off-site recovery of foundry sand









Water use 103m3

Water intake 103m3





Total waste ton

















Water use 103m3

Water intake 103m3




Total waste ton









Comau■ ■ ■

■ ■ ■


The scope of the survey was subject to somechanges in 2004. In Italy, this was mainly dueto the reorganization of operations thatincluded also the reinsourcing of some activitiesin Fiat Auto. Abroad, the consolidation of threemore plants accounted for the variation in thescope of operations.

Plants in Italy: 5




Metano tep/anno 254 214 139




Fabbisogno idrico 103m3 242 223 133







industriali t 3,321 3,036 1,778




Smaltiti con trattamento t 1,003 830 711

Smaltiti in discarica controllata t 442 212 120






Metano tep/anno 254 214 1,504




Fabbisogno idrico 103m3 246 227 165







industriali t 3,521 3,402 2,280




Smaltiti con trattamento t 1,003 830 714

Smaltiti in discarica controllata t 492 273 253









Water use 103m3

Water intake 103m3




Total waste ton
















Water use 103m3

Water intake 103m3




Total waste ton









In line with the continuousimprovements in relation to the ISO14001 Environmental ManagementSystem, 83.1% of all waste generatedat the Group’s plants is nowrecovered and reused in processing.

Waste■ ■ ■

■ ■ ■


% recycled in Italy

% recycled worldwide (*) % to landfills worldwide (*)

% to landfills in Italy

(*) Note: Figures for 1996 through 1999 apply to European plants.

Waste disposal

48,353

1,341,948

1,390,301

733,589

52.8

20,788

61,459

525,920

608,167

37.8

57,916

1,213,629

1,271,545

696,766

54.8

20,049

87,380

466,142

573,571

36.7

Worldwide waste generation,recyling and disposal (tons/year)

45,129

1,110,937

1,156,066

634,837

54.9

15,872

68,515

435,837

520,224

37.7

Waste generation, recycling and disposalat Italian plants (tons/year)

2002

80

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

70

60

50

40

30

20

10

0

2003

90

2004

General plant refuse

2002 2004

Industrial waste

Total waste

■ Generation

Waste recovery and recycling index (%)

Total recycled waste

■ Recovery and recycling

Treatment and disposal

Incineration with energy recovery

■ Disposal

Total disposal

Controlled landfills

Percentage of waste sent to landfills

2003

16,999General plant refuse

2002 2004

501,051Industrial waste

518,050Total waste

■ Generation

430,669

83.1Waste recovery and recycling index (%)

Total recycled waste

■ Recovery and recycling

9,713

32,426Treatment and disposal

Incineration with energy recovery

■ Disposal

49,830

91,969Total disposal

Controlled landfills

9.6Percentage of waste sent to landfills

172.0Specific waste generation index(metric ton/million euros)

25,570

497,517

523,087

406,185

77.7

8,992

63,690

37,720

110,402

7.2

171.2

20,498

2003

423,462

443,960

367,672

82.8

5,674

34,018

33,004

72,696

7.4

146.3

Volatile Organic Compound Solvent Emissions■ ■ ■

Volatile organic compound (VOC)emissions dropped further in 2004.

Data for Irisbus are shown separatelyfrom those for Iveco, as Europe hasintroduced new VOC emission limitsthat apply specifically to busmanufacturers.

As for other paint shopoperations, these limits areexpressed in g/m2.

Further improvements will beachieved in 2005, as specific rulesfor solvent management arecurrently being developed.

The figures shown in the table reflectemission values in relation tocontinuous improvements in thecomposition of paint products andcoating technologies.

■ ■ ■


Paint shop VOC emissions (g/m2)

Fiat Auto Italy

Fiat Auto worldwide (1)

Iveco Italy

Iveco worldwide (1)

(1) Figures for 1994 through 1997 apply to European plants only.

(2) Figures for 2003 reflect the extended scope of this year’s report, which now includes Irisbus plants.

79.0

83.5

53.0

60.1

79.0

87.1

55.1

60.1

79.0

86.2

55.4

63.0

82.6

88.4

55.6

67.6

83.1

90.4

63.2

74.8

92.0

90.0

67.8

79.8

93.7

91.0

83.1

92.7

104.5

101.0

84.7

100.2

110.5

111.0

90.3

105.5

137.7

—

97.1

—

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

73.8

80.2

50.5

(2) 66.0

2003

76.3

79.9

49.0

65.2

2004

Irisbus Italy

Irisbus worldwide

330.0

200.0

342.0

210.0

04

SocialResponsibility

84 Human Resources84 Composition85 Equal Opportunities87 Health and Safety88 Training and Professional

Development90 Recruitment and Selection91 Industrial Relations94 Internal Communication97 Employee Benefits

98 Community Involvement99 Charitable Gifts

103 Community Investments105 Commercial Initiatives with Social Impact108 Socially Sustainable Business Initiatives109 Institutional Relations109 Relations with Associations110 Relations with the Media

■ ■ ■ Human Resources

SOCIAL RESPONSIBILITY

■ ■ ■

84

The Fiat Group and its employees are strongly committed tobehave in a socially responsible manner, by observing andrespecting the cultures and traditions of each country in whichthe Group operates.


The Fiat Group’s number ofemployees at December 31, 2004amounted to 160,549 people, 44%of which are based in Italy and 27%in the rest of Europe. The Groupemploys a large number of peoplealso in South America, accountingfor 15%, and in North America, 10%.3% of employees work in other partsof the world.

Fiat Group’s employees are brokendown into three types of categories:

■ ■ ■

Composition

• Blue collar workers (hourly)

• White collar workers (salaried)

• Professionals, holdingmanagement and specialist roles,divided as follows:

– professionals and professionalexperts, corresponding tomiddle management in Italy;

– professional masters,professional seniors andexecutives, referred to as“dirigenti” (seniormanagement) in Italy.

Contingent, temporary anddurational employees accountedfor 3.2% of the total workforce atDecember 31, 2003, and 4.2% atthe end of 2004. The percentagewas lower in Italy, whereemployment arrangements of thiskind involved 2.2% of the workforcein 2003 and 2.5% in 2004.

Breakdown by age

Breakdown by seniorityBreakdownby level of education

11 to 20 years

21 to 30 years

Over 30 years

Less than 5 years

13%

19%

16%

5 to 10 years

20%

32%

High school diploma

University degree or equivalent

Not classified

10%

44%

38%

Elementary/middle school8%

40 to 50

Over 50

Under 30

13%

36%

28%

30 to 4023%

(1) Data apply to Fiat Group employees in Italy.

Workforce Characteristics (1)

Offering each employee the sameopportunities to develop his or herskills and abilities, withoutdiscrimination based on race, sex,age, nationality, religion andpersonal beliefs is one of thecornerstones of the Group’smanagement policy.

Gender Diversity in theWorkforce (1)

At the end of 2004, womenaccounted for over 15% of theGroup’s entire worldwide workforce.Though the percentage of womenemployed in office and clericalpositions exceeds that in other jobcategories, women are also wellrepresented among the Group’sprofessionals.

■ ■ ■

Equal Opportunities

■ ■ ■

85

2003 Headcount

Professional MasterProfessional Professional Senior

Total Headcount Hourly Salaried Professional Expert Executives

World 162,237 104,821 32,056 22,650 2,710

Italy 73,535 47,073 11,810 12,963 1,689

Europe (excl. Italy) 44,951 27,031 12,210 5,153 557

Usa, Canada, Mexico 14,833 8,598 3,257 2,704 274

South America 22,159 17,630 2,979 1,391 159

Rest of the World 6,759 4,489 1,800 439 31

2004 Headcount

Professional MasterProfessional Professional Senior

Total Headcount Hourly Salaried Professional Expert Executives

World 160,549 105,090 28,968 23,868 2,623

Italy 71,329 45,765 10,931 12,957 1,676

Europe (excl. Italy) 42,885 25,935 10,542 5,905 503

Usa, Canada, Mexico 15,497 9,277 3,033 2,911 276

South America 24,405 19,853 2,841 1,563 148

Rest of the World 6,433 4,260 1,621 532 20

2003 2004

Italy Outside Italy World Italy Outside Italy World

Automobiles 28,413 16,150 44,563 28,543 16,578 45,121

Ferrari - Maserati 2,823 145 2,968 3,070 252 3,322

Agricultural andConstruction Equipment 4,247 22,578 26,825 4,194 21,552 25,746

Commercial Vehicles 14,066 17,445 31,511 13,768 16,754 30,771

Components 6,636 13,243 19,879 7,233 14,635 21,868

Metallurgical Products 1,436 6,120 7,556 1,229 7,342 8,571

Production Systems 7,299 10,076 17,375 3,942 9,386 13,328

Publishingand Communications 874 0 874 849 0 849

Services 4,622 2,491 7,113 4,080 2,439 6,519

Other 3,119 454 3,573 4,172 282 4,454

Group Total 73,535 88,702 162,237 71,329 89,220 160,549

Headcount breakdown by Sector (Consolidated companies)

The Group is committed to providing equal opportunities to all its employees,both on the job and in their career advancement.The Head of each office shall ensure that in every aspect of employment, suchas recruitment, training, compensation, promotion, transfer and termination,employees are treated according to their abilities to meet job requirementsand all decisions are free from any form of discrimination, in particular,discrimination based on race, sex, age, nationality, religion and personal beliefs.


Social Responsibility

■ ■ ■

(1) To ensure a uniform basis for comparisonbetween different countries and jobcategories, the gender profile is related to asample of approximately 97% of the totalworkforce, which in practice includes allemployees of metalworking companies inItaly and their counterparts in the rest of theworld.

2003 2004

Men Women Men Women

World 85.1 14.9 84.4 15.6

Italy 81.9 18.1 82.0 18.0

Europe (excl. Italy) 86.2 13.8 82.5 17.5

Usa, Canada, Mexico 84.0 16.0 84.8 15.2

South America 94.9 5.1 95.1 4.9

Rest of the World 84.4 15.6 82.6 17.4

■ ■ ■

86 Social Responsibility

Particularly in recent years, therehas also been an increase in thenumber of women in managementpositions. By contrast, theproportion of women engageddirectly in the Group Companies’shop-floor manufacturingoperations has remainedsubstantially stable, and in any caseis in line with the industry average.

Growth in the percentage of femaleemployees has been particularlymarked in Italy, especially inprofessional and seniormanagement positions. This trendis illustrated in the table, whichshows employment figures for thepast twenty years.

Promoting equal opportunities formen and women in the workplaceis a goal shared by the Companyand employee representatives. Thisissue is tackled within the socialdialogue, in compliance with locallaws and practices.

In Italy, the Automobile andCommercial Vehicle Sectorsfollowed through on the Group-wide Labor Agreement reached in1996 by setting up EqualOpportunity Committees. Made upof Group and employeesrepresentatives, these committees:

• monitor women employment

• study and promote initiatives

• conduct reviews on a preemptivebasis of any dispute in theapplication of the equalopportunity practices.

At the Group’s other Sectors, biennialreports on the workforce genderprofile are examined together withthe labor unions at the meetingscontemplated by the NationalCollective Labor Agreement.

Gender profile by geographic area (%)

Percentage of women by job category

2003 2004

World Italy World Italy

Senior management 6.9 7.8 7.3 7.8

Middle management 13.1 14.6 13.5 14.8

Salaried 30.9 38.0 33.6 37.5

Hourly 11.2 14.4 11.5 14.5

Total 14.9 18.1 15.6 18.0

Women in the Fiat Group’s Italian workforce(Total percentage of women employed by job category)

19851.6%

4.5%36.1%

13.2%15.1%

19902.0%

5.6%32.7%

13.1%14.9%

20004.9%

11.3%35.1%

15.4%17.9%

20015.7%

12.8%35.0%

14.2%17.7%

20027.0%

14.2%38.9%

13.7%18.3%

20037.8%

14.6%38.0%

14.4%18.1%

20047.8%

14.8%37.5%

14.5%18.0%

Senior management

Middle management

Salaried

Hourly

Total

■ ■ ■

87Social Responsibility

Employee Turnover andInter-Group Transfers

The variations in the number ofemployees recorded in the two-year period 2003-2004 are due tochanges in the consolidation area,as well as new incoming andoutgoing personnel.

In 2003, business acquisitions anddisposals, and the divestitures ofFiatAvio S.p.A., the ToroAssicurazioni Group, Fraikin, andFidis Retail Italia in particular,resulted in a net decrease of 13,100employees.

Disposals and acquisitions in 2004resulted in a net increase of 2,100employees. Much of this changewas associated with theconsolidation of the Magneti MarelliElectronic Systems business, whichwas partially offset by the decreasesthat occurred with the divestituresof Fiat Engineering and Midas, andtransfers from Comau Service toAssociated Companies.

Of the new employees joining theGroup in 2003-2004, around halfwere hired under contingent,temporary and durationalarrangements. On the average, 30%of these arrangements were laterconverted into open-endedemployment contracts. In Italy, thispercentage rose to 60%.

Around 30% of the employees wholeft the Group did so as a result ofstaff downsizing operations. Everyeffort was made to soften theimpact of the adopted measuresupon the employees, through thecushioning measures contemplatedby current Italian legislation, as wellas through social plans drawn uptogether with the labor unions.

Moreover, it should also be bornein mind that the Fiat Group’s sizeoffers employees opportunities totransfer between Sectors ormanufacturing units. In the two-yearperiod, over 2,000 employees – two-thirds of whom were in Italy – thusmoved to a different Sector or toanother manufacturing facility inthe same Sector.

All of the Fiat Group employees, atwhatever level in the organizationand whatever their responsibilitiesand assignments may be, areinvolved in preventing risks andimproving safety at the workplace.

Each Group Company isresponsible for the impact that itsmanufacturing processes can haveon the work environment, and forensuring that they comply with thelaws of each country where they dobusiness. In particular:

• All activities affectingoccupational safety and health,ergonomics and fire preventionare vital aspects of our work, andinextricably linked with it.

• Promoting these activities is anessential part of managementresponsibilities at all levels of theorganization.

• Safety training and informationare an integral part of theprofessional skills of everyone inthe Group.

Each Group Company monitorsaccident and injury data as requiredby local law and safety regulations,using methods appropriate to thespecific nature of eachmanufacturing process.These data reflect work-relatedaccident assessment, measurementand certification systems that varyfrom country to country, and thusare not directly comparable.This Report thus focuses only onthe data referring to operations inItaly, as collected by Group Sectorsand based on generally usedstandard indicators.

■ ■ ■

Health and Safety

Fiat Group employee turnover – World

2002

2003

2004

-22,696

2,100

14,615

11,545

Employees at Dec. 31

Incoming

Outgoing

net change after disposals and acquisitions

-13,104

-18,403

186,492

162,237

160,549

■ ■ ■


2004

Frequency rate 1.54

Severity rate 0.31

Fatalities 1

The survey concerned employeesof the Group Companies who areexposed to risks and are thuscovered by INAIL insurance. Seniormanagers and accidents en routeto/from place of work are excluded.

The frequency rate is the result ofthe ratio between the number ofreported accidents and the numberof hours worked multiplied by onehundred thousand.

The severity rate is the result of theratio between the number of lostworkdays and the number of hoursworked multiplied by one thousand.

No fatalities were reported in anyGroup Companies in the rest of theworld.

Accidents occurredin the Fiat Group in Italy

The Group recognizes that motivated and highly professionalpeople are an essential factor for maintaining competitivenessand for the creation of shareholder value and customer satisfaction.


■ ■ ■

Training and Professional Development

The Group’s competitivenesshinges on the individual andcollective skills of its employees.The enhancement anddevelopment of these skills arecentral to the corporate strategicintent.

Fiat sees training as essential in

enriching and improving these skills,and recognizes that training mustbe planned and provided on thebasis of the corporate goals, andwith a view to furthering the growthand improvement of thesocioeconomic system.

The Group thus provides itsemployees with opportunities fortraining and professionaldevelopment, enabling them todevelop the skills needed to filldifferent roles and responsibilitiesthrough professional growth andspecialization programs that canalso be followed singly. In this sense,Fiat regards its training courses asan integral part of work activities.

entire payroll, and 0.4% more thanin 2003, in training and professionaldevelopment programs designedto support the operations of itscompanies around the world.A total of 76,739 employeesparticipated in these programs.

Each employee is responsible formaking the most of all of theeducational opportunities providedby the Group to increase his or herskills.

In 2004, the Group invested108,147,000 euros or 2.4% of its

Training initiatives involved morethan 76,700 employees in 2004

�

No Smoking Policy

As a step to protect non-smokershealth, the Fiat Group has adopteda policy aimed at avoiding risksderiving from “passive smoke”.Such issue is clearly addressed inthe Code of Conduct, whichrequires all employees, includingthose working in countries wheresmoking in the workplace ispermitted, to “be sensitive to theneeds of those who physicallysuffer from the effects of passivesmoke”.Most companies belonging to theGroup adopt a “no smoking”policy. In Italy, in particular,smoking is prohibited not only incompliance with industrial accidentprevention regulations, but alsoin view of employees healthprotection. Smoke is banned inmeeting rooms and workingplaces for smokers and non-smokers. The smoking ban hasrecently been applied to all indoorworking places and extended topublic premises.

■ ■ ■


• developing new competenciesarising from innovations intechnologies, organization andmanufacturing;

• maintaining the corecompetencies associated withproduct/process quality levelsneeded to face challengessuccessfully;

• raising the average level of skillsowned by the employeesinvolved in the initiative.

In 2004, the Fiat Project provided atotal of 27,813 training hours to7,840 employees.

These programs are organized bythe Group’s training company, IsvorFiat.

During the year, Isvor Fiat provideda total of 24,297 days in in-house andon-site training and consultingprograms.

An additional 30,700 employees wereenrolled in web-based distancelearning courses, receiving 182,700hours of instruction.

Of the many training initiatives thatgot under way in 2004, the “FiatProject” conducted together with theItalian Ministry of Welfare was ofparticular interest. Targeting over21,000 Fiat Auto employees, theproject is the most ambitious on-the-job training program ever offered inItaly or elsewhere in Europe, and isan important opportunity forretraining workers in new skills andimproving employability.

Seen as a fundamental part of theGroup’s industrial strategies, thetraining program is also anoccasion for:

Indicators 2003 2004

euros % euros %

Total training expenses 95,052,000 108,147,000

Per capita training expenses 585.88 673.60

Type of training (*)

– Institutional (career advancement courses) 2,000,000 7.80 2,727,000 6.74

– Language 2,910,000 11.50 3,663,000 9.05

– Refresher courses(technical/job training) 18,800,000 72.70 29,598,000 73.10

– Other (e.g. office automation) 2,100,000 8.00 4,498,000 11.11

Employees involved 70,785 76,739

Impact on cost of labor 1.42 1.70

(*) This amount is the result of the cost per capita times the number of participants. The corresponding percentage is calculated on direct training costs.

Training Expenses

�

International AccountingStandards and the IASProgram

Following the introduction of thenew IAS/IFRS InternationalAccounting Standards andInternational Financial ReportingStandards, which must be adoptedin the consolidated financialstatements of Companies listed onEuropean stock exchanges startingin fiscal 2005, the Fiat Group setup a web-based distance learningprogram in 2004 to train employeesin how to apply the new accountingapproach. The training program,which involved people from 29countries and all of the Group’sSectors and Companies, consistsof 26 modules providing a total of60 hours of instruction in sevenlanguages. At the end of 2004,program participants numbered3,003 (2,081 of whom obtainedcertification).

■ ■ ■

Recruitment and Selection

■ ■ ■


Among the many initiativesdesigned to strengthen Fiat’scooperation with universities, theAutomotive Engineering degreeprogram at the Politecnico di Torinohas received particular attentionand support. The first 29participants in this program receivedtheir degree in academic year2003/2004.The degree program wasinaugurated in 1999, on the eve ofFiat’s centennial, through anagreement between the Fiat Groupand the Politecnico di Torino. Theinvestment celebrates a century ofshared growth for Fiat and Turin,and is also intended to strengthen

the city’s industrial and technologicalmission by focusing on its mostimportant resource, young people.Fiat continues to support the degreeprogram, defraying operating costsand providing corporateprofessionals and experts who makeup 20% of the program’s facultymembers.Fiat donated the building whichhouses the program, formerly theLingotto plant’s paint shop, and paidrenovation expenses totaling around26 million euros.Fiat also agreed to fund theprogram for a ten-year periodstarting in 1999, providing an annualcontribution of 2,324,000 euros.

In 2004, Fiat had productivedealings with 55 universities,including 17 in Italy.

Activities involved:

32 career days (6 in Italy, 24in the United States, 2 in Poland)

4 Group presentations

10 Sectorpresentations/testimonials

18 lectures provided.

In Italy alone, 1,500 middle schooland junior high students, 18,000high school students and 3,200university undergraduates visitedone of the Group’s plants duringthe year. Elsewhere, Fiat Auto plantswere visited by 8,800 students inBrazil and 3,700 in Poland.

Group Companies have alsopartnered with major Italianuniversities in their Master’s degreeprograms.

For example, Master’s programs inAutomotive and Industrial Researchhave been instituted at thePolitecnico di Torino; Master’sprograms in MarketingManagement, in BusinessAdministration, and in ManagementAccounting and Corporate Financehave been established at theUniversity of Turin School ofEconomics, and a Sales Academywas set up in cooperation with SDABocconi.

Other successful initiatives includethe training programs conductedbetween 2003 and 2004 by the CRF(Fiat Research Center) in cooperationwith the Italian Ministry of Education,Universities and Research (MIUR).Lasting twenty months, theseprograms alternate periods ofuniversity coursework with training atthe Fiat Research Center, and provideparticipants with the specializedknowledge needed for research inmechatronics and for designing andtesting hybrid vehicle componentsand propulsion systems.

As one of the most significantaspects of its relationship withuniversities, Fiat participates incooperative education programsthat provide work-study periods andinternships with Group companies.

A total of 1,200 trainees worked atGroup companies, including 300 ona curricular basis and 900 on a non-curricular basis (i.e., 500 preparingtheir theses and 400 post-graduates).

In 2004, 67,137 job applicantssubmitted résumés, as against59,150 in 2003. Over 58,000 of theseapplications were unsolicited, or inother words were not made inresponse to posted job vacancies.

Automotive Engineering

The recruitment policy’s successstems from a number of factors:programs that provide trainingsupport for both job orientation andcareer advancement, learning pathsthat focus on the individual,opportunities for internationalexperience, and a series of initiativesfor outstandingly talented personnel.

The Group hired over 350 recentcollege graduates in 2004.

During the year, 2,312 candidateswere examined in Italy, including 984who hold college degrees. Recentcollege graduates are selected eitheron the basis of their performanceduring a post-graduate internship,or through a direct evaluationprocess involving:

• Aptitude and personality tests,personal interviews, andevaluation of English languageskills.

• “Dynamic” assessment(assessment center) focusing onbehavior characteristics of keyimportance to the Group.

• Technical interview at thecandidate’s future job site todetermine motivation andcompare assessment results withthe required profile.

The Fiat Group recognizes the roleof employee representatives andlabor unions constituted inaccordance with local law andpractice in the countries where itoperates.

Dealings with these groups areconducted in a spirit of mutualrespect, dialog and constructiveconfrontation.

Association with unionsEmployees are free to choosewhether to join a union inaccordance with local law and therules envisaged by the various labororganizations.

As certain countries – France, forexample – regard decisions to joina union as a purely personal matterfor employees, who are thus notrequired to inform the Company, itis not possible to track overall unionmembership.

By contrast, union members in othercountries may authorize theiremployer to deduct union dues fromtheir paycheck, thus providing ameans of determining the numberof members.

■ ■ ■

Industrial Relations

This is the case in Italy, where overone third (36.7%) of the employeescovered by the National CollectiveLabor Agreement for metalworkersbelong to one of the labor unionswho signed the agreementsobserved by the Group.

Certain Fiat Group employees inItaly are represented by the FiatMiddle Managers’ and Supervisors’Association, whose members in2004 accounted for 42.7% ofeligible employees, as against 41%in 2003.

Employee representatives

Many European countries haverepresentative structures electeddirectly by employees.

Italy, for example, has the so-calledUnitary Workplace Structures orRSUs, bodies elected by all workers(senior managers excluded) fromnominees submitted by the laborunions. Elections are held every threeyears at each manufacturing unit. Asof December 31, 2004, RSUmembers at the Group’smetalworking companies in Italynumbered approximately 900.

■ ■ ■


After they are hired, college recruitstake part in an orientation programthat involves both classroom trainingsessions and on-the-job experienceto guarantee that they gain a solidprofessional and managerialgrounding that reflects the Group’svalues and goals.

Training is designed to transmit anunderstanding of the corporatesystem, business and professionalbasics. General post-recruitmenttraining is followed by specificsessions tailored to the type oforientation program and individualneeds.

On-the-job training follows aplanned sequence designed to buildfunction-specific and interfunctionalskills.

One of the most recent additions tothe Group’s training initiatives is the“CNH Graduates Program”,introduced in 2004. Lastingapproximately three years, theprogram provides on-the-jobexperience at three differentcorporate Functions, preceded byperiods of training at the beginningof each job assignment.

The Fiat Group in ItalyUnion membership: % of headcount (hourly workers, salaried workers,middle management)

5.5%

12.2%

8.8%

0.2%

0.7%

UILM

FLM

FIOM

FIM UGL

FAILMS

Other

FISMIC

1.4%

0.1%

7.5%

2003Total 36.4

5.5%

12.2%

9.0%

0.1%

0.7%

1.4%

0.1%

7.6%

2004Total 36.7

Collective bargaining

Collective bargaining takes place atdifferent levels and according toprocedures that vary from country tocountry, in compliance with local lawsand practices.

For instance, in certain countries,including Italy, Germany and Belgium,wage-related issues are dealt withthrough national and regionalcollective bargaining, withsupplemental or implementationagreements at the company level ifnecessary. In some other countries,bargaining takes place only at thecompany level also for wage-relatedissues.

As for company or plant bargaining,the Fiat Group entered into a totalof 355 collective bargainingagreements around the world in 2004.

Nearly half of these agreementsconcerned operating issues (workingtime arrangement, work organization,etc.). One fourth addressed theimpact of the restructuring andreorganization programs onemployees, and the remaining fourthregarded wages.

By comparison with 2003, there wasa decrease in the number of agree-ments addressing restructuring issues,while those dealing with operatingissues and wages increased.

Matters 2003 2004

Wages 87 101

Operating issues 147 167

Restructuring 117 87

Total 351 355

■ ■ ■


European Works Council (EWC)

Italy 13

France 4

Germany 3

Spain 3

U.K. 2

Belgium 2

Portugal 1

Austria 1

Total 29

Middle managers (*) 1

(*) Italian

The Fiat Group’s CollectiveBargaining Agreements around theworld at company or plant level

Dealing with the socialconsequences of restructuring

In 2004, the Group’s industrialrelations involved managing theimpact on employment of theactions taken to respond to difficultmarket conditions and reduceoverhead within the framework ofrestructuring programs started inprevious years and new programslaunched in 2004. These goals wereachieved using the social shock-absorber programs available underexisting laws and through socialimpact plans, most of which agreedwith employee unions, thatcushioned the impact of downsizingmeasures on Group employees.

In Italy, employee redundancieswere handled primarily through theso-called “mobilità diaccompagnamento alla pensione”,i.e. layoff with long-termunemployment benefits, whichenables employees who meetcertain age and seniorityrequirements and leave theCompany within the framework oflarge-scale layoffs to receivesupplemental income (a mobilityallowance) for the years remaining(maximum of three) until they areeligible for retirement benefits.In 2004, about 2,000 employeesbecame eligible for mobilityallowances. About one-fourth of

The Fiat Group has also formed arepresentative body complying withCouncil Directive 95/45/EC on theestablishment of a European WorksCouncil or a procedure in Community-scale undertakings and Community-scalegroups of undertakings for the purposesof informing and consulting employees.The Fiat Group European Works Councilwas set up in 1996 and renewed in 2001through an agreement signed by theItalian labor organizations and by theEuropean Metalworkers’ Federation(EMF) on behalf of its member unionsin the European countries where Fiatmaintains a presence.The European Works Council is madeup of employee representatives fromEuropean Union countries where at leastone Fiat Group Sector has over 150employees. The thirty seats on the EWCare distributed as follows:

Following the European Union’senlargement, it will be necessary toredistribute seats in order to representworkers in the newly acceded countrieswhere Fiat has a significant presence(Poland, the Czech Republic andHungary). The labor organizations havesubmitted a proposal for reallocatingseats which has yet to be agreed uponwith the Group.The EWC meets once a year, usuallybefore the end of November.Management also holds an additionalmeeting with the Restricted Committee(which consists of six members of theEWC) in the first half of each year.In 2004, the meeting with the RestrictedCommittee was held on April 2, and theannual EWC meeting took place onNovember 8-9. The latter was attendedby Fiat Group CEO Sergio Marchionne,who explained the key aspects of thestrategy adopted by the newmanagement team and confirmed thecommitment and determination withwhich the Group is pursuing its statedimprovement objectives.

these employees qualified for long-term mobility allowances. Theseallowances, which are available inspecial cases under a law that wasenacted in April 2003 and remainedin force through the end of 2004,are provided over a longer periodthan regular mobility allowances.

Situations that required temporaryreductions in capacity utilizationwere handled using the “CassaIntegrazione Guadagni Ordinaria”(Regular Temporary Layoff BenefitsFund). The “Cassa IntegrazioneGuadagni Straordinaria” (SpecialTemporary Layoff Benefits Fund)was used only for 494 employees atthe Arese plant.

Outside Italy, the occupationalconsequences of restructuringinitiatives were handled primarilythrough social impact plans agreedwith the unions. The most importantagreements involved:

• CNH: decrease of combine-harvester production capacity,which resulted in the closure ofthe Neustadt factory in Germany;

• Magneti Marelli: closure of theMagneti Marelli Lighting plant inCannock, U.K., and grouping ofthe Motopropulsion facilities inFrance, which required thetransfer of certain operations fromNanterre to Argentan;

• Comau: social impact program inconnection with the downsizingof the Comau Systèmesproduction facilities in France.

Collective BargainingAgreements for wages

With regard to collective bargaininginvolving compensation issues, theagreements reached with the unionscall for wage increases that aregenerally in line with the rate ofinflation. Increases in excess of therate of inflation were granted bycompanies with favorable operatingresults or in special situations.

In Italy, employees received thewage increases provided for underthe National Collective LaborAgreement for MetalworkingEmployees (hourly and salariedworkers). This Agreement, which wasrenewed in May 2003, called for anaverage wage increase of 2.5% in2004. The provisions of theAgreement regarding employeecompensation expired at the end of2004. On January 14, 2005, theunions submitted toFedermeccanica (a nationalorganization that represents Italianmetalworking businesses) their wageincrease requests for the two-yearperiod 2005-2006. The proceduresfor the renewal of the CollectiveLabor Agreement require the unionsto abstain from wage-related strikesfor a period of four months afterthey submit their requests in orderto allow negotiations to proceed.

Group employees were alsoawarded the Annual PerformanceBonus. Under the Group-wideAgreement of 1996, which is still inforce, the bonus was computed onthe basis of indicators of the Group’soverall performance, provided bythe 2003 Consolidated FinancialStatements, and quality indicatorsfor the individual Sectors.

Outside Italy, the main laboragreements included the renewal ofthe Collective Labor Agreement forMetalworking Employees inGermany (following the signing ofan agreement for the region ofBaden Württemberg in February2004, which set terms that were usedas a reference point for theagreement signed in other Germanregions), which provided increasesof 2.2% in 2004 and 2.7% in 2005.This agreement also introducedgreater flexibility for employers,enabling them to increase averageweekly work hours when specialproduction needs require it.

In France, most Group Companiescarried out their annual labornegotiations, granting employeeswage increases that averagedbetween 1.5% and 2%. In Poland aswell, the majority of Groupcompanies reached wageagreements with the unions,granting average raises of about 3%.In Brazil, wage-related agreementsprovided employees with increasesthat were in line with those grantedby other large groups, andemployees received annual bonusesthat varied according to companyresults.

■ ■ ■


■ ■ ■

Internal Communication

Labor disputes

Overall, labor disputes wererelatively minor, with the exception,in Italy, of the strikes that affectedFiat Auto’s Sata plant in Melfi in thespring of 2004 and Iveco’s Bresciafactory in the fall. The dispute inMelfi forced the stoppage of theSata facility, as well as componentplants located in the same district,for a period of about three weeks.For about 10 days, this situationhad a major negative impact onother Fiat Auto facilities, whereproduction gradually ground to ahalt due to the lack of deliveries ofcomponents and vehicle assembliesproduced in Melfi. The dispute wassettled with an agreement signedon May 9, 2004. The agreementchanged the distribution of workshifts and called for the wagepackages of Sata employeesgradually to be brought on par withthose of other Fiat Auto employees.The strikes in Brescia were calledto demand negotiations for asupplemental labor agreement atthe factory level that would providewage increases in excess of thosepaid in the rest of the Group.Consequently, the Companyrefused to negotiate thesedemands.

The main development involvingcompanies outside Italy was the

strike called this past November bythe UAW (United Auto Workers) inthe United States, which involved650 CNH employees representedby said Union (plants in Racine,Wisconsin; Burlington, Iowa; theEngineering center in Burr Ridge,Illinois, and the Depot of St. Paul,Minnesota), for the renewal of theCompany Collective LaborAgreement. The previousagreement, which expired on May2, 2004, had been in force for sixyears and had called forexceptionally burdensomecompensation and benefitpackages that resulted in laborcosts double those of other CNHplants in the United States. Thedispute at CNH was five-monthlong and during this period CNHused temporary workers to continueproduction, as allowed under U.S.laws and practices. A settlementagreement was reached on March19, 2005 with a ratification vote bythe employees affected by theagreement. It provides for wageincreases in line with those grantedat the major competitors’ facilitiesand includes many of the proposalsput forth by the company toincrease flexibility and reduce laborcost as well as health care costs forretirees.

For the Fiat Group, internalcommunication is essential todialogue: a direct, open way ofsharing the Group’s vision and goalswith everyone at all levels of theorganization. This dialog issupported by a variety of media –conventional and otherwise – thatreach employees in all Sectors.

Publications

At regular intervals, two in-housemagazines keep Fiat employeesposted about what’s going on inthe Group. The first is the monthlyillustrato, distributed to the Group’semployees and retirees in Italy.Founded in December 1953, themonthly has chronicled the doings,major and not so major, of thecompany and the people who workthere for over half a century. Thefull-color, hundred-page magazinehas accompanied all of Fiat’ssuccesses, challenges and changes,remaining true to its mission as abridge between the Group and theemployees’ families. Linkingcolleagues in different Sectors,

■ ■ ■


illustrato helps forge a commonculture throughout the Group. Thus,it features news about the companyand the world around it, togetherwith useful information.

Along with the Group’s monthly,the 95,000 current and retiredemployees belonging to the FiatGroup Seniors Association receivethe latter’s review Percorsi.To provide up-to-the-minuteinformation, the Group alsopublishes a biweekly newsletter,indiretta. The newsletter is

distributed to workplaces, factoriesand offices, while special editionsinform employees about importantevents affecting the Group at thesame time as readers of outsidemedia. Several Group companiesadd their own “local pages” toindiretta, providing news itemsabout the Sector in addition tothose about the Group as a whole.

Electronic editions of bothpublications are available on theGroup intranet.

Finally, other Group Companiesissue specific publications focusingon topics related to their Sector.

� The issue of indiretta on theachievement of the operatingbreakeven

� A preview of the homepage ofthe new Fiat Group intranet portal

� �

Group Intranet

“Fiat GroupNet” can be accessedby all employees with a personalcomputer and a corporate e-mailaddress, i.e. 40,000 worldwide usersconnected to the Fiat intranet. TheFiat intranet Portal is a modern worktool that makes it possible to viewdocuments and other material, shareknowledge and experience, andensure an effective flow of informationbetween coworkers and betweenemployees and the Company. Its useexpands 20% annually.

Following an accurate analysis and

in line with the Fiat Group’s strategies,the intranet shifted towards a B2E(Business to Employee) model, whichdirectly involves employees in itsdesign. The intranet Portal has thusbecome a privileged access point toinformation, documents andapplications, as well as self-servicetools and virtual cooperation,stepping towards the creation of a“virtual desk”.

The individual Sectors have their owncorporate intranets, all designed toprovide information and specificservices.

In 2004, the role that the Groupintranet Portal played in internalcommunication was not that of asimple vehicle of information but alsoof an instrument for collection andanalysis of needs. For instance, anextensive survey was carried out that

involved the entire population ofcorporate professionals around theworld.

An online questionnaire wasdistributed to find out how theGroup’s entire population seesinternal communication (modalitiesand means). A dialog was thuscreated, where answers and requestsfrom the participants spurredconcrete actions. Responses to thequestionnaire totaled 25% of peopleinvolved: an interesting result for avolunteer-based survey.

Conventions and events

Regular meetings provideemployees with a chance toexchange views, comparingdifferent ways of working andthinking, and enriching theirprofessional and personalexperience.

Major events organized by theGroup’s companies in 2004included:

• the convention organized by CNHto commemorate the company’sfifth anniversary in November2004. During the event, whichinvolved all CNH sites worldwidein the same day, participantsviewed a recorded message fromthe CEO and a video created forthe occasion. The event alsoreceived extensive coverage onthe corporate intranet.

■ ■ ■


• Managing the Future, an initiativeaddressing issues of particularimportance for Iveco’s future. Foreach issue, the project involves ateam of twenty colleagues drawnfrom several countries andrepresenting different levels ofresponsibility and professionalexperience. In 2004, the meetingtackled issues such as Teamwork,Communication, QualityExcellence, CustomerRelationship Management.

• Encontro com o Superintendente,a series of meetings organizedby Teksid do Brasil. Inaugurated

in 1994, the initiative offers onehundred or so blue- and white-collar workers from each shift achance to meet with companymanagement once a month. TheCEO illustrates the company’sperformance and then fieldsquestions. At the end of themeeting, participants fill out ananonymous questionnaireindicating their level ofsatisfaction.

• Fiat Auto’s ManagementMeetings and Business Meetings,with the participation of Sector’smanagers. During these meetings,company performance, achievedresults and future strategies arepresented. Ten company locationsaround the world were connectedwith the headquarters in Turinduring the December 2004Business Meeting.

� Ferrari’s employees watch theCompany Internal Channel,inaugurated in 2004

� Iveco’s new web environmentnamed Eportal

� �

The Sectors’communication toolsIn addition to taking part inenterprise-wide projects, eachSector develops its own approachesto communication. Though thenumber of initiatives in a Group asextensive as Fiat is obviously toobig to discuss them all, a few of themost original or innovative of theseefforts – not necessarily the onesthat are most widespread orinvolved the most work – aredescribed below.

Fiat Auto – In an unusual approachto communicating with itsemployees in Poland, Fiat Auto

introduced its own company radiostation. A thirty-minute program,mainly devoted to music, isbroadcast during breaks. It providesclear, straightforward coverage ofa variety of topics: news, specialreports and announcements.

Ferrari – Thirty videoscreens enableemployees to enjoy the FerrariInternal Channel, which airs newsabout the Maranello maker’sproducts, people and events. Thechannel was inaugurated in 2004.

CNH – Every three months, CNH’sapproximately 27,000 employeesaround the world gather togetherat their workplaces to watch the“company news broadcast”. Airedin the local language at each site,the thirty minute program fills

employees in about what went onduring the quarter on thecommercial, industrial and financialfronts. In addition to companyperformance highlights, thebroadcast places special focus onindividual regions. A question andanswer period follows. Attendanceis high, though it differs fromcountry to country and from siteto site.

Iveco – The new Eportal webenvironment integrates theprevious local intranets andprovides many information aboutcorporate activities. Features

■ ■ ■


available to employees include thefollowing two:

• The Open Door section, acommunication channel, whereemployees can ask questions orsubmit suggestions to theStrategy Board, the Company’sdecision-making body. Messagesand answers are then posted ina specific section of the portal.

• “Welcome to Iveco”, a guide nowbeing published for newemployees containing all theinformation they need to get theircareers at the company off to agood start.

Fiat Associations

The Fiat Group promotes a numberof internal associations, particularlyin Italy. In 2004, the Group invested1,390,000 euros in the activities ofthese associations.

Fiat associations include:

• UGAF, the Fiat Group SeniorsAssociation, with a worldwidemembership of 95,000 employeeswith at least 25 years of seniority.

• the Fiat Senior ManagersAssociation (GDF), whichrepresents the Group’s current andretired senior managers. Theassociation has 3,300 membersaround the world.

• Fiat Apprentices School AlumniAssociation (Ex-Allievi Fiat), with3,600 members who prepared fortheir careers through an on-the-job experience at the Company’sApprentices School.

• Social Activity Centers (Cedas), anorganization totaling 73,000members, which promote andcoordinate cultural, recreational,sports and leisure time activitiesfor Fiat employees and theirfamilies.

Scholarships and Grants

The Fiat Grants and ScholarshipsProgram for children of active Groupemployees in Italy and around theworld continued in 2004. During theyear, the program provided 573students with financial assistancetotaling 952 thousand euros.

Overall, a further 542 students wereawarded scholarships from the Fiatassociations.

Supplementary Pension Plans

Almost 60% of the GroupCompanies offer supplementarypension plans, introduced in allcountries where local legislation andsocial security systems allow suchplans.

As a general policy, the Group

■ ■ ■

Employee Benefits

■ ■ ■


prefers defined contributionretirement plans, though definedbenefit plans are also used in areaswhere they are the market standardor were already in place at the timethe company involved was acquiredby the Fiat Group. Defined benefitplans are essentially restricted to theEnglish-speaking countries, GreatBritain and the United States inparticular.

Supplementary Health Plans

Nearly all of the Group Companiesparticipate in supplementary healthplans, nearly all of which areprovided by insurers. Coveragelevels vary from country to country,depending on local publichealthcare systems and the localmarket restrictions, opportunitiesand competitiveness. In many

countries, moreover, Fiat provideshealth care services directly at itsown facilities, which includeexamining rooms and other speciallyequipped areas.

In most cases, supplementary healthplans are available to seniormanagers, professional staff andtheir families, and involve apopulation of around 100,000people.

Vacation Centers

In Italy, the Fiat Group offer itsemployees’ children, aged between8 and 12, a two-week vacation at theseaside or in the mountains betweenmid-June and mid-August. In 2004,1,500 children stayed at the Group’svacation centers at a cost to thecompany of 1,050,000 euros.

Sisport

Active under various names since1922, Sisport Fiat S.p.A. is theGroup’s sports Company. Sisportcenters are located in and aroundTurin, where they cover over 300,000square meters. In 2004, around500,000 people used Sisport’sfacilities. Since 1928, Sisport Fiatorganizes the Agnelli Trophy, anationwide competition featuring anumber of different sports events,joined by all of the Group’s plantsand Functions in Italy. In 2004, theGroup’s companies in the Turin areacontributed around 2 million eurosto support sports activities for theiremployees.

Other Benefits

The Group also extends discountsand interest-free or low-interest loansto its employees for purchases of itsproducts, cars in particular.

■ ■ ■ CommunityInvolvement

SOCIAL RESPONSIBILITY

■ ■ ■

98

To measure its contributions to thecommunity openly and effectively,the Fiat Group uses the modeldeveloped by the LondonBenchmarking Group, whichidentifies four categories into whichdifferent forms of communityinvolvement can be classified:

• Charitable gifts

• Community investments

• Commercial initiatives with socialimpact

• Socially sustainable businessinitiatives

The Fiat Group is aware that its workhas a profound influence on thecommunities where it operates,promoting their economic andsocial growth and helping make ahigher standard of living moreaccessible to all.

Knowing this, the Group has alwayspaid close attention to thewellbeing of the communities whereit operates, working together withassociations and local institutionsto share some of the wealth it hasgenerated.

As grouped in the pyramidmodel, these forms of involvementrange from activities inspiredmore by a sense of corporatecitizenship than by a concern fortheir return to the business – suchas charitable donations to goodcauses – to core businessactivities with a high social value.

In 2004, Fiat Group’scontributions to communitiestotaled 16,177,400 euros, brokendown as follows:

Charitable gifts

4,907,200 euros

Community investments

6,901,100 euros

Commercial initiativeswith social impact

3,619,100 euros

Socially sustainablebusiness initiatives

750,000 euros


Total :

16,177,400 euros

Charitable gifts, with no concern for areturn to the business

Costs and investments for initiatives infavor of the communities where theheadquarters and/or plants are located

Costs and investments for social initiativesaimed at promoting commercialinitiatives

Costs and investments for businessinitiatives with high social value

■ ■ ■

Accounting data

The Giovanni Agnelli Foundation

The Giovanni Agnelli Foundationis an independent non-profitresearch and cultural institute whosework focuses on human and socialsciences. Headquartered in Turin,the Foundation was established byFiat and IFI in 1966 to celebrate thecentenary of the birth of Fiat’sfounder, Senator Giovanni Agnelli,and operates thanks to its own

■ ■ ■

Charitable Gifts

■ ■ ■

99

endowment fund and outsidecontributions. It belongs to networksof Italian and European foundations.

The Foundation’s chartered missionis “furthering and spreadingknowledge of the conditions onwhich Italy’s progress in economic,scientific, social and cultural fieldsdepends”, as well as supportingresearch.

The Foundation acts as a bridgebetween the social sciences, policymakers and public opinion, in theconviction that research is usefulwhen it is able to participate in publicdebate and contribute toestablishing priorities. It plans andorganizes cultural events such asresearch programs, seminars andconferences.

Results of the Foundation’s workare made available to the public ina series of volumes published underthe Giovanni Agnelli Foundationimprint, and are disseminatedthrough the media or posted onthe Foundation website(www.fondazione-agnelli.it). TheFoundation’s library collections areavailable to scholars and studentsat no charge.

Programs are generally long-rangein nature. In 2004, work centeredon the following topics:

• Civil society and non-profitorganizations, with specificreference to the role offoundations.

• Values and problems of socialintegration, where theFoundation helped initiate anre-thinking in Italy on the issue ofsecond-generation immigrants.

• The social and historicrepercussions of Italianemigration.

• Resources for local development,particularly as regardstechnological innovation. Turinand Piedmont are the key issue.

� The historical headquarters ofthe Giovanni Agnelli Foundation inTurin

� One of the conferencespromoted by the Foundation in 2004devoted to the world of school

� �

The Foundation participates activelyin the debate concerning the futureof Turin, and is a member of thecity’s strategic planning association.

In 2004, the Foundation organizedeight conferences (including twoheld by its independent researchoffshoot, the Edoardo AgnelliCenter for Comparative ReligiousStudies) and hosted a large numberof other events.

It published six volumes andawarded several scholarships andresearch grants, including one forthe economics of contemporary artoffered together with UniCreditPrivate Banking.

In 2005, work will concentrate on“People, generations anddevelopment”, a program whichwill investigate demographicchanges such as immigration andtheir impact on Italy’s development.The program’s major emphasis willbe on building human and socialcapital.


■ ■ ■


The Edoardo Agnelli Foundation

Established at the urging of SenatorGiovanni Agnelli and recognized asa charitable trust in 1950, theFondazione Edoardo Agnelli perAttività Assistenziali e Sociali, –Edoardo Agnelli Foundation forCharity Work and Social Activities,promotes social solidarity throughphilanthropy, social assistance andhealth care, scientific research inareas of high social importance,

education and training. TheFoundation provides assistance forthe underprivileged and supportsinstitutions engaged in social andeducational work.

The criteria and procedures followedfor the Foundation’s donations, aswell as the areas in which they aremade, are established by the boardof directors of the institution inaccordance with the aims set forthin its charter.

The Fiat Group has been supportingthe Foundation ever since itsestablishment. In 2004, Fiat’scontribution amounted to 100,000euros.

� �

Fiat’s campaign against cancerOver the years, the Fiat Group hasmade major efforts to fight againstcancer, sponsoring projectscapable of producing long-lastingeffects.

Fiat has been supporting theInstitute for Cancer Research andTreatment in Candiolo, on theoutskirts of Turin, since itsfoundation in 1996, with an interestof 19.35% in its stock capital.

The Institute provides completediagnostic and therapeutic servicesand carries out researches aimedat discovering the causes of cancer,by counting on the best humanresources and advancedtechnologies.

In 2004, Fiat’s charitable donationsto the Piedmontese Foundation forCancer Research, the non-profitfoundation that supports andmanages the Candiolo Institute,totaled 50,000 euros. In addition,Editrice La Stampa contributed150,000 euros of the proceedsgenerated from the sale of the book“Giovanni Agnelli” to the Institute.

La Stampa-Specchio dei TempiFoundation

The La Stampa-Specchio dei TempiFoundation was established in 1982.It takes its cue from the newspaper’s“Specchio dei Tempi” (Signs of theTimes) Letters to the Editor column,which since 1955 has provided readerswith a forum for expressing theirsolidarity with people who need help,and given them a channel for doingsomething concrete about the situationsthat have sparked their concern in newsarticles or letters.The Foundation’s objective is to promoteinitiatives of significant social value andprovide assistance to individuals, familiesand communities hit by tragedy ormisfortune. It also supplies tools andequipment to communities in order toalleviate suffering and improve livingconditions for individuals or groups ofpeople.The La Stampa-Specchio dei TempiFoundation has provided aid oninnumerable occasions: the collapse ofthe Vajont dam, the earthquake in Irpinia,the Piedmont floods in 1994, and morerecently, the Molise earthquake and thetsunami in South East Asia.For 25 years, the Foundation has beendistributing a “Christmas bonus” toneedy senior citizens living alone,providing them with extra cash. TheFoundation also collects donations forthe Research on Cancer.The Foundation’s management expensesare defrayed by Editrice La Stampa,while its directors provide their servicesfree of charge.

■ ■ ■


Fiat is also one of the foundingmembers of the European Instituteof Oncology with a 10.9% interestin its capital stock. This private non-profit corporation headed byUmberto Veronesi was set up in1987 to contribute to progress inscience. Inaugurated in 1994 anddeclared a Scientific Institute forResearch, Hospitalization andHealth Care by the Italian

government two years later, the EIOis part of Italy’s national healthservice. It is committed toexcellence in cancer prevention,diagnosis and treatment throughclinical and scientific research andinnovative organization andmanagement.

Moreover, every year, Fiat S.p.A.and some of the Group Companies,among which Comau, contributeto the nationwide fundraising daypromoted by AIRC, the ItalianCancer Research Association.

A building for the Lingottoparish hall

In 2004, Fiat transferred title to abuilding and the surrounding landto Lingotto’s Our Lady of TheAssumption parish in recognitionof the latter’s valuable role in thelife of the community. Built in 1946,the facility had since the early fiftiesbeen loaned for free by Fiat to theparish, which had made it into acommunity meeting place and acenter for youth activities.

Helping handsfor South East Asia

The parish now has a sports fieldadjacent to the hall, which also hostsa family consultation service run bythe Sisters of Charity of the Orderof St. Vincent, after-school activities,parents’ educational programs, anda number of initiatives designed toprevent marginalization amongyoung people, rehabilitate drugaddicts, and help their families.

�

� A research laboratory of theEuropean Institute of Oncology

� The Institute for Cancer Researchand Treatment in Candiolo (Turin)

� A school being built in Sri Lankathanks to donations collected by theLa Stampa-Specchio dei TempiFoundation

The Fiat Group took part ininternational efforts to aid thevictims of the tsunami that struckSouth East Asia on December 26,2004.

Iveco and its dealers donated oneand a half million euros, includingfinancial support, equipment andtechnical assistance. Funds andmaterial were channeled throughthe humanitarian groups involvedin this international relief mission.

CNH and its global partnerKobelco Construction Machineryearmarked one million dollars(equivalent to 750,000 euros) foran aid program that sent vitalsupplies and equipment to thedisaster-struck areas.

Ferrari announced that its 400thEnzo Ferrari limited edition willbe donated to Caritas, which willauction it off to raise funds fortsunami victims.

The La Stampa-Specchio dei TempiFoundation organized asubscription that raised over 2.6million euros for rebuildingschools, constructing pediatricclinics and family housing, andproviding many other types of aidfor the victims.

■ ■ ■


Helping the disabled in Spain

Fiat Auto signed a cooperationagreement with the Spanish ONCEFoundation’s Fundosa Accesibilidad,whose aim is to provide a concreteanswer to all mobility problems.

This company provides technicalassistance for rehabilitation, andmakes mobility – and everyday life– easier for the disabled. It has alsoset up a door-to-door taxi service,which uses specially equippedvehicles, and promotes public andprivate projects designed to

eliminate impediments tocommunication and movement inbuildings and cities.

In 2004, Fiat Auto donated two FiatUlysse minivans valued at around48,000 euros to Fundosa, to be usedfor transporting the disabled.

� �

Community involvement inWisconsin

In 2004, CNH provided a totalof around 970,000 dollars,equivalent to 780,000 euros, tosupport social initiatives in NorthAmerica, principally in Racine,Wisconsin, home to one of thecompany’s plants. Seventy percentof this amount consisted ofcharitable gifts to non-profitorganizations that help thedisadvantaged, while 30% wasdonated for cultural projects such

as libraries and museums, as wellas initiatives supporting thecommunity’s economic growth.CNH contributed toapproximately three hundredInstitutions and Organizations inthe United States.

� � Two pictures attesting toTeksid’s commitment for Brazil:children’s books donated tokindergartens and the employees’solidarity chain

� The Giovanni e Marella AgnelliArt Gallery

� Professional training promotedby Iveco in Egypt

Solidarity on wheels

Community involvement in Brazil

During the year 2004, Teksidcontributed 64,600 euros to fundsocial projects in Braziliancommunities.

Natal Solidário, the aid campaignthat started four years ago for Valedo Jequitinhonha, the poorestregion in the state of Minas Gerais.Teksid’s employees personally collectand distribute food and medicinesto the local population, with thesupport from the company medicalservice.

The Salao Do Incontro project aimsat providing job training forteenagers living in metropolitanareas near the Teksid plant throughhandicraft courses. Teksid sees tothe building and furnishing of thetraining centers.

The Creches project, where Teksidhelps twelve nursery schools(“creches”) in the areas around thefactory, providing books and othermaterials.

Lar Efatà is a children’s home, fororphans and abandoned or abusedminors, which Teksid aided bydonating the building and providingfinancial contribution for running itsactivity.

In 2004, Fiat Auto supported non-profitassociations and organizations intheir work, choosing projects withsignificant cultural or charitable merits.

In most cases, Fiat helped these groupsby donating automobiles, including:

- The special Michael Schumacherversion of the Fiat Stilo to UNESCO.

- A Fiat Idea 1400 Emotionpersonalized by Naomi Campbell, toANLAIDS, Italy’s national associationfor people suffering from AIDS.

- A Fiat Idea to the Telethon televisionprogram, to be presented to anindividual or family with a geneticdisease.

In addition, a number of vintagesweatshirts bearing the 1930s Fiattrademark were auctioned during afundraising event at a London’sexclusive club. Proceeds, amountingto over 110,000 euros, were donatedto UNICEF.

Corporate citizenship in Turin

Over the years, the Group has helpedmany important initiatives get underway, and still continues to work closelywith the associations, consortia andfoundations that promote the growthand development of Turin and itssurroundings.

The Fiat Group is a partner in theTurin Wireless District and, throughits main Sectors, provides financialsupport for its goals. In 2004, thiscontribution, including the researchactivity carried out by the CRF (Fiat

■ ■ ■

Community Investments

Research Center), amounted to280,000 euros.

The project aims at stimulating a newentrepreneurial spirit in Piedmontand ensuring that the region willbenefit in economic and employmentterms.

Together with other public andprivate groups, Fiat promotes theStrategic Plan for the City of Turinthrough the Associazione TorinoInternazionale, and it supports theAssociazione Torino Finanza, of whichit is a founding member.

Training for technicians in Egypt

Together with the Salesian’s DonBosco Institute, Iveco embarked onan important training initiative inCairo, where it has a significantcommercial presence: a courseaddressed to young mechanics anddesigned to ensure that Egypt’s futurerepair technicians keep pace withtechnology.

The course spans over three yearswith classes of 16 young men and itrepresents an interesting careeropportunity for the people involved.

�

■ ■ ■


The most promising students willreceive a scholarship from Iveco.

Iveco supplies the Don BoscoInstitute with all necessary equipment,including mechanical components,engines, advanced diagnosticssystems and textbooks. The companyalso provides educational support.

�

Giovanni e Marella AgnelliArt Gallery

The Giovanni e Marella Agnelli ArtGallery was created with the aim ofspreading the knowledge of art andenhancing the image of Turin as acultural city. The Gallery is the final stagein the process of transformation of theLingotto which lasted more than twentyyears and was commissioned by Fiat toRenzo Piano.The collection of works of art thatbelonged to Giovanni Agnelli and hiswife, Marella, are on permanentexhibition in a gallery located in astructure, called the “scrigno” (jewelbox), suspended on the roof of theLingotto in Turin, Fiat’s formermanufacturing plant.It houses 25 extraordinary masterpieces(23 paintings and two sculptures)ranging from the eighteenth century tothe middle of the twentieth.The Gallery has five other levels belowthe “scrigno” that host temporaryexhibitions, an art education center,offices and a bookshop.In addition to the expenses connectedto the restructuring of the Gallery, Fiatprovides it with financial support for themanagement of its activities.

■ ■ ■


Zero Hunger, as Brazil’s socialintegration policy is called, aims toguarantee basic rights for everyone:the right to food, health, education,social security and a job. Throughtargeted initiatives, Zero Hungertries to break the vicious circle ofpoverty and hunger, providingdisadvantaged families with socialand economic support. In March2004, Brazil’s President Luiz InácioLula da Silva and other members ofhis administration signed anagreement with Fiat that formalizedits participation in various socialintegration programs.

Esportista Cidadão (Urban Athlete),is a vast educational program,addressed to 700 children and teensfrom Belo Horizonte, and aimed atoffering young people a betterfuture. The program, which waslaunched in 1998, promotesentertaining, sports and culturalactivities and related initiatives.Young people are offered periodicmedical and dental visits, as well aslearning support, while families areprovided with social aid andnutritional guidance.

The program Árvore da Vida (Treeof Life) provides educationalsupport for the young peoplebelonging to Betim’s community,and fosters social integration.Promoted by Fiat in 2003 under thesponsorship of the Italian Embassy,the project consists of manyinitiatives: literacy courses, sportsand cultural activities, vocationaltraining in response to the needsof the local market.The program is expected to involve6,000 families in six years. Theseefforts, which involve public andprivate entities, non-profitassociations and schools, aim atpaving the way for a profound socialand economic transformation.

Recofiat, vocational school ofelectromechanics, is a jointinitiative promoted by Fiat and itssales network in Rio de Janeiro.Targeted at young people agedbetween 15 and 16, the coursescombine classroom instructionwith paid stages at the Fiatdealers’ premises. The schoolstarted its activity in 1996, andhas since then trained over 500people. 70% of them wereemployed by dealers or machineshops.

In 2004, Magneti Marelli funded thelaunch of vocational training schoolsat its plants in Brazil. These schoolsare part of the “Formare” projectcreated by the non-profit IochpeFoundation. The goal is to offer betteremployment opportunities to youngpeople belonging to lower socialclasses.

Three hundred company employeesvolunteer to teach at the one-yearcourses. Travel allowances,scholarships, food, lodging andhealthcare are offered to students tohelp them attend courses.

The Formare project will continue in2005, when it will involve over 3,000young people.

� Young Brazilians involved in socialintegration projects

� Trainees at the vocational schoolfinanced by Magneti Marelli

��

Fiat in Brazil: for a better life

The numerous projects launchedin Brazil attest to Fiat’scommitment to cooperate withinstitutions in fighting themarginalization of young people,preventing risky situations andpromoting the culturaldevelopment of new generations.Overall, in 2004 the Groupdevoted 211,300 euros toinitiatives in favor of localcommunities in Brazil.

The Turin 2006 Winter Games

The Fiat Group is one of the mainsponsors of the Turin 2006 WinterOlympic Games.

Drawing an international audience,the Olympics will have a significantimpact on the economy and imageof Turin, Piedmont and Italy as awhole, which will be at center stagefor an entire month, attracting theattention of sports fans and themedia. Fiat is contributing to theGames’ success by providing theOlympic Committee with economic

resources, products, professionalskills and organizational know-how.In economic terms, totalcontributions made in the three yearsbetween 2004 and 2006 will be worth40 million euros.Over 3,000 Alfa Romeo, Lancia andFiat brand cars and more than 1,000Iveco Irisbus buses will be theexclusive means of transport forathletes, journalists, guests andspectators.The 2006 Winter Olympic Gameswill also be a chance to present thesporting side of the Fiat Group andits products to the entire world. Eachbrand is teamed with a particularsport that reflects its spirit: Fiatsponsors Italy’s freestyle, snowboard,

The Alfa Romeo Ski Racing Team,one of the teams sponsored by theFiat Group for the 2006 WinterOlympics

skeleton, bobsleigh, hockey andcurling competitors; Lanciapromotes figure skating; Alfa Romeosupports the Alpine skiing events;and Iveco backs cross country skiing,ski jumping and short track speedskating.

Fiat’s commitment to the Olympicsis yet another expression of theGroup’s historical role in Turin’s socialand economic life, while theParalympic Winter Games spotlightits work on behalf of the disabled.

Sports and entertainment forTelethon

The Fiat Group contributed directly to

Telethon’s work in fighting genetic

diseases.

No fewer than six teams fielded by the

Group took part in the “500 Mile Kart

Challenge”, the go-kart race held in

downtown Milan, under the banner of

solidarity. The event involved

personalities from the worlds of show

business, sports, culture and politics.

As the race’s main sponsor, the Group

was represented by Fiat, Lancia, Alfa

Romeo, Fiat Light Commercial Vehicles,

Iveco, Juventus, Ifil and Ferrari F1.

■ ■ ■

Commercial Initiatives with a Social Impact

Protecting arts and nature

In 2004, the Fiat Group donated over50,000 euros to support projects andinitiatives of outstanding cultural andartistic value. Among them are:

• FAI, the Italian EnvironmentalFoundation, committed to restoreand open to the public Italy’s artisticand environmental heritage.

• The Consulta per la Valorizzazionedei Beni Artistici e Culturali di Torino(Advisory Board for the Restorationof the Artistic and Cultural Heritageof Turin), of which Fiat is a founding

member. Since 1987, it has beenworking to restore Turin’s historicbuildings.

Innovation culture

The Italian National Innovation Awardis the “Champions’ Cup” of innovativeentrepreneurial ideas. In 2004, thesecond annual awards ceremony washeld in Turin and organized by thePolitecnico Business Incubator incooperation with the YoungEntrepreneurs of Confindustria. Theaward’s goal is to promote a culture ofinnovation and provide concretegrowth opportunities for newCompanies springing from the ideasof university students and researchers.The Fiat Group provided a prize of20,000 euros in support of the initiative.

■ ■ ■


Lingotto and the concert seasonsorganized by the AssociazioneLingotto Musica. In 2004, Fiatcontributed as the main sponsor tothe association’s offerings, andsupported the program for Italy’syoung musical talents promoted bythe Associazione De Sono.

Maserati also sponsored musicevents, participating as a partner inthe 82nd Arena di Verona OperaFestival.

In Poland, Fiat Auto supported theBielsko-Biala Polish Composers’Festival, the Tychy Classical GuitarCompetition, and the “YoungMusicians of Europe” concert givenon the occasion of the country’saccession to the European Union.

Fostering sustainable agriculture

CNH, with its New Holland brand,joined the Slow Food movement forthe latter’s Terra Madre (MotherEarth) initiative, the event that sawfood communities from all over theworld converging on Turin in October2004 to work together for the futureof agriculture. Participants rangedfrom Egyptian producers of driedmangoes from Burkina Faso to theirBolivian colleagues who harvest Brazilnuts in the country’s Pando region,and from Madagascar’s zebu herders

Fiat and music

Most of Fiat’s initiatives in support ofmusic are linked to a historic site, theformer Lingotto car plant.

Since 1987, the former factory hostedconcerts by the RAI OrchestraSinfonica Nazionale and the WienerPhilharmoniker.

Later, in the plans drawn up by RenzoPiano for Lingotto’s transformation,a central role was reserved for thenew Giovanni Agnelli Auditorium.Over the years, the Group has neverceased to support music at the

■ ■ ■


to Iceland’s producers of organically-raised lamb. A total of 5,000 peoplefrom 131 countries attended theevent, representing the manycommunities that cultivate andproduce food sustainably. Expertsfrom New Holland and Slow Foodwill analyze soils, cultivation methodsand farming issues in a number ofareas in Italy and around the world,working out new ways for achievingprogress towards quality agriculture,in the respect of environmentalconditions and needs of the sectorworkers.

� The “Terra Madre” initiative

� Brazilian students involved in theVocê Apita educational project

�

Italian safe driving championship

Alfa Romeo, Iveco and Magneti Marelli

are sponsors of the Italian Safe Driving

Championship. Backed by the Prime

Minister’s Office and the Ministry of

Infrastructures and Transport, the

event is open to young people aged

between 18 and 25.

The goal is to make them aware of

their own limits and those of the

vehicles they drive. In particular, the

staff, headed by the Championship’s

founder and organizer Andrea De

Adamich, will try to give participants

a good grounding in safe driving

techniques.

Fiat Group Companies have always

considered road safety as one of the

most important contributions they can

make to their customers and society

in general. The sizeable R&D

investments they make in order to

improve safety are a practical

demonstration of this belief, as are

the many awareness-raising campaigns

they have conducted over the years.

In this context, the Group’s decision

to sponsor the Italian Safe Driving

Championship is yet another

contribution to introducing intelligent

driving methods and techniques,

helping young people find good role

models, and creating the conditions

for safer travel.

In Brazil for Young People

Over the years, the Fiat Group’scommitment in Brazil took theform of many important initiatives,mainly targeted at young people.Such programs aim at promotingsustainable mobility, traffic safety,social integration, and raisingyoung people’s awareness of theimportance of protecting theenvironment and the country’sartistic heritage.

Overall, the Group’s financialcontribution for the projectspromoted in Brazil amounted to889,300 euros in 2004.

Você Apita is part of a wider programthat the Fiat Group promoted eightyears ago with the aim of educatingyoung people to sustainablemobility. The objective is to raisepeople’s awareness so as to improvethe quality of life in cities.The program was launched in 1997in cooperation with the BrazilianMinistry of Education, and in thebeginning it consisted in providingschool students with educationalmaterial on road safety. Since 2002,the initiative has widened its reachto tackle issues such as the right tomobility, fundamental human rights,life in society, respect for theenvironment.

Sponsored by UNESCO, theprogram has reached 15 millionstudents all over Brazil.

In 2004, the Fiat Group promotedthe competition Tesouros do Brasil(Treasures of Brazil) under thesponsorship of the Brazilian Ministryof Culture, the Ministry of Education,the Institute for the NationalHistorical and Artistic Heritage, andUNESCO.The goal of this initiative is to protectBrazil’s historical, artistic and naturalheritage by identifying the assets

�

■ ■ ■


underpinning the cultural identity ofthe country’s neighborhoods, citiesand regions.

This commitment, which dates backto 1999, has inspired a series ofimportant projects, including the“Portraits of Brazil” film competition,the “Brazil as I see it” photo contest,and the literary prize entitled “Apoem called Brazil”.

The “Treasures of Brazil”competition was open to all Brazilianelementary and junior high school

students, who teamed up in groupsof five or more to present historicalresearch projects dealing with anaspect of local culture or traditions.Approximately 13,600 studentsparticipated in the initiative,submitting a total of 1,200 researchpapers.

In 2004, CNH promoted the Water,Brazil’s Health project, which raisedBrazilians’ awareness of theconsequences of polluting andwasting water. The roadshoworganized by CNH featured nineconcerts attended by over 15,000people in nine Brazilian cities, as wellas theater seminars that involved2,000 children from the country’spoorest urban areas.

Supporting sports in Poland

In 2004, Fiat Auto Poland continuedto support a series of sports andcultural events that aimed atstrengthening the company’s bondwith the country.

In particular, Fiat Auto Poland wasthe main sponsor for the Tour dePologne and the BKS Stal, thewomen’s volleyball team that wonthe national championship for thelast two years.

At the local level, Fiat Auto Polandsupported the second annual TyskieKryterium Fiata bicycle raceorganized in the city of Tychy, andsponsored the XII Fiat Footrace inBielsko-Biala. As part of anagreement with the Polish OlympicCommittee, the company alsopresented a Fiat Stilo to each Polishathlete who won gold medals atthe Athens Olympics.

Fiat also helped celebrate Poland’saccession to the European Unionthrough its support for the initiative“Cycling towards Europe”.

As part of its attention to culturalinitiatives, Fiat Auto Polandsponsored the Italian StudiesConference organized by Krakow’sJagiellonian University.

Total contributions amounted to286,000 euros.

Autonomy

In 1995, Fiat Auto launchedAutonomy: a program designed tofacilitate and improve mobility forthe disabled.

Convinced that making sure thatthis fundamental right is availableto all is an essential part of a carmaker’s corporate responsibility,Fiat Auto embarked on a broad-based array of initiatives coveringmany different areas and involvingplayers that include medical boardsassessing fitness to drive,

rehabilitation centers, the ItalianMinistry of Health, the ItalianMinistry of Infrastructures andTransportation, as well as all mainassociations for the disabled.

The program has been extendedto people with sensory, cognitive,motor and psychic disabilities of allkinds, according to evolutions inthe national regulations.

The most important feature of theAutonomy program is its networkof 13 “Mobility Centers” alreadyoperating in Italy. Other threeCenters are about to open and twoare being developed.

These facilities help disabledpeople learn to drive. As part of thefree services offered at the MobilityCenters, qualified personnel helpaspirant drivers with disabilities tryout their driving, motor, cognitive

and sensory skills on sophisticatedsimulators that also make it possibleto identify the kind of adaptiveequipment they need. In 2004, over850 tests were carried out.

The Autonomy program also makesit possible to install advancedadaptive equipment, for driving ortransporting disabled people, onany car or light commercial vehiclein the Fiat range.

The program also includes a specialfinancing and aid package thatsupplements tax reliefs provided

for by the Italian government(4% VAT, reduction of personalincome taxes, relief from provincialregistration tax, relief from road tax).Thus, disabled drivers areeligible for discounts of up to14% on new vehicle purchases,low-interest loans from SAVA, anda bonus for the purchase of theirnext car.In 2004, 12,000 Autonomy vehiclesproduced under the brands Fiat,Lancia and Alfa Romeo were soldin Italy, compared with 6,700 in theprevious year.

Together with Targarent, theGroup’s rental car company, Fiathas also introduced a program thatenables drivers with disabilities torent specially equipped vehicles atItaly’s major airports.

The logo of the Autonomy programand a Fiat Group vehicle specificallyequipped for the disabled

Autonomy participates in the majorevents concerning the automotivefield, including motorshows, theExposanità healthcare exhibition,the Bologna Trade Fair, and Turin’sParalympic Day.

In 2004, the program sponsoredsome athletes who are a living proofthat disabled people can be self-sufficient: among these, Alfredo DiCosmo, the only disabled drivercompeting on the Italian GT racingcircuit.

Thanks to all of these activities, Fiat

■ ■ ■


■ ■ ■

Socially Sustainable Business Initiatives

Auto was involved in the CorporatePartnership program promoted bythe European CommissionDisability Unit and received anaward from the EuropeanCommission’s Employment andSocial Affairs Directorate Generalin recognition of its activeparticipation in the program.

For further information on theAutonomy Program

Toll-free number 800 838333

Mobility CenterCoordination 055 33 14 59

055 32 15 537

Website: www.fiatautonomy.com

As Italy’s largest manufacturingenterprise, the Fiat Group has a widerange of dealings with institutions atall levels: local, national andinternational.

In accordance with the Group’s corevalues and the principles expressedin the Code of Conduct, dealingsreflect a spirit of openness andconsistency.

This network of relationships providesvital input to all levels of the publicdecision-making process: generalinformation about market trends andthe performance of the Group’sCompanies; communication onissues connected to production sitesand workers: transport, traffic, housingsettlements, recreational centers;production needs both in financialand technological terms; economicpolicy issues such as training, jobflexibility, pension plans, modalitiesof the general economicdevelopment.

In such a vast field of activity, in termsof both contents and number ofplayers, the main problem for theGroup is that of establishingconsistent and orderly relations withthe stakeholders, in coordination withthe external communication function.

Obviously, there can be no singlenegotiating table with such differententities. Nevertheless, the Fiat Groupbelieves it is fundamental, also forthe future, to pursue the maximumtransparency and timeliness in itsrelations with all institutions.

ERTICO, European Road TransportTelematics ImplementationCoordination Organisation, a groupdedicated to the development ofintelligent transport services andsystems that will contribute to a moresustainable mobility.

EUCAR, European Council forAutomotive R&D, which coordinatesresearch and development activitiesamong the main Europeancarmakers.

EUROMOT, The EuropeanAssociation of Internal CombustionEngine Manufacturers, a nonprofitorganization serving the interests ofIC engine makers supplying the EUmarket.

IRU, International Road TransportUnion, which assists bus and coachas well as taxi and truck operatorsthroughout the world.

SAE International, Society ofAutomotive Engineers, the premiersociety dedicated to advancingmobility engineering worldwide.

At the national level, the Fiat Groupbelongs to a number of majorassociations, including:ANFIA, Associazione Nazionale fraIndustrie Automobilistiche, theItalian National Association ofAutomotive Industries.

AICQ, Associazione Italiana per laCultura della Qualità, the ItalianAssociation for Quality.

AILOG, Associazione Italiana diLogistica, the Italian Logistics andSupply Chain ManagementAssociation.

Relations with public institutions must be transparent andinspired by Group values. The Group will fully co-operate withregulatory and governmental Bodies within the context of theirlegitimate activity.


The Fiat Group representativesactively participate in all of the majorinternational associations in theautomotive sector:

■ ■ ■


ACEA, Association desConstructeurs Européensd'Automobiles, which represents thethirteen major European car, truckand bus manufacturers in the EU.

ECG, European Car-Transport Groupof Interest, which groups togetherthe 54 leading European vehiclelogistics companies.

EIRMA, European Industrial ResearchManagement Association, which aimsat improving innovation throughmainly market-centered research anddevelopment activities.

ENGVA, European Natural GasVehicle Association, whose missionis to develop a market for NGVsthroughout Europe.

ERT, European Round Table ofIndustrialists, which aims at promotingthe competitiveness and growth ofEurope’s economy.

■ ■ ■

Institutional Relations■ ■ ■

Relations with Associations

Fiat maintains extensive links withthe major national and internationalmedia, as well as with local media,particularly in the areas surroundingthe Group’s manufacturing sites.

In communicating information, theGroup assigns the utmostimportance to:

• Complying with the Code ofConduct,

• Respecting the rules of journalism,

■ ■ ■

110

• Ensuring that the informationprovided is clear and timely,

• Equal treatment for all channelsof information,

• Willingness to provide regularinformation, and

• Preparing quality informationalmaterial.

The press office deals chiefly witheconomic, financial, labor, ecologicaland environmental issues, scientificresearch and innovation, culturalmatters and general topics affectingthe Group and requiring mediacoverage.

In addition, the main operatingcompanies (Fiat Auto, Ferrari,Maserati, CNH, Iveco, MagnetiMarelli) have their own internalpress offices that handle mediacontacts in Italy and elsewhere forinformation regarding theirproducts and marketing activities.

In 2004, the Fiat press office issuedover 50 press releases, organizedfour press conferences andenabled journalists and reportersto listen to the webcast conferencecalls in which the Group’s quarterlyresults are released.

The press office also dealt withday-to-day requests from themedia for interviews, informationalmaterial and photographs.

The Group’s new website featuresa special section for the media, the“Press Room”. Updatedcontinually, this section containspress releases and otherinformation and materialspecifically prepared for journalists:press files with essential data aboutthe operating Sectors, financialhighlights, breakdowns ofemployees by sector andgeographical area, major facilitiesand research centers, interviewswith corporate leadership, bios andphotographs of the Group’smanagement team, downloadableproduct photos, and presscontacts. A mail alert service is alsoavailable to inform readers eachtime the site is updated.


Fiat S.p.A. Communications

Via Nizza 250

10126 Turin – Italy

Tel. +39 011 00 63088

Fax +39 011 00 63798

[email protected]

www.fiatgroup.com

■ ■ ■

Relations with the Media

AIPnD, Associazione Italiana Provenon Distruttive, the Italian Associationfor Non-Destructive Testing andMonitoring Diagnostics.

AIRI, Associazione Italiana per laRicerca Industriale, the ItalianAssociation for Industrial Research.

ASSONIME, Associazione Italiana frale Società Per Azioni, The AssociationFor Italy’s Limited Liability Companies.

ATA, Associazione Tecnicadell’Automobile, the ItalianAutomotive Engineering Association.

CEI, Comitato Elettrotecnico Italiano,the Italian ElectrotechnicalCommittee.

C.S.A.O., Centro Sicurezza Applicataall'Organizzazione, the OrganizationalSafety Center.

CUNA, Commissione tecnica diUnificazione nell’Autoveicolo, theItalian technical Commission forAutomotive Standardization.

S.I.S.M, Società Italiana di ScienzeMicroscopiche, the Italian Society forMicroscopical Sciences.

TTS Italia, Telematica per i Trasportie la Sicurezza, the NationalAssociation for Telematics forTransport and Safety.

UNI, Ente Nazionale Italiano diUnificazione, the Italian NationalStandardization Body.

Fiat also belongs to Confindustria,the Confederation of ItalianIndustries, through the latter’sregional organizations andrepresentative offices.

The Group also actively contributesto the activities of the Italian AspenInstitute, the Associazione degliAmici dell’Accademia dei Lincei, andthe Associazione Guido Carli.

■ ■ ■ Commitmentsfor the Future

ECONOMICRESPONSIBILITY

● Inclusion of Corporate SocialResponsibility in the corporatestrategies of the Fiat Group

● Increase the Company’s value andcompetitiveness

● Develop activities to assessrespect of the Code of Conductwithin the Group

● Include all suppliers in amonitoring system for theapplication of the principles setforth by the Code of Conduct andthe Compliance Program

● Further extend the application ofthe Environmental ManagementSystem

● Increase the number of ISO14001-certified production sites

● Enhance technological R&Dactivities that ensure the lowestenvironmental impact of products

● Develop processes that guaranteethe integration of businessobjectives with environmentalprotection

● Strengthen relations withstakeholders and theircommitment on social-environmental issues

● Focus commitment on projectshaving a high social impact for thewellbeing of communities wherethe Fiat Group operates

● Increase training activities thateducate about socially-sustainablebehaviors

● Ensure commitment to thedisadvantaged and equalopportunities in general

ENVIRONMENTALRESPONSIBILITY

SOCIALRESPONSIBILITY

■ ■ ■

111

05

Appendix

114 Methodology

115 Report ofthe Auditing Firm

117 Main PerformanceIndicators

119 Glossary

123 AssessmentQuestionnaire

Fiat Group www.fiatgroup.com

Fiat Autonomy www.fiatautonomy.com

CRF (Fiat Research Center) www.crf.it

Elasis www.elasis.it

GRI www.globalreporting.org

CSR-SC www.welfare.gov.it

London Benchmarking Group www.lbg-online.net

OSIF (Monitoring Center for Businessand Financial Sustainability) www.osif.it

■ ■ ■

114 Appendix

What is a SustainabilityReport / Triple Bottom Line

A Sustainability Report is the voluntaryreport on the company commitmentto implementing Social Responsibilitypolicies.

Through the identification ofmonitored indicators, it informs:

• stockholders

• lenders

• employees

• suppliers

• customers

• commercial network

• institutions

• environmentaland consumers’ associations

• local communities

• future generations

about initiatives and programs,thereby involving them in sustainabledevelopment processes.

The Fiat Group, as well as other largeItalian and international companies,decided to adopt the Triple BottomLine methodology, an integratedapproach to assess, in a definiteperiod of time, the corporate socialresponsibility, i.e. the economic,environmental and socialperformance of the company (literally,“bottom line” indicates the last lineof the financial statements, where theprofit is displayed).

Contacts

This Report is available on the

website www.fiatgroup.com

or upon request:

Fiat S.p.A. Communications

Via Nizza 250 – 10126 Turin - Italy

Tel. +39 011 00 63088

[email protected]

■ ■ ■

MethodologyMethodology

The Sustainability Report of the FiatGroup was drawn up according tointernational standards - GlobalReporting Initiative, LondonBenchmarking Group – also takinginto account indications madeavailable by rating agencies.

The Global Reporting Initiative (GRI)is an independent internationalorganization that develops anddisseminates guidelines for reportingon the economic, environmental, andsocial dimensions of companies.

The London Benchmarking Group(LBG) developed a methodologythat allows the identification andclassification of all initiativesundertaken by companies insupport of the local communitieswhere they operate.

In addition, the Fiat Group conformedto the requirements proposed by theItalian Ministry of Labour and SocialPolicies in the framework of theCorporate Social Responsibilityproject. In particular, the identifiedindicators take into account,consistently with the characteristicsof the Company, those proposed bythe Ministry and, starting from thisyear, they will be monitored bymanagement, who will have to assessthe introduction and developmentof socially responsible criteria andinitiatives in investment plans.

Scope of the Report

Data and information contained inthe Triple Bottom Line Report refer,except where differently stated, toall Companies and Sectorsbelonging to the Fiat Group: FiatAuto, Ferrari, Maserati, CNH, Iveco,Magneti Marelli, Teksid, Comau,Business Solutions, Itedi.

The balance sheet data of foreignsubsidiaries are translated into eurosby using the exchange rates in effectat the end of 2004. The statementsof operations of foreign subsidiariesare translated using the averageexchange rates for the year.

A brief overview of this SustainabilityReport was examined by theBoard of Directors of Fiat S.p.A.on March 24, 2005.

Useful links

■ ■ ■

115Appendix

■ ■ ■

Report of the Auditing Firm

■ ■ ■

116 Appendix

■ ■ ■

117Appendix

Area Indicator GRI CSR-SC Page

Ethical Audit Implementation of the Code of Conduct HR1; HR8 7.6 18-21

Reporting of Violations HR9 19

Violations of the Code of Conduct HR10 19

Corporate Governance Board of Directors LA11 2.5 6-7

Presence of independent directors within the BoD LA13 2.5.1 27

Presence of minority stockholders within the BoD 2.5.2 27

Frequency of BoD meetings 2.5.3 27

Oversight committees 6.3; 6.3.1; 6.3.2 27

Operating performance Financial data EC7; EC9 5

Value added EC1 24

Stockholders/Partners and financial community 2

Stock Performance 2.2; 2.3 25

Stockholder base 2.1 26

Stockholder protection 27

Relations with stockholders 2.7 28

Communications and reporting activities 2.7.1 28-29

Institutional presentations and documents 2.7.2 28

Roadshows 2.7.1 28

One-to-one meetings 2.7.1 28-29

Lenders Volume and use of debt EC6 5.3 30

Rating 2.4 30

Low-rate loans EC9 6.4 31

Human resources Labor cost trend EC5 1.6; 1.6.1 32

Incentive systems EC5 1.6.3 32

Customers EC1; EC2 3

Portfolio 3.1 33-37

Relations with customers 3.3 38-41

Access channels 38

Customer loyalty-oriented measures 3.3.2 39-40

Customer satisfaction-oriented initiatives EC2 3.3.1; 3.1.2 40-41

Advertising PR9; PR10 42

Litigation with customers 42

Suppliers EC3 4

Supplier portfolio EC11 4.1.1 43

Management policies and instruments EC11 4.1.2 43-45

Communication with suppliers 4.1.3 43-44

Litigation with suppliers 45

Environment 8

Environmental certifications 8.2 51

Environmental training 8.2 50-51

Environmental policies EN19; EN13; EN18 8.2 48-49

Research and innovation EN35 8.2 56-64

■ ■ ■ Main Performance Indicators

Area Indicator GRI CSR-SC Page

Environment Energy consumption, materials and emissions EN10 8.1 70-81

Air emissions EN10; EN8; EN30 8.1.4 70-81

Water dumping 8.1.5 70-81

Waste EN2 8.1.6 70-81

Health and safety LA7 1.11

Accidents at work and diseases LA7; LA5 1.11.1 87-88

Projects 1.11.2 87-88

Human resources 1

Equal opportunities LA10 1.3 85-86

Female and male personnel LA11 1.3.1 85-87

Policies for disabled peopleand minorities in general LA11 1.3.3 85-87

Staff composition LA1 1.1 84-87

Age LA1 1.1.2 84

Seniority in grade LA1 1.1.3 84

Geographical origin LA1 1.1.4 85

Educational qualification LA1 1.1.7 84

Turnover LA2 3.6 87

Inter-group transfers LA1 1.2 87

Training LA9; LA12 1.4 88-89

Training projects LA9; LA12 1.4.1 88-89

Training hours by category LA12 1.4.2 88-89

Recruitment and selection 1.2.1 90-91

Internal communications LA17 1.10 94-96

Industrial relations LA3 1.9 91-94

Respect for freedom of associationand the right to collective bargaining LA3 1.9.1 91-94

Percentage of trade union membersamong employees LA3; LA4; LA13 1.9.2 91

Benefits for employees EC12 1.12 97

Community SO1 7

Charitable gifts EC10 99-102

Community investments 103-104

Commercial initiatives with social impact 105-107

Socially sustainable business initiatives 108

Institutional relations SO1 7.3 109

Relations with associations SO1 7.3 109-110

Relations with the media PR9; PR10 7.4 110

■ ■ ■ Main Performance Indicators

■ ■ ■

118 Appendix

■ ■ ■

Glossaryof the Main Terms related to CSR (Corporate Social Responsibility)adopted by the Automotive Industry

Active Safety: All the mechanical characteristics that contribute to the dynamic performanceof the vehicle on the road: road holding, prompt and effective brakeapplication, drivability and ease of handling; responsive and performingpower units.

Car Sharing: Shared utilization of a vehicle fleet by several people. This servicesupplements collective transport and is geared to the improvement ofmobility and the environment.

CFC: Acronym for ChloroFluoroCarbons or halogenated hydrocarbons, used inthe recent past in air-conditioning equipment and refrigerators. Theautomotive industry has replaced these compounds, responsible forchemical reactions that deplete the ozone layer, with other substancesthat have no detrimental effects.

CNG: Compressed Natural Gas. To store natural gas aboard a vehicle it isnecessary to compress it to high pressures (generally 200 bar). Natural gasis mostly composed of methane.

Code of Conduct: It defines the commitments and the conduct principles adopted by aCompany in its relations with business, employees, environment andexternal communities. For the Fiat Group, it is an integral and substantialpart of the work contract.

Cogeneration: Combined production of electric and thermal energy, on the conditionsdefined by the Authority for Electric Energy and Gas.

Combustion: Reaction of organic substances with oxygen present in the atmosphere:it produces carbon oxides, water vapour and thermal energy.

Corporate Governance: Set of rules for the management of an organization aimed at the creationof social and economic value for all entities involved.

Corporate Social Responsibility: Companies’ voluntary inclusion of social and environmental commitmentsin their commercial initiatives and relations with stakeholders (Green Paperof the European Commission).

CSR-SC: Project developed by the Ministry of Welfare based on the concept of CSRas set forth by the European Commission. The project aims at promotingthe culture of social responsibility within the economic system and increasingcorporate awareness on sustainable development.

Defined Contribution Plans where the Retirement Fund guarantees the payment of a determinedcontribution in each working period (weekly, fortnightly, monthly). In thiscase, there is no guarantee about the life annuity, which will be calculatedat the moment of retirement. The financial risk rests on the employee.

Defined Retirement Benefit Plans: Plans where the Retirement Fund guarantees a life annuity, which usuallycorresponds to a percentage of the last salary or to an average salarycalculated over a certain number of working years.In this case, the Company’s contribution varies over the years so as toensure the existence of a capital (liability) sufficient to pay the promisedannuities. The financial risk rests on the Fund.

■ ■ ■

119Appendix

(CSR)

Retirement Plans:

■ ■ ■

120

Eco-Audit: Systematic checking and monitoring of the environmental managementsystem. It is one of the instruments used for environmental certification.

Eco-Efficiency: Production of more goods and services using a smaller quantity of resources,generating less refuse and contaminants.

Elettra Park: A car park where engined vehicles are exchanged with electric vehicles.

EMS: Environmental Management System, i.e. the introduction of a specificCompany function that copes with environmentally related problems, risksand opportunities.

Energy Recovery: Use of the thermal energy released by waste combustion processes.

Environmental Certification Certification procedure of a production site, performed by an accreditedOrganization, on the basis of the main international standards: the documentcertifies a good environmental management of the site.

Environmental Indicators: Reference parameters that allow measurement of the impact of activitiesor products on the environment.

Environmental Policy: Set of principles and objectives relating to the environmental responsibilityadopted by an organization while performing business.

Fuel Cell: A fuel cell is an electro-chemical device that generates electric energy.Hydrogen and oxygen are recombined in a cell (or "stack") in the presenceof catalysts or a polymeric electrolyte (P.E.M. - Proton Exchange Membrane)and produce electric energy with an extremely high degree of efficiency,with water vapor being the only by-product of this reaction. A vehicle canuse the energy generated in this manner for traction and auxiliary functions.

Global Reporting Initiative (GRI): Independent international organization that develops and disseminatesguidelines for reporting on the economic, environmental, and socialdimensions of companies.

Hybrid Power Vehicle: Vehicle in which the power delivered is made available by several energysources: an electric engine is combined with an internal combustion engine(bimodal power).

Impact on the Environment: Favorable or adverse, total or partial changes to the environment causedby activities carried out by people.

ISO 9001: Standard ensuring quality in the design, development, manufacturing,installation and assistance, issued by the International Organization forStandardization (ISO).

ISO 14001: Standard ensuring quality in the environmental management issued bythe International Organization for Standardization (ISO).

Legislative Decree 231: Legislative Decree of June 8, 2001 that introduced a regime of administrative(but de facto criminal) liability of Companies for crimes against publicagencies (bribery, extortion, etc.) and white collar crimes (false accounting,etc.) committed by company directors or senior managers or otheremployees in the interest or for the benefit of the aforesaid Companies.

Life Cycle Analysis (LCA): It is the analysis of a product (or service) life cycle from the standpoints ofenergy and the environment. Life cycle covers the entire history of aproduct, from raw material extraction to semi-finished and finished productprocessing, use, reuse (if applicable) or recycling/scrapping.

London Benchmarking Group (LBG): Institution whose methodology identifies and classifies all initiativesundertaken by Companies in support of the local communities where they

Appendix

of Production Processes:

■ ■ ■

121Appendix

operate. The codified model identifies four categories of corporatecommunity expenses and investments: charitable gifts, communityinvestments, commercial initiatives with social impact, socially sustainablebusiness initiatives.

Particulate Trap: A trap (or filter) upstream of a vehicle exhaust system to withhold particulates.This technology is a major step forward towards full eco-compatibility ofdiesel engines.

Passive Safety: Structural and product features that contribute to ensure full occupantprotection in case of crash: stiff cockpits, programmed warping body withhigh energy absorption capacity, effective restraint systems (belts, airbags,headrest and seat configuration); interior components designed to attenuatethe risk of injuries in a collision and fire-proof components.

Ppm: Part per million. Unit of measure for low concentrations. It is used todetermine the concentration of a number of air pollutants.

Preventive Safety: Solutions adopted to ensure that the driver is in his/her best psychophysicalconditions and driving fatigue is minimized: ergonomically designedcontrols, anatomic seat configuration, ample visibility, silent running.

Rating: Assessment of a debtor’s, company’s or public agency’s ability to meetdebt obligations.

Recycling: Processing of waste and scrap material through their use in a new productivecycle.

Shareholder: Entities that hold equity investments in a company.

Stakeholder: An individual, community or organization that influences the operationsof an organization or directly or indirectly suffers the repercussions. In thebroadest meaning of the term, stakeholders can be internal (managementand employees) or external (suppliers, customers, investors, businesspartners, local communities, the public agencies, future generations,environmental interests, etc.).

Sustainable Development: Development that, by providing economic, environmental and socialservices to all member of a community, improves quality of life, and meetsthe needs of the present generation without jeopardizing those of futuregenerations.

TOE: Ton of oil equivalent: a conventional unit of energy, corresponding to 10million kcal, which is used to express the calorific power of any energysource.

Triple Bottom Line: An integrated approach to assess, in a definite period of time, the corporatesocial responsibility, i.e. the economic, environmental and social performanceof the company (literally, “bottom line” indicates the last line of the financialstatements, where the profit is displayed).

Value Added: Wealth produced by a company during its financial period, i.e. the differencebetween the gross production and the consumption of goods and services.

Edited by:Fiat SpA Communications

Graphic coordination by:Micrograf – Turin, Italy

Graphic design by:Fantinel & Associati – Turin, Italy

Printed by:Arti Grafiche Giacone – Turin, Italy

Printed in Italy

June 200501ENG

Printed on Fedrigoni Symbol Freelife recycled and environmentally-friendly paper

Quality of Information

How exhaustive is the information? (1 = very little; 5 = very much)

• Fiat Identity � � � � �

• Economic Responsibility � � � � �

• Environmental Responsibility � � � � �

• Social Responsibility � � � � �

• Commitments for the Future � � � � �

Language

How clear is the communication? (1 = very little; 5 = very much)






Fiat Group Programs and Projects

How do you judge the actions undertaken and the objectives stated?(1 = very negatively; 5 = very positively)






Document Assessment

Which sections did you find particularly interesting?

• Fiat Identity �

• Economic Responsibility �

• Environmental Responsibility �

• Social Responsibility �

• Commitments for the Future �

■ ■ ■ Assessment Questionnaire

We invite you to present us, byfilling out this questionnaire,with your suggestions andremarks, which will contributeto the identification of criticalareas and the improvement ofthe following editions.

The questionnaire can besent by mail to the followingaddress:

Fiat S.p.A. CommunicationsVia Nizza, 25010126 Turin – Italy

or filled out online at theCompany websitewww.fiatgroup.com

Remarks and Suggestions:

Fiat S.p.A.Corporate HeadquartersVia Nizza, 25010126 Turin – Italy

Corporate Press Department Contacts:Tel. +39 011 00.63088Fax +39 011 [email protected]

www.fiatgroup.com

2004 SUSTAINABILITY REPORT - FCA Group...5 Highlights for 2004 6 Board of Directors 8 History 12 Organization 12 Corporate Structure 13 Management 15 Outlook for 2005 17 Corporate

Documents