2006 Sustainability Report

Fiat S.p.A.

Corporate Headquarters

Via Nizza 250

10126 Turin – Italy

Corporate Press Department Contacts:

Tel. +39 011 00.63088

Fax +39 011 00.63798

[email protected]

www.fiatgroup.com

Economic, Environmental and Social Responsibility

2006 SustainabilityReport

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2006 SustainabilityReportEconomic, Environmental and Social Responsibility

Progress is the realisation of Utopias. Oscar Wilde

Fiat S.p.A.Registered Office in Turin, Via Nizza 250Paid-in capital: 6,377,262,975 eurosEntered in the Turin Company RegisterFiscal Code: 00469580013

Contents

6 Letter from the Chairman

and the Chief Executive Officer

8 Monitoring of Group Results

10 Dialogue with Stakeholders

Fiat Identity 16 Board of Directors

19 History of the Fiat Group

22 Profile and Structure of the Group

27 Corporate Governance

Economic Responsibility34 Fiat Group Highlights

36 Map of Alliances

38 Stockholders

42 Lenders

45 Human Resources

48 Customers

65 Suppliers

Environmental Responsibility72 Environmental Management System

76 Implementing Environmental Management Systems

81 Environmental Performance

102 Sustainable Mobility

Social Responsibility124 Human Resources

148 Community

Appendix162 Methodology

163 Report of the Auditing Firm

164 Main Performance Indicators

168 Acclaim for the Group’s Work

173 Glossary

177 Assessment Questionnaire

2006 has been an important year for the Fiat Group, markingthe conclusion of our turnaround efforts which began in July2004. All the targets set at that time have been achieved, andin many cases exceeded.All sectors of activity have reported significant improvement,and Fiat Group Automobiles realised its first trading profitsince 2000. 2006 was also important because we made another stepforward in the introduction of a new cultural framework withinwhich the Group operates, which has its roots on a significantredefinition of the concept of leadership and its relevance inthe running of our businesses.In organisational terms, this has meant adopting clearprinciples of meritocracy in the management of our humanresources, promoting our best employees, making themaccountable and giving them a wide margin of operatingfreedom, all driven by mutual respect and integrity. A constructive dialogue with all stakeholders, transparentbusiness management, and respect for the environment andthe society with which the Company interacts every day arenot marginal elements but instead represent an integral aspectof the way we work and do business.

This is the third Fiat Sustainability Report. It presents asnapshot of a firm that continues to change rapidly. After facinga series of transitions that were fundamental to its history, it isnow preparing to deal with other, just as crucial changes.Having completed the restructuring process, the Group is nowmoving forward into a new phase, the phase of growth, onewhich has been rigorously planned in detail through to 2010.Our commitment for the next four years is to consolidate Fiatas a major international industrial group. This objective will be pursued by combining our strategicdevelopment initiatives with the values of honesty, integrity,and accountability that have guided us thus far. Over the past three years, our approach has enabled us toopen up a constructive dialogue with institutions, trade unions,employees and collaborators, with our industrial partners, andsociety in general.

The same approach will guide us in future, through theimplementation of a growth programme that will demandincreasing effort and energy. On this ambitious journey, we are helped by the fact that weand our stakeholders share the same goal – making Fiat a best-in-class player – and the same method – pursuing sustainablegrowth. In order to offer an ever increasing audience the possibility ofhaving access to the complexity of a group like Fiat, whichoperates in more than 190 countries and in different areas ofactivity, we have followed three fundamental principles:clarity, completeness and reliability of information. Highlights of the results achieved by each Sector are reportedusing clear, direct and simple language, while maintaining aunified vision of the Group. Furthermore, in order to improve the quality and reliability ofthe data we present, we have refined the way we collect themand, when necessary, we have expanded the geographicalscope of reference. The reliability of our information and data is assured by usingthe international standards recommended by the GRI (GlobalReporting Initiative) and accurate controls by the auditing firm.

On the following pages, stockholders, institutional investors,and lenders will find the governance system that has beenadopted to assure genuine transparency in the way in whichthe Group has been run and its financial performance during2006. The results we achieved have not only contributed topromoting confidence in Fiat, as reflected by its improved debtratings and major appreciation of its stock market price, butwill also allow us to distribute a dividend to our stockholdersfor the first time in five years.

Customers, who have been restored to the centre of ourbusiness strategy, may assess the benefits of this newphilosophy and a new relationship based on active listeningand dialogue. We have made enormous efforts to improve thequality of our products, the dealer network, and after-salesservice. We are committed to continuing these efforts to

Letter from the Chairman and the Chief Executive Officer6

Letter from the Chairman and the Chief Executive Officer

improve our commercial organisation and render our serviceseven more efficient, by continuing to invest in product andprocess innovation.

To our suppliers, we offer a comprehensive vision of theactions taken to improve the purchasing process and developpartnership relationships. Over the course of the year, wehave organised a series of meetings to illustrate the progressmade by Fiat and its future goals. The reason for these effortsis that the pride, team spirit, and desire to do better thatsustain our dealers’ loyalty towards our brands depend largelyon them knowing that we are solid partners with the resourcesto carry through with our commitments.

Fiat employees can count on a management of humanresources based on meritocracy, promotion of talent, anddevelopment of individual abilities and skills. The challenges that we face in the coming years force us tokeep the pressure up and continue to demand maximum effortfrom all the men and women at Fiat. We will confront these challenges with confidence, because weknow we can count on an extraordinary pool of human capital,which is our best guarantee for the future.To the persons who work in our Group – and who have done ahard job in the last few years to restore the pride andcredibility of Fiat – we want to express our most sinceregratitude for what they have done thus far.

Using numbers and concrete facts, this report also documentsthe progress made towards sustainable development in respectof the environment, which translates into ecologically efficientmanagement of plants and the realisation of increasingly eco-compatible products, as can be seen by the broad range ofmethane fuelled vehicles and our standard-setting flex-fueltechnology in Brazil. In the area of research, great attentionhas been focused on developing low environmental impacttechnologies.

Fiat’s commitment towards the community is actioned throughvarious major projects designed to combat social hardships incountries like Brazil and new initiatives in Italy and the rest ofEurope. The Autonomy Project confirms our commitment todisadvantaged people. Its goal is to facilitate the mobility ofdisabled persons, with an increasing amount of dedicatedresources and the launch of specific public awareness campaigns.

Delivering on our promises is one of the key values of thenew Fiat.This mentality underlies our decision to present not only thegoals we have achieved but also the Group’s commitmentsover the next several years. Major steps forward have been made in the field ofsustainability.This progress has also been recognised and rewarded with the“Annual Report Oscar 2006,” which Fiat won last year for thequality of its financial disclosures and the Triple Bottom Lineformat used to report economic, environmental, and socialperformance.While we are very pleased by this award, it also provides astimulus for the future. The 2006 Sustainability Report was written specifically with theview of doing even more, and better. And again, this is a promise.

Letter from the Chairman and the Chief Executive Officer 7

Luca Cordero di MontezemoloChairman

Sergio MarchionneChief Executive Officer

In the first Sustainability Report the Fiat Group declared toits stakeholders the commitments that it planned to pursue inthe economic, environmental and social areas.This Report provides a detailed view on the results achievedin 2006.

Monitoring of Group Results8

Monitoringof Group Results

Economic responsibility

Inclusion of Corporate Social

Responsibility in the corporate

strategies of the Fiat Group

Increase the Company’s value

and competitiveness

Develop activities to assess

respect of the Code of Conduct

within the Group

Include all suppliers in a

monitoring system for the

implementation of the

principles set forth in the

Code of Conduct and the

Compliance Program

The Fiat Group Communications Department is assigned responsibility for triple bottom line

reporting. The reporting system and involvement of Group management at all levels was

reinforced in 2006.

The Fiat Group realized better than expected results in 2006: 52 billion euros in revenues (+11%

from 2005), while trading profit doubled to 2 billion euros with improvements in all principal Sectors.

The Group’s net income totalled 1.2 billion euros. The Fiat S.p.A. Board of Directors made a motion

for payment of the first dividend since 2002, totalling 276 million euros for all classes of shares.

Net industrial debt totalled 1.8 billion euros at December 31, 2006. The cash position was very

strong, at almost 8 billion euros. The Fiat debt rating and stock price consequently improved,

generating a yield of 97%, almost double its value.

■ Assessment of compliance with the Code of Conduct by Group employees and collaborators

continued. In response to reports of real or suspected violations of the Code of Conduct,

investigations were carried out by the Group Internal Audit function and Compliance Officers of the

individual Sectors. Further audits were carried out by those entities to uncover conduct that is not

compliant with the principles of the Code.

■ A new Compliance Program pursuant to Legislative Decree 231/2001 was approved by resolution of

the Fiat S.p.A. Board of Directors to receive regulatory amendments to the model fact situations of

white collar crime and market abuse.

In accordance with different procedures from Sector to Sector and in respect of their operating

autonomy in relationships with suppliers and partners, information continued to be exchanged by

Group Sectors on their adoption of the Compliance Program pursuant to Legislative Decree 231/01

and the Code of Conduct.

To facilitate the search for issues within the document, thefollowing table provides a short description ofinitiatives launched and results achieved in 2006 for eachcommitment undertaken in 2004 and a reference to the pagenumber where such issues are dealt with in this Report.

Commitments undertaken by the Group Results achieved in 2006 Page

10

34-35

38-39

43

29-30

67

Commitments undertaken by the Group Results achieved in 2006 Page

Monitoring of Group Results 9

The Group’s commitment to improving the Environmental Management System applied at industrial

sites continued.

The number of ISO 14001 certifications at production sites increased from 89 in 2005 to 96 in 2006.

The Fiat Group is focused on the big issues of environment and safety.

The activities of innovation and development are focused on different technological areas, for

example:

■ development and application of innovative technologies for improvement of engine performance,

reduction of engine and vehicle emissions and fuel consumption;

■ development of technological and system skills in the electronics, online, ICT, and preventive safety

areas in order to improve vehicle safety and performance;

■ development of innovative architecture solutions (body and interiors) and vehicle systems to

improve product performance and distinctiveness in strict compliance with budget limits.

Environmental management is integrated with all corporate activities. One example is represented by

the results achieved in terms of products and processes compatible with the environment and a

constant commitment to training personnel on environmentally friendly behaviour.

Numerous initiatives were undertaken with Group stakeholders in view of continuous dialogue. The

Report illustrates the principal initiatives undertaken in 2006 that involved employees, customers,

suppliers and institutions.

Community investments involved medium and long-term projects carried out in view of contributing

to the resolution of serious social problems, protecting the territory where the Group operates, and

promoting important cultural or artistic initiatives.

The projects undertaken by the Group during the year increased considerably in terms of number

and value.

Training on the Code of Conduct, principles of good corporate governance, environmental issues, and

workplace health continued and expanded.

The Group maintained its commitment to protection of equal employment opportunity. Investment in

the Fiat Autonomy programme continued and expanded in order to provide individual and group

services and transportation to disabled persons. The Terni centre started operations, and the

agreement with the Udine Medical Commission was signed. Fiat was an Official Partner of the Turin

2006 IX Paralympic Games, supported the fifth edition of Paralympic Day, and launched a

communication campaign on the issue.

Environmental responsibility

Further extend the implementation

of the Environmental

Management System

Increase the number of ISO 14001

certified production sites

Enhance technological research and

innovation activities that ensure the

lowest environmental impact of

products

Develop processes that guarantee the

integration of business objectives with

environmental protection

Social responsibility

Strengthen relations with stakeholders

and their involvement in social and

environmental issues

Focus commitments on projects

having a high social impact for the

wellbeing of communities where

the Fiat Group operates

Increase training activities that

educate about socially-sustainable

behaviors

Ensure commitment to the

disadvantaged and equal

opportunities in general

72-80

72-75

102-119

72-99

10-11

140-145

158-159

148-157

29

72

130

135-139

156-157

The Fiat Group and its employees are committed to conductand enhance their relationships with all classes of stakeholdersacting in good faith, with loyalty, fairness, transparency andwith due respect for the Group’s core ethical values.… The FiatGroup is committed to achieving the highest standards of bestpractice in relation to its moral, social and businessresponsibilities towards the people concerned. (Code of Conduct)

The Fiat Group Communications Service was put in charge ofTriple Bottom Line (TBL) reporting in 2006, while respectingthe independence that each of the Group’s Sectors enjoys insetting strategies and working towards its goals in corporatesocial responsibility.During the year, the Group’s website at www.fiatgroup.comwas expanded to include a section on Sustainability with linksto the TBL Report and an e-mail address, [email protected],so as to provide stakeholders with direct access to informationrelating to sustainability matters. In addition to being posted on the Internet, the SustainabilityReport is distributed at the Fiat S.p.A. Stockholders Meeting.Group management receives a copy, in many casesaccompanied by a letter from the Sector’s Chairman of theboard and/or CEO. The 2005 Sustainability Report was alsosubmitted and illustrated, with particular attention to thesection discussing the Group’s relations with its employees, atthe meeting of the Selected Committee of the Fiat GroupEuropean Works Council held on May 12, 2006, and was laterpresented to the Italian employee representatives and labourunions on May 22, during the kick-off meeting for the FiatGroup’s supplemental company-wide collective bargainingagreement renewal negotiations. In addition, over 3,200 copiesof the Report were printed and sent out in response torequests for information.

Stakeholders’ opinions are collected and analysed usingassessment questionnaires available both in hardcopy formatand on-line. Most of the questionnaires received for the 2005Report were sent in by customers. Ratings for the 2004 and2005 Reports were very similar, with stakeholders assigningboth years an average score of 3.53 on a 1 to 5 scale.

TBL assessment questionnaires

(minimum score = 1, maximum score = 5) 2004 and 2005

Score assigned to:

■ Quality of information 3.53

■ Language 3.58

■ Fiat Group programmes and projects 3.47

Average overall score 3.53

Dialogue with Stakeholders10

Dialogue with Stakeholders

Customer 40%

Public opinion 19%

Stockholder 13%

Employee 6%

Non-profit group 6%

Other 16 %

Categories of stakeholder who filled out questionnaires

for the 2005 Sustainability Report (%)

Measures designed to promote stakeholder engagementinclude the many conventions that the Fiat Group organisedduring the year with its dealers and suppliers. Examplesinclude the convention that New Holland, the CNH brand thatis leader in the production of agricultural machinery, organisedto outline the company’s programmes to over 1,500 Europeandealers; the Suppliers' Leadership Conference in which CNHand Iveco met with more than 1,500 suppliers from 25countries, including China, Brazil, Canada and Japan, toillustrate their goals for integrating the two company’spurchasing services; and the Fiat Auto convention that broughttogether over 1,000 suppliers in October.

To promote dialogue with investors, Lingotto hosted the“Investor Day” meeting on November 8 and 9. On thatoccasion, Fiat CEO Sergio Marchionne and the managers of themain sectors illustrated the Group’s growth strategies to 250investors and financial analysts: two days spent scrutinizingfacts and figures, strategies and new products. The Grouppresented its achievements and, even more importantly, itsgoals for the coming four years.

The Group’s many initiatives that foster its relations withassociations and institutions included Iveco’s participation inthe Sino-Italian Green Week in Beijing. The event showcasedthe work that the Italian Ministry of the Environment and theChinese government have done for environmental protectionand sustainable growth: cooperative projects such as the FiatGroup’s supply of natural gas-powered engines for the citybuses in China’s capital.The Fiat Group also continued to implement its 2005agreement with local government in Piedmont (Turin’smunicipal and provincial administrations, and the Piedmontregional administration) to repurpose former industrialfacilities at Mirafiori, provide support to the automotive supplychain and the many firms that depend directly or indirectly onthe auto industry, help retrain and requalify workers, andencourage technological research and development. Early in2006, Fiat and the Piedmont regional administration announced

a wide-ranging cooperative program for hydrogen-poweredtransportation. Through this programme, the Group and theadministration will join forces in a series of local andEuropean-level initiatives over the short, medium and longterm that will put Piedmont at the forefront of the push todevelop the propulsion systems of the future.

Nationally, Fiat participates in the CSR Manager Networkpromoted by ISVI, the Institute for Business Values, and ALTIS,the Postgraduate School of Business and Society at theUniversità Cattolica del Sacro Cuore in Milan. To promotecorporate social responsibility in Italy, the CSR ManagerNetwork provides businesspeople from across the country withopportunities to exchange views, lay out the roadmap toimprovement, dialogue with stakeholder representatives, meetthe leaders who are driving change in Europe and around theworld, and ensure that they are represented at the variousinstitutions.At the European level, Fiat attended the Review Meeting of theEuropean Multi Stakeholder Forum on Corporate SocialResponsibility hosted by the European Commission in Brusselson December 7, where the Group participated in a survey onhow much progress has been made in implementing therecommendations published in the 2004 Forum Report.

Dialogue with Stakeholders 11

Fiat’s CEO and the managers of the main

Sectors of the Group illustrate financial

strategies to investors and financial

analysts during the “Investor Day”.

Brief description of rating/study 2006 2005 2004 internet address

Agenzia Europea di Investimenti

GEIE Standard Ethics

Ratings from EEE (maximum) to E- (minimum) EE- E+ E+ www.agenziaeuropea.it

The Accountability Rating is a proprietary tool

developed by AccountAbility and csrnetwork

for measuring the extent to which companies

have built responsible practices into the way they

do business and how well they account for the impact

of their actions on their stakeholders. It is applied

to the top fifty companies from the Fortune Global 500®,

plus 14 other companies in key sectors.

The maximum possible rating is 100.

In 2006, the highest rating achieved in the automotive

sector was 50, while the lowest was 24. 45 35 25 www.accountabilityrating.com

AXIA – Financial analysis, studies and research

Ethical rating.

A dual range is used:

■ (min) A+, A++, A+++ (max)

■ (min) B+, B++, B+++ (max) B++ – – www.axia.org

The Pacific Sustainability Index rates the quality of

corporate environmental and social reporting,

assigning grades from A+ (max.) to F (min.). B- – B- www.roberts.cmc.edu

In addition, the results of a study by the European Federation

for Transport and Environment (www.transportenvironment.org)shows that Fiat is the only car maker in Europe whose products,with CO2 emissions of 139 g/km, now meet and exceed the 140g/km target which ACEA, the European AutomobileManufacturers Association, is committed to achieve by 2008pursuant to an agreement between ACEA and the EU.

Dialogue with Stakeholders12

Ethical ratings and studies

of the Fiat Group’s CSR

A number of independent analysts and ethical ratingorganisations have published assessments of the FiatGroup’s performance in corporate social responsibility.The following table shows a few of the results of thesesurveys: though it is clear that they do not account for all of

the assessments that have been made of the Group, they arethose that can be considered most significant at the timethis Sustainability Report was drafted. To give an idea oftrends, data is shown for all three years from 2004 to 2006where possible.The criteria used in each assessment differ according to itspurpose and scope. For this reason, a link is provided to thewebsite where further information is available.

The price of greatnessis responsibility. Winston Churchill

Fiat Identity16 Board of Directors

19 History of the Fiat Group

22 Profile and Structure of the Group

27 Corporate Governance

29 Application of the Code of Conduct

30 Evolution of the Compliance Program pursuant to LegislativeDecree 231/2001

Luca Cordero di Montezemolo

59 years old, Chairman■ President of Confindustria■ Chairman of Ferrari S.p.A.■ President of the Bologna International Fair■ President of the Luiss Guido Carli University■ Vice President of UNICE (Union des Industriels de laCommunautée Européenne)■ Member of CNEL (Consiglio Nazionale dell’Economia e delLavoro – National Council for Economics and Labour)■ Member of the Board of Directors of Poltrona Frau,La Stampa, PPR (Pinault/ Printemps Redoute), Tod’s, IndesitCompany, Le Monde■ Member of the International Advisory Board of Citigroup Inc.■ Awarded the title of Cavaliere del Lavoro■ Awarded the title of Chevalier de la Légion d’honneur

John Elkann

31 years old, Vice Chairman■ Chairman of Itedi■ Vice Chairman of IFIL Investments S.p.A.■ General Partner and Vice Chairman of Giovanni Agnellie C. Sapaz■ Member of the Board of Directors of Exor Group SA,IFI S.p.A., Editrice La Stampa S.p.A., COTEC Foundation■ Member of the Board of Directors and of the ExecutiveCommittee of RCS Rizzoli Corriere della Sera■ Member of the Board of Directors, of the Audit Committeeand of the Compensation Committee of Gruppo BancaLeonardo S.p.A.■ President of the Italy-Japan Foundation and Vice Chairman ofthe Italy-China Foundation, Giovanni Agnelli Foundation, ItalianAspen Institute, Pinacoteca Giovanni e Marella Agnelli

Sergio Marchionne

54 years old, Chief Executive Officer■ Chief Executive Officer of Fiat Group Automobiles■ Chairman of CNH Case New Holland■ Chairman of SGS SA■ Chairman of ACEA (European Automobile ManufacturersAssociation)■ Member of the Board of Directors of Serono SA■ Permanent member of the Giovanni Agnelli Foundation■ Member of the General Council of Confindustria, Assonime(Associazione fra le società italiane per azioni – Association forItaly’s limited liability companies); Turin Employers’Association■ Member of the Supervisory Board of HOCHTIEF■ Awarded the title of Cavaliere del Lavoro

Andrea Agnelli

31 years old, Director■ He spent four years in Lausanne at Philip MorrisInternational (Marketing and Corporate Affairs), and thenworked in Turin in the Corporate Development department ofIFIL Investments S.p.A.■ Member of the Board of Directors of IFI S.p.A.

Fiat Identity Board of Directors16

Board of Directors

Roland Berger

69 years old, Independent director■ Chairman of the Supervisory Board of Roland BergerStrategy Consultants of Munich■ Honorary Professor for General Business Administration andManagement Consulting at the Brandenburg TechnicalUniversity in Cottbus■ Member of the Council of the Technical University of Munich,the Munich Academy of Music and Drama, the Board ofTrustees of IFO – Institute for Economic Research at theUniversity of Munich, the Board of Trustees of the University ofErfurt, the Board of Insead in Fontainebleau■ Vice Chairman of the Association of Management ConsultingFirms (AMCF)■ Chairman of the Board of Trustees of the “Convention forGermany”■ He received the Carl S. Sloane Excellence in ManagementConsulting Award from the American Management ConsultantFederation (AMCF)

Tiberto Brandolini d’Adda

59 years old, Director■ General Partner of the Giovanni Agnelli e C. Sapaz■ Vice Chairman and Member of the Executive Council of IFILInvestments S.p.A.■ Chairman and General Manager of Sequana Capital■ Chairman and Chief Executive Officer of EXINT■ Vice Chairman and Chief Executive Officer of Exor Group■ Director of IFI S.p.A., the Société Générale de SurveillanceHolding Sa (SGS), Vittoria Assicurazioni and Espirito SantoFinancial Group S.A.■ Awarded the title of Chevalier de la Légion d’honneur

Luca Garavoglia

38 years old, Independent director■ Chairman of Davide Campari-Milano S.p.A.■ Director and Vice Chairman of Federvini and Vice President ofthe National ‘C’ Syndicate of Federvini■ Member of the General Council and of the ExecutiveCommittee of Assonime (Associazione fra le società italianeper azioni – Association for Italy’s limited liability companies)■ Vice Chairman of EALIC - European Association for ListedCompanies■ Chairman of the Italian Advisory Board of Insead inFontainebleau■ Member of the Board of Directors of the FAI Foundation (Fondoper l’Ambiente Italiano - Fund for the Italian Environment) and ofthe Board of the European Institute of Oncology Foundation

Gian Maria Gros-Pietro

65 years old, Independent director■ Chairman of Autostrade S.p.A. and of ASPI – Autostrade perl’Italia S.p.A.■ Head of the Department of Economics and Business Sciencesof the Luiss Guido Carli University in Rome■ Professor of Industrial Economics in Turin■ Chairman of the Scientific Council of Ceris (Istituto diRicerca sull’Impresa e lo Sviluppo – Business DevelopmentResearch Center)■ Director of Edison S.p.A. and Seat Pagine Gialle S.p.A.■ President of Federtrasporto and PERSEO S.p.A.■ Member of the General Council and Executive Committee ofConfindustria, Assonime (Associazione fra le società italianeper azioni - Association for Italy’s limited liability companies)and the Employers’ Association of Rome■ Member of CNEL (Consiglio Nazionale dell’Economia e delLavoro – National Council for Economics and Labour)■ Vice President of the Istituto Grandi Infrastrutture (GreatInfrastructures Institute)■ Member of the Executive Committee and General Council ofthe Aspen Institute of Italy, the International Business Councilof the World Economic Forum, the Board of Directors of theRosselli Foundation and the COTEC Foundation

Hermann-Josef Lamberti

51 years old, Independent director■ Member of the Board of Managing Directors of DeutscheBank AG

Fiat Identity Board of Directors 17

■ Chairman of the Supervisory Board of Deutsche Bank Privat-und Geschäftskunden AG■ Member of the Supervisory Board of Carl Zeiss AG andDeutsche Börse AG

Virgilio Marrone

61 years old, Director■ Chief Executive Officer and General Manager of IFI, IstitutoFinanziario Industriale S.p.A.■ Member of the Board of Directors of Exor Group S.A. and ofthe Management Board of Intesa Sanpaolo

Vittorio Mincato

71 years old, Independent director■ Chairman of Poste Italiane S.p.A.■ Chairman of Assonime (Associazione fra le società italianeper azioni - Association for Italy’s limited liability companies)■ Member of the Executive Committee of Confindustria■ Vice Chairman of the Employers’ Association of Rome ■ Member of the Board of Directors of Parmalat, AccademiaNazionale di Santa Cecilia of Rome, Accademia Olimpica of Vicenza■ Awarded the title of Cavaliere del Lavoro

Pasquale Pistorio

71 years old, Independent director■ Honorary Chairman of STMicroelectronics■ Vice Chairman of Confindustria for innovation and research■ Member of the Board of Directors of CharteredSemiconductor Manufacturing, Telecom Italia S.p.A. andEnergy Conversion Device Inc.■ Member of the Conseil Stratégique pour l’attractivité du paysauprès du Premier Ministre Français, the Internal AdvisoryCouncil of the Government of Singapore, the InternationalBusiness Council of the World Economic Forum, the ConseilStrategique des Technologies de l’Information■ Awarded the title of Commendatore al Merito of the Republicof Italy, Chevalier de l'Ordre National du Mérite by thePresident of the French Republic, Cavaliere del Lavoro by thePresident of the Republic of Italy, Chevalier de la Légiond’Honneur of the French Republic.

Carlo Sant’Albano

43 years old, Director■ Managing Director and General Manager of IFILInvestments S.p.A.

■ Director of Sequana Capital, Juventus F. C. and Alpitour■ Member of the Supervisory Board of Banca IntesaSanpaolo S.p.A.

Ratan Tata

69 years old, Independent director■ Chairman of Tata Sons Limited, the holding company of TataGroup, and of the major Tata companies including Tata Steel,Tata Motors, Tata Power, Tata Consultancy Services, Tata Tea,Tata Chemicals, Indian Hotels, Tata Teleservices and TataAutoComp■ Chairman of two of the largest private sector promotedphilanthropic trusts in India■ Chairman of the Government of India’s InvestmentCommission ■ Member of the Prime Minister’s Council on Trade andIndustry, the National Hydrogen Energy Board and the NationalManufacturing Competitiveness Council■ Member of the International Investment Council set up bythe President of the Republic of South Africa, theInternational Business Advisory Council of the BritishGovernment, the International Advisory Council of Singapore’sEconomic Development Board, the Asia Pacific AdvisoryCommittee to the Board of Directors of the New YorkStock Exchange ■ Member of the international advisory boards of MitsubishiCorporation, American International Group, J.P. Morgan Chaseand Rolls Royce■ Member of the Alcoa Board■ President of the Court of the Indian Institute of Science andof the Council of Management of the Tata Institute ofFundamental Research■ Member of the Board of Trustees of Rand Corporation,Cornell University and the University of Southern California,and of the Foundation Board of the Ohio State University ■ Chairman of the Advisory Board of RAND’s Center for AsiaPacific Policy ■ Member of the Global Business Council on HIV/AIDS and ofthe Programme Board of the Bill & Melinda Gates Foundation’sIndia AIDS Initiative

Mario Zibetti

67 years old, Independent director■ Member of the Board of Directors of Ersel SIM S.p.A. of Turinand of Fabio Perini S.p.A. of Lucca (Korber AG Group)

Fiat Identity Board of Directors18

The birth of a great Group and the years between

the two World Wars

F.I.A.T. was founded in Turin on July 11, 1899 and the first factory,inaugurated in 1900 in Corso Dante, employed 35 people thatproduced 24 cars a year. Giovanni Agnelli, a former cavalry officer,was appointed Managing Director in 1902. In 1903 Fiat was listed onthe Stock Exchange. In 1904 the company adopted the ovaltrademark on a blue background. In 1908 Fiat Automobile Co. wasset up in the United States. Relations were established for theexport of cars to France, Austria, the United Kingdom and Australia.At the end of its first decade of activity, Fiat had a capital stock of12,000,000 Italian liras, 2,500 employees and an annual output of1,215 cars. The outbreak of World War I brought about a massiveexpansion in the production of army trucks, airplanes, ambulancesand engines for submarines. Construction of the Lingotto factory,the largest in Europe, began in 1916 and in 1923 the factory becameoperational. In those years Fiat diversified its activities to includethe iron and steel industry, and the railway, electricity and publictransport sectors. The Great War ushered in a decade of profoundsocial change. In November 1920 year Giovanni Agnelli wasappointed Chairman of the Board of Directors. Growth resumed,and various new models were launched, among which the 501 andthe 519. Fiat created Sava, a consumer credit company whoseobjective was to enhance installment sales (so-called hirepurchases). In those years Fiat introduced health care services forits employees, it set up the Fiat Apprentices School and a numberof associations. Fiat continued to invest in Italian and foreign

companies and IFI (Istituto Finanziario Industriale) was set up. In1924 the Moscow plants became operational. Mussolini’s call forautarchy forced the company to focus on the domestic market.During the thirties, trucks and commercial vehicles, including diesel-powered vehicles, underwent considerable technologicaldevelopment and the aeronautical and railway sectors also grewsignificantly. In 1928 Vittorio Valletta was appointed Fiat’s GeneralManager. In 1934 the company designed a low-powered and lowconsumption (eight liters for every 100 kilometers) car: the 508, alsoknown as “Balilla”. Overall, a total of 113,000 units were produced.1936 was the year of the debut of the Fiat 500 “Topolino”, thesmallest utility passenger car in the world. 510,000 units wereproduced until 1955. The Mirafiori plant, which employed 22,000workers on two shifts, was inaugurated on May 15, 1939.Service centers, workshops and specific industrial initiatives startedto be set up in Spain, Egypt, Poland and France. During the SecondWorld War the production of cars was drastically cut while therewas a fivefold increase in the number of commercial vehiclesproduced. Though Fiat’s plants were severely damaged during thewar, production did not stop.

The economic miracle and mass motoring

The assistance Fiat offered its employees helped to make up for thedeficiencies of Italy’s public services. Fiat provided employees withlinen, shoes and firewood to employees, while Fiat canteensdistributed 100,000 meals every day. Senator Giovanni Agnelli diedin 1945 and in July 1946 Vittorio Valletta was appointed Chairman.

Fiat Identity History of the Fiat Group 19

History of the Fiat Group

With the aid of the Marshall plan, reconstruction of plants wascompleted in 1948. Workforce increased from 55,000 to 66,000, andprofits, which had reached break-even after 1943 and were at loss in1946, began to show an upward trend. During its production revival,Fiat launched the Fiat 500 B berlinetta and giardinetta, the 1100Eand 1500E models, and a car completely new in its design andmechanics, the Fiat 1400. For the first time ever, a standardheating/ventilation system was installed on the 500C. In 1951 Fiatproduced the first jet plane: the G 80. In 1953 the first diesel-powered cars made their debut. In 1955 the Fiat 600 was launched.Over 4,000,000 units of this utility car would eventually beproduced. Two years later the new 500 was launched and in the end3,678,000 units of it were produced. During this decade the overallnumber of employees increased from 70,000 to 80,000, andproduction rose from 70,800 cars in 1949 to 339,300 in 1958.Between 1956 and 1958 the size of the Mirafiori plant doubled andat the end of the sixties it employed over 50 thousand workers.Meanwhile production of tractors and construction machinery alsoexpanded. Operations abroad also increased, with new plants beingbuilt in South Africa, Turkey, Yugoslavia, Argentina and Mexico.Plant engineering and construction operations, headed by Impresit,experienced urging international expansion: the Karibahydroelectric plant on the Zambesi, the Dez dam in Iran and theRoiseires dam on the Blue Nile in Sudan, the rescue of the ancientEgyptian temples at Abu Simbel, and the motorway tunnel of theGran San Bernardo. Between 1959 and 1968 Fiat’s output increasedfrom 425,000 to 1,751,400 cars, and the ratio between inhabitantsand cars went from 96 to 28 inhabitants per car. Exports alsoboomed: from 207,049 to 521,534 cars. The production ofcommercial vehicles and tractors also increased from 18,968 to68,200 units and from 22,637 to 52,735 units, respectively.Workforce doubled: from 85,117 to 158,445 employees. In 1964 theFiat 850 was launched, followed by the 124 and the 125: the first

Fiat cars to adopt in 1968 the rhomboid Fiat trademark. In 1966

Giovanni Agnelli, grandson of the founder, became Chairman of theCompany. In 1969 Fiat decided to strengthen its involvement in theSouth of Italy, where the Company could already count on facilitieslocated in Reggio Calabria, Bari and Naples. So plants for theproduction of cars were built at Termini Imerese, Cassino andTermoli, while the Sulmona, Lecce, Brindisi and Vasto plants wereto satisfy special production requirements.

The years of diversification

The economic boom was followed by a long period of social unrest:turmoil inside the factories reached its peak in 1969, with a total of15 million strike hours and drastic repercussions on profitability.The 127 was launched in 1971, the first Fiat car with front wheeldrive which was distinctly innovative for its time and, at the end of1974 the one millionth 127 rolled off the assembly line. Emphasison automated manufacturing processes increased: as early as 1972

Mirafiori was using 16 robots on its 132 model production line andin 1974 the Cassino plant was robotised as well. 1978 saw theintroduction of “Robogate”, the new robotised, flexible bodyworkassembly system. This system, installed in the Rivalta and Cassinoplants and designed by Comau, would soon become world leader inthe field. In 1978 Lancia S.p.A. was merged into Fiat S.p.A., whilethe Lancia trademark was preserved for marketing purposes. In1979, the Automobiles Sector was transformed into an autonomouscompany with Giovanni Agnelli as its Chairman and it included theFiat, Lancia, Autobianchi, Abarth and Ferrari brands. 50% of theprestigious Ferrari company had already been acquired in 1969. Atthe end of the seventies, Fiat adopted a holding structure.Alongside Fiat Auto, Fiat Ferroviaria, Fiat Avio, Fiat Trattori, FiatVeicoli Industriali, other Group companies such as Fiat Engineering,Comau, Teksid, Magneti Marelli, Telettra were also established asindependent companies. Cesare Romiti became Chief Executive

Fiat Identity History of the Fiat Group20

Officer of the Fiat Group in 1980. Fiat Ferroviaria developed thePendolino, a high-speed train thanks to which Fiat was to winimportant tenders in many European countries. Iveco became theinternational trademark for all of Fiat’s commercial vehiclesoperations. In 1983 the Fiat Uno was unveiled at Cape Canaveral:this car was to represent the beginning of a new era for Fiat Auto. Itwas radically innovative in its use of electronics and alternativematerials and for the adoption of a “clean” engine, the Fire 1000.Overall, a total of 6,272,796 units will be produced. The followingyear Fiat Auto S.p.A. acquired Alfa Romeo S.p.A. and its associatedcompanies; in 1993 the prestigious Maserati sports brand alsojoined the Group. The number of international agreements in thetelecommunications and components companies continued toincrease. In 1987 Magneti Marelli was transformed into an industrialholding company controlling more than 60 companies around theworld. In 1989 the Fiat Tipo was elected “Car of the Year”. Thismature industrial society began to recognise the importance of acar’s environmental impact. Fiat launched a project for the totalrecovery and recycling of end-of-life vehicles. In 1991 work beganon two new plants at Pratola Serra and Melfi, which will becomeoperational in 1994.

Focalization on the Automobile Sector and international alliances

Fiat responded to the crisis of the early nineties by expanding itsinternational presence. At the same time it undertook a majorcapital increase and continued to invest significant resources ininnovation, while rigorously cutting costs and pursuing incisiverestructuring programmes. The Fiat Punto was the innovative carlaunched in those years. Designed to be a European car, in 1995 itwas elected “Car of the Year”. On February 28, 1996 GiovanniAgnelli became Honorary Chairman of the Fiat Group and CesareRomiti took over as Chairman, a position he will hold until 1998,when Paolo Fresco replaced him. At the same time, Paolo Cantarella

was appointed Chief Executive Officer. In September 1997, theParent Company left its offices in Corso Marconi to move to theLingotto building, which had in the meantime been turned into afair and conference center. In 1998 the Panda celebrated its 18thbirthday and become one of the cars that had been on the marketfor the longest time. At the end of the nineties, Fiat responded tothe incursion of South East Asian products into the Europeanmarket by returning to the Company’s original strategy of focusingon emerging markets. The plants in Brazil and Argentina wereexpanded and Fiat launched the world car Palio. Fiat became thebiggest manufacturer in Brazil, Argentina, Poland and Turkey. In1991, with the acquisition of the tractor and agricultural machineryoperations of Ford Motor Co, Fiat’s construction machinery sectortook on the New Holland brand and became international. In 1993 itsigned an agreement with Hitachi Co Machinery Ltd and expandedexisting joint ventures, accounting for approximately 20% of totalglobal output. Iveco strengthened its leadership position in Europewith the introduction of the EuroTech, EuroStar and EuroCargoseries and set up joint ventures and manufacturing operations inIndia and China for the production of the light vehicle Daily. In 2000,Fiat entered into an industrial alliance with General Motors, whichwas unwound five years later. On January 24, 2003 Giovanni Agnellipassed away. In order to face the crisis that the Group was goingthrough, Fiat redesigned the scope of its operations to focus on itsautomotive operations, thus selling the Aviation and InsuranceSectors. On May 27, 2004 Umberto Agnelli, who had taken on thereins of the Group after his brother’s death, passed away. TheGroup’s top management now featured Luca Cordero diMontezemolo as Chairman, John Elkann as Vice Chairman andSergio Marchionne as Chief Executive Officer. The Fiat Panda waselected “Car of the Year” and Ferrari won the sixth Constructors’Championship and the fifth Drivers’ Championship in a row.Rigorous cost-containment measures and an incisive industrialrelaunch enabled the Group to reach operating break even in 2004

and post an income in 2005. The dense network of agreements thatopened the doors to new markets such as China, India and Russia,is recent history.

Fiat Identity History of the Fiat Group 21

Fiat Identity Profile and Structure of the Group22

Profile and Structure of the Group

100%

Maserati

100%

Magneti Marelli

9.9%

R.C.S. Mediagroup

Fiat Group

Automobiles

100%

Fiat Group Automobiles

Agricultural and construction equipment

90%

CNH

Components and Production Systems

100%

Fiat Powertrain Technologies

Main Portfolio Investments

1.8%

Mediobanca

84.8%

Teksid

85%

Ferrari

Trucks and Commercial Vehicles

100%

Iveco

100%

Comau

Other Businesses

100%

Itedi

motoring world through its commitment to all forms of mobilityfor people and goods: from cars to trucks, agricultural tractors,marine engines, aeronautical engines and, in more recent years,space launchers. During the past few years, Fiat redefined its corebusiness area by refocusing manufacturing and service activitieson the traditional automotive sector. As a consequence, certainbusinesses no longer considered strategic such as the Aviationand Insurance Sectors were sold. Rigorous cost-containmentmeasures and an incisive industrial relaunch enabled the Groupto reach operating break even in 2004 and post an income in2005. Fiat is now committed to consolidating its position as aleading industrial Group at the international level. TheAutomobile Sector’s recovery of market shares in Italy and abroadcontributed to restoring Fiat’s credibility. The Company’sreputation has also benefited from the launch of new modelsacross all brands that have been received extremely well by thepublic for their creativity, style, technology, and innovation.

The Group’s mission is to grow and create value by supplyinginnovative products and services for maximum customersatisfaction with due respect to the legitimate interests of allcategories of stakeholders, fair employment practices, safetyin the workplace, and in full compliance with the applicablelaws and regulative directives of the countries, in whicha Group company operates.(Code of Conduct)

Fiat was one of the founders of the European motor industry.Right from the outset the Company pursued two growthstrategies that became the cornerstones for its later development:a strong international vocation and an innovative spirit, as seen inthe technological quality of its products and the advancedproduction and organisational solutions it adopted. But in morethan one century’s activity Fiat has meant much more than carsalone. In fact the Company interpreted its vocation for the

Fiat Group AutomobilesOne of the pioneers of the car industry, Fiat built its first car in1899. Since that date, many of its models have marked importantmilestones in automobile history. Fiat Auto, which changed its name into Fiat Group Automobileson February 1, 2007, produces and sells vehicles under the Fiat,Alfa Romeo and Lancia brands and light commercial vehiclesunder the Fiat Light Commercial Vehicles brand. Each brand hasa specific identity with defined, recognized characteristics, andapplies distinct commercial and marketing policies. Fiat is knownfor its creativity, versatility and practicality, Lancia features anelite and exclusive line of models, Alfa Romeo combinessportiness, technology and elegance in a unique design and FiatLight Commercial Vehicles is a reference point for easier, moreproductive and gratifying working experiences. Fiat GroupAutomobiles is made up of four companies: Fiat Automobiles,Alfa Romeo Automobiles, Lancia Automobiles and Fiat LightCommercial Vehicles. In the last few years, the Sector haspursued a strategy of targeted alliances aimed at strengthening

its position on international markets, enter new segments andtechnologies and enhance its know-how. Its plants are located inItaly, Poland, Brazil and Argentina. Manufacturing is also carriedout through either joint ventures or licensing agreements inFrance, Turkey, Egypt, South Africa, India, China and Vietnam. Sales financing and a broad array of support programmes forcustomers and the dealer network round out the range ofproducts and services offered by the Company. On elevenoccasions Fiat Group Automobiles models have won the Car ofthe Year Award, the car industry’s most prestigious recognitionworldwide.

MaseratiMaserati is an all Italian brand with a glorious sporting history:since the very beginning it has been manufacturing fascinatingand exclusive cars built in short production runs, outstanding interms of prestige, technological innovation, styling andperformance.The House of the Trident was founded in Bologna in 1914, andin 2005 the ownership of the company was transferred fromFerrari to Fiat. The Quattroporte confirmed its position as the top-selling modelmade by the Company. Since its launch in 2003, it has beenhonored 28 times, both in Italy and abroad.In 2006, new versions of the Quattroporte Sport GT, GranSport MCVictory and GranSport Spyder were launched on the market.In 2006, major resources were dedicated to the development ofnew models, which will flank the existing line following theirintroduction in 2007. The first of these is the new QuattroporteAutomatica, launched in January 2007 and the MaseratiGranTurismo, launched in March 2007.In 2004, Maserati returned to the racing circuits with the MC12 andin 2006 it won the FIA GT title in the Driver and Team categories.In 2006, it won the Spa 24-hour race for the second year in a row.

FerrariThe first Ferrari was built in Maranello in 1947, at the companythat Enzo Ferrari had transferred from Modena five yearsearlier, and it was given the name by which it is known today. Ferrari’s mission remained the same over the years: to buildunique sports cars destined to represent the excellence ofItalian cars, whether on the road or on racing circuits. And infact the legend continues. Suffice it to look at its successes onthe circuits, where the Scuderia Ferrari in 2004 won its fifthFormula 1 Drivers’ Championship and its sixth Constructors’

Fiat Identity Profile and Structure of the Group 23

Championship in a row. These achievements are reinforced bysales results and the vast number of fans that follow the raceson circuits throughout the world. Ferrari cars have always beenproduced within a self-imposed limit. In the past few years, the Maranello and Modena plants havebeen the scene of a significant technological upgrade, as part ofa wider-ranging project referred to as “Formula Uomo” (formulaman) whose goal is to create a functional working environmentwhich would also be pleasant and comfortable to work in.Alongside the wind-tunnel designed by Renzo Piano in 1997,particularly noteworthy are the new structures dedicated toMachining Processes and Painting, designed by Marco Visconti,GES Logistics, designed by Luigi Sturchio, and the spectacularProduct Development Center, designed by Massimiliano Fuksas.

CNHCNH was formed in 1999 through the merger of two renownedbrands at the international level: New Holland NV and CaseCorporation. CNH is one of the world’s leading manufacturersof agricultural tractors, combine harvesters, hay and forage

equipment and grape harvesters and is among the leaders inthe construction equipment business. In order to satisfy more effectively the differentiated needs ofits customers and dealers, CNH operates through four distinctglobal brands: Case IH and New Holland in the agriculturalequipment segment and Case and New Holland in theconstruction equipment segment.In 2006, CNH made significant progress to renew and upgradeits product line. In the agricultural equipment segment, Case IH launched anumber of four wheel drive products equipped with Tier 3engines. Bolstered by launches of the CR and CSX combines inEurope, New Holland again confirmed its leading position in thecombine market.In the construction equipment segment, Case ConstructionEquipment launched new Tier 3 wheel loaders and dozers. New Holland Construction launched pilot controls on skid steerloaders and compact track loaders in North America to enhanceease of operation and manoeuvrability. Meanwhile, Case New Holland won strong acclaim fromindustry observers with its spring announcement to theNational Biodiesel Board that it fully approves use of up to B20blends (20% biodiesel/ 80% petroleum-based diesel) on allagricultural equipment currently produced with CNH engines.As for the services provided in 2006, CNH has set the stage forcontinued future improvements by refocusing efforts on dealersand customers.

IvecoIveco was formed in 1975 through the merger of five Europeanbrands, and was joined by others over the years. Today, Iveco isone of the world’s leading companies in the road transport sector.Iveco designs, manufactures and markets a wide range of light(2.8 - 6 tons GVW), medium (6 - 16 tons GVW) and heavy (above16 tons GVW) commercial vehicles for on-road and off-road use. Italso produces public transport vehicles and special purposevehicles for defence and civil protection applications.On January 1, 2006 Iveco’s powertrain activities (engines andtransmissions) were transferred in the Fiat PowertrainTechnologies Sector. Iveco operates in over 100 countries through its dealer network,joint ventures, licensees and participating investments. It ispresent in countries with a high growth potential such as Chinaand South America.Iveco gave significant impetus to its growth strategy in 2006,


especially in China, where three new joint ventures were finalized. During the year, Iveco continued restyling of its product range.The following products were introduced in 2006: the New DailyEuro 4 in the van, cabin, and minibus versions, all with Euro 4compliant engines; the Astra ADT30 dumper for extremelyheavy quarry activities; the Citelis urban transport bus; theNew Domino people carrier; the Crossway long-distance bus;and the prototype heavy vehicle (Transport Concept).Innovation involved prototypes of low-emission lightcommercial vehicles with diesel and methane engines.

Fiat Powertrain TechnologiesEstablished in March 2005, Fiat Powertrain Technologies (FPT) isthe Fiat Group’s Sector that encompasses all the Powertrainactivities of Fiat Auto (Fiat Powertrain), Iveco (Iveco Motors), andthe Fiat Research Centre. In addition, it coordinates, as regardstechnological development projects, Elasis’ powertrain activities.With an annual output of around 2.8 million engines and 2.1million transmissions, FPT is one of the most significant players inthe powertrain sector on a worldwide basis. FPT is present in 8countries with 16 plants, 10 Research and Development Centersand around 19,000 employees. Furthermore, a network of dealersand service centers ensures the presence of its brand and productsin over 100 countries. Approximately 3,000 highly skilledtechnicians are dedicated to the development and engineering ofinnovative technologies. The quality and reliability of this greateffort are confirmed by more than 40 patents filed each year. Thanks to an extremely wide range of products and technologies,FPT can satisfy almost any request of the market, ensuring a highlevel of performance, reliability and efficiency to its customers.FPT’s applications regard the automotive sector (cars, light,medium and heavy commercial vehicles and buses), the industrialfield (earth moving and site machines, agricultural and irrigationmachinery and special machines), and the marine (pleasure andprofessional applications) and Power Generation businesses. Research and advanced engineering activities are mainly aimed atthe development and application of innovative technologies forthe improvement of powertrain performance, and reduction ofemissions and fuel consumption, while at the same time ensuringtechnological excellence of the Company. Dynamism and technology are represented by FPT RACING, ateam working on design, test, development and production of:engines for racing cars, performance kits to upgrade gasoline anddiesel powertrains, and special engines for automobiles producedlimited series.

Magneti MarelliFounded in 1919 by Fiat and the Ercole Marelli company, in1967 Magneti Marelli was acquired entirely by the Fiat Groupthat transformed it into a worldwide centre for automotivecomponents.Magneti Marelli has recently organized its various businessesinto homogeneous groups, to better focus on its core activities. Today Magneti Marelli Holding S.p.A. operates in the followingbusiness lines: Lighting, Powertrain, Electronic systems,Exhaust systems, Suspension systems and Motorsport. Thanksto this selected range of activities the Sector has become aglobal supplier with a widespread production structure inEurope, North and South America and Asia, which means itcan guarantee absolutely top-level components and systems tomanufacturers throughout the world.Among Magneti Marelli’s recent successes, the followingproducts should be cited: in the Lighting area, the world’s firstdesign for a headlamp unit using LED technology for all requiredfunctions, and the AFS headlamps (Adaptive Frontlight System);in the Electronics area, info-telematics systems with navigationfunctions and instrument clusters with integrated TFT displays;in the Powertrain business unit, the new Multijet 1.3 16v engine,the third generation AMT transmission, and the SFS (SoftwareFlexFuel Sensor) bi-fuel engine control system for the combineduse of alcohol and gasoline in the same tank. The performanceof the Tetrafuel system should be noted as regards alternativefuel. It enables the engine to run on four types of fuel: gasoline,AEAC (Brazilian anhydrous ethanol blendstock – pure gasolineand 22% of alcohol), alcohol or natural gas. This technology hasbeen introduced for the first time in the Fiat Siena.

TeksidTeksid was founded in 1978, drawing together over 60 years ofexperience accumulated by Fiat in the metallurgical field, theorigins of which stretched back to the early 1900s.From its founding until today the Company, which operates inthe field of metallurgical components for the automotiveindustry, has grown to become one of the world leaders in itsfield. The Sector collaborates with the main European andAmerican manufacturers in high technology cast-iron andmagnesium castings. As part of Teksid’s strategy to focus onits core business, in December 2006 the Fiat Group reached anagreement for the sale of its interests in Meridian TechnologiesInc., the company in which Teksid held a 51% interest andthrough which the Group operated in the magnesium business.

Fiat Identity Profile and Structure of the Group 25

Teksid’s plants are located in Italy, France, Portugal, Poland,Brazil, Mexico and China. It produces cylinder blocks andheads, exhaust manifolds, crankshafts, camshafts andcomponents for cars and commercial vehicles.

ComauIn 1978, Comau combined under a single corporate umbrellathe machine tool and production system activities that Fiat andother companies in the Turin area had developed since thebeginning of the Thirties.Over the years Comau has made important acquisitions tostrengthen its presence in its core business segments, inparticular in the Bodywork, Mechanical Engineering andRobotics. Fiat’s acquisition of Pico in 1999 (American marketleader for bodywork systems), and Comau’s acquisition ofRenault Automation and Sciaky structurally reinforced theSector’s presence on its principal markets and its position as asupplier to the main automotive manufacturers. Comaubroadened its range of services by offering maintenanceservices for production plants at its customers’ manufacturing


Corporate Security

Institutional

Relations

Fiat Group

Automobiles

CNH

Internal Audit

Chief Financial

Officer

Comau

Teksid

Centro

Ricerche Fiat

Communications

Ferrari

Maserati

Iveco

Board of Directors

Chairman

Vice Chairman

Chief Executive Officer

Group Purchasing Coordination

Business

Development

Magneti Marelli

Elasis

Fiat Powertrain

Technologies

Human

Resources

International

Holding Fiat

Industrial

Relations

Itedi

Senior Counsel

facilities, thus becoming one of the few “global” suppliers inthe motor industry automation field. In fact the Sector canguarantee customers a comprehensive service: product andprocess engineering, production start-up of machinery lines,and maintenance to ensure the correct and constant operationof manufacturing plants.

ItediFiat entered publishing in 1926 when the Group set up Editrice LaStampa for the publishing of the Turin-based newspaper, “LaStampa” (founded in 1867). 1980 marked the founding of Itedi, Italiana Edizioni S.p.A., thatabsorbed all of Fiat’s publishing and communication activities. The Company operates through Editrice La Stampa S.p.A. and, asregards sale of advertising space, through Publikompass S.p.A. In November 2006, a new all-colour tabloid format featuring anoriginal graphic layout was introduced for the daily La Stampa.Concurrently, the new version of the newspaper’s website wenton-line, with graphics matching those of the paper and moresections and services.

The Fiat Group adopted and abides by the new CorporateGovernance Code of Italian Listed Companies issued in March2006, supplemented and amended as necessary to ensure thatthe corporate governance system it adopted is in line with therules imposed for listing on the NYSE (New York StockExchange), including the relevant sections of the 2002Sarbanes-Oxley Act, and the characteristics of the Group. The Group’s corporate governance system is illustrated in theAnnual Report on Corporate Governance prepared inaccordance with the Guidelines issued by Assonime andEmittenti Titoli SpA and recommended by Borsa Italiana SpA.Reference is made to that report for a detailed analysis. Thefollowing paragraphs summarise the principal steps taken bythe Group to bring its corporate governance system intocompliance with the aforementioned national and internationallaws, regulations, and standards.

1993 The Fiat Group adopted a Code of Ethics, which was revisedin 2003 and renamed Code of Conduct(*). This document definesthe principles governing Group conduct in its business affairsand the commitments and responsibilities of its employees.1997 The Fiat Group adopted a System of Values and Policies

on the basis of a process mandated by top management, withthe contribution of middle management.

2002 Fiat SpA, in its capacity as issuer of listed shares,established and adopted its Internal Dealing Regulation, whichregulated the disclosure requirements and rules of conduct of“Relevant Persons” and the Company itself in view of assuringthe highest level of transparency and standardised marketdisclosures. This code remained in effect until March 2006, whenreceipt of the European Market Abuse Directive fully regulatedthe matter, rendering all voluntary regulation superfluous.2003 The Fiat SpA Board of Directors approved the Compliance

Program pursuant to Legislative Decree 231/2001(*) for the firsttime. This Program was subsequently amended in 2005 and2006 to receive changes in laws and new interpretations withregard to the criminal offences envisaged in Legislative Decree231/01. The Program is an integral part of the Fiat SpAcorporate governance system and refers to the principles setforth in the Fiat Group Code of Conduct. Following approval by the Board of Directors, the Guidelines for

the Internal Control System(*) were implemented at the Group.These Guidelines are considered an essential element of theGroup’s corporate governance system. The document identifiesthe key lines of responsibility for design, implementation, andmonitoring of the Internal Control System. Following approval by the Board of Directors, the Charter of

the Internal Control Committee(*) and the Charter of the

Nominating and Compensation Committee(*) came into effect.Revised in 2005, they define Committee composition, duties,and meeting procedures. Following approval by the Board of Directors, the Guidelines for

Significant Transactions and Transactions with Related Parties(*)

came into effect. In accordance with the Corporate GovernanceCode of Borsa Italiana, the Board of Directors reserves the rightto examine and approve in advance any transaction with asignificant impact on the balance sheet, economic and financialfigures, including the most significant transactions with relatedparties and subject all transactions with related parties to specialcriteria of substantial and procedural fairness. 2004 Information on the corporate governance system, whichhad previously been provided in the Report on Operations ofthe Annual Report, was issued for the first time in a separate

Fiat Identity Corporate Governance 27

Corporate Governance

document, the Annual Report on Corporate Governance(*),which is dedicated exclusively to this topic. This Report, whichis prepared in accordance with the Guidelines issued byAssonime and Emittenti Titoli SpA and recommended by BorsaItaliana SpA, is published annually. The institutional trainingof Group employees was complemented by classroom andonline instruction on corporate governance, the Code ofConduct, and the Compliance Program pursuant to LegislativeDecree 231/01, which would be joined in 2006 by the SarbanesOxley Act. In implementation of the Guidelines for the Internal ControlSystem, the Fiat Group launched an Enterprise Risk

Management process that introduced periodic audits of thestrategic, operating, financial, and compliance risks faced bythe Group. The reference framework was COSO - Enterprise

Risk Management (ERM) - Integrated Framework of September29, 2004. This audit is performed on a semi-annual basis. 2005 The Fiat SpA Stockholders Meeting approved moreselective criteria for annual assessment of directors’independence(**). Following approval by the Board of Directors, the Group

Procedure for the Engagement of Auditing Firms(*) came into

effect. This procedure regulates the engagement of auditingfirms and other related parties by Fiat SpA and its subsidiaries,in order to safeguard the principle of independence of thefirms engaged to audit the financial statements. Following approval by the Board of Directors, theWhistleblowings Management Procedure(*) came into effect. Itregulates the operating processes of receiving, registering, andconfirming reports of violations of the Code of Conductreceived from any individual inside (employees) or outside(suppliers, customers, etc.) the Company. The Fiat Group published its first Sustainability Report forfiscal 2004. This annual report includes the Group’sEnvironmental Report, which has been prepared since fiscal1992.2006 In its capacity as a “Foreign registrant accelerated issuer”the Fiat Group certified its internal control over financialreporting as required by Section 404 of the United StatesSarbanes Oxley Act.

The Fiat Group Annual Report on Corporate Governance can

be consulted and freely downloaded from the Group website

www.fiatgroup.com, in the Investor Relations section.

Fiat Identity Corporate Governance28

(*) This document can be consulted and freely downloaded from the Group website www.fiatgroup.com

(**) The criteria for qualification of a director as independent are illustrated in the Fiat Group Annual Report on Corporate Governance.

Application of the Code of Conduct Any individual who acts as a middle manager and executiveshall 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 is anessential aspect of their work and to make sure that employeesare aware that business results are never more important thancompliance. (Code of Conduct)

Since it was first implemented nearly four years ago, the Codeof Conduct has been brought to the attention of employeesthroughout the Group through training and disclosures.Complementing Company bulletin boards, the Group Intranetdedicates a specific section to the Code of Conduct, completewith answers to frequently asked questions in order to assistemployees in resolving any doubts that they might haveregarding proper conduct in specific situations. In 2006, 6,326 employees attended courses for a total of 13,813training hours, during which the principles set forth in theCode of Conduct were presented and case models of goodcorporate governance were studied. Of these employees,5,788 took online courses regarding the system of compliancewith the United States Sarbanes Oxley Act and the ComplianceProgram pursuant to Legislative Decree 231/2001. Thesetraining modules, which had been available for two years onlyin Italy, were also introduced in France, Poland, Spain, andBrazil.

2006 Training on Classroom Online

Corporate Governance training training Total

Hours 826 12,987 13,813

Employees 538 5,788 6,326

involved (512 in 2005)

Average evaluation

of the course’s usefulness 4.08 3.9 4.04

(Scale 1:5 1=min; 5=max) (4.4 in 2005)

Monitoring of compliance with the Code of Conduct includedapplication of the Whistleblowings Management Procedurethat came into effect in 2005 and audits by Internal Audit andthe Compliance Officers (CO) of Group Sectors. In 2006 theFiat Group received a total of 58 reports regarding allegedviolations of the Code of Conduct by its employees. Fiat Revi,the Group’s internal audit company, is still conducting

investigations in ten of these cases, while 21% of the reportedcases resulted in disciplinary action commensurate to thegravity of the violation and in compliance with the NationalCollective Labour Agreement (CCNL) and applicable laws of theindividual countries involved. Another 12% of the casesresulted in reinforcement of the Internal Control System. Theprincipal types of violations uncovered included conflicts ofinterest on the part of Group employees in transactions withsuppliers or the dealer network, the theft of Company assets,undocumented payments for consulting services, anddeficiencies in the management of purchases and relationshipswith suppliers. Violations of the Code of Conduct that were not theconsequence of reports but rather uncovered during audits byInternal Audit or the Compliance Officers (CO) of GroupSectors involved 71 Group employees. Disciplinary actioncommensurate to the gravity of the violations was taken incompliance with the CCNL and applicable laws of theindividual countries involved. Most of these cases involveddisciplinary sanctions (96%).In 2006, Fiat Revi carried out audits on, inter alia, the processof compliance with the 2002 Sarbanes Oxley Act. It performed14 such audits on the integrity of the internal control systemsof the Group’s largest companies, which were complementedby six business ethics audits.

Violations of the

Code of Conduct 2006 2005

No. of reports received 58 62

■ of which violations

confirmed and sanctioned

with disciplinary actions 21% 16%

■ of which violations confirmed

that led to the reinforcement

of the Internal Control System 12% 16%

Employees involved in cases

of violations that were

confirmed and which were

not the consequence of reports 71 62

Audits on the Internal Control System

No. of audits performed

by Internal Audit on the integrity

of the Internal Control System

(Sarbanes Oxley Act) 14 34

Business Ethics Audits 6 2


Audits of travel expenses continued in 2006 by applying aprototype to the sampled companies that was developed in2005 for the purpose of detecting Company conduct in violationof applicable policy. Following specific action taken at certainGroup Sectors, the prototype (which is currently appliedprincipally in Italy) was revised and adapted for use outsideItaly through the Group information system. This form willbecome available in 2007 and enable Group Sectors/Companiesto detect anomalies on an independent basis.

Evolution of the Compliance Program

pursuant to Legislative Decree 231/2001

In a resolution dated July 24, 2006, the Fiat SpA Board ofDirectors approved a new Compliance Program (the“Program”) and new guidelines for Group Companies. The changes made to the Fiat SpA Program received statutoryamendments regarding white collar crimes and market abuse.Furthermore, it was decided to set up a Compliance ProgramSupervisory Body with several members in accordance withcurrent regulations and case law, as well as the trends reportedat leading Italian enterprises. The current members of the FiatSpA Compliance Program Supervisory Body are the GroupCompliance Officer, the Senior Counsel, and an externalprofessional. Those Sectors/Companies that have alreadyadopted Programs are currently updating them, while thoseCompanies still without one (mainly small and/or newlyacquired companies) continued to prepare their own Programs.The Fiat SpA Program was disseminated to all Companyemployees, while the Guidelines were distributed in theSectors Parent Companies through communication to allCompliance Program Supervisory Bodies. An excerpt of theProgram was published in Italian and English on the Groupwebsite, while the complete version was posted on theCompany Intranet, together with the Guidelines. Specific studies are underway to examine the implications ofLaw 146/2006 on the matter of trans-national offences in lightof the provisions of Legislative Decree 231/01.Revision of the self-paced online training course offered inprevious years was undertaken, in order to include newlyintroduced offences (terrorism, enslavement of persons,

trafficking in human beings, market abuse). The course, to betaken by all executives, as well as those professionals andwhite collar employees involved in activities considered at riskof commission of offences pursuant to Legislative Decree231/2001, was offered in fiscal 2006 and will continue in 2007.

Fiat Identity Corporate Governance30

Invention is the ability to think laterally. Albert Einstein

Economic Responsibility

45 Human Resources

45 Incentive systems

48 Customers

48 Sales volumes and market shares

56 Sales systems and commercial channels

58 Customer loyalty and satisfaction

63 Communication

64 Litigation with dealers and customers

65 Suppliers

65 Supplier relations and purchasingprocesses

67 Business ethics

67 Litigation with suppliers

34 Fiat Group Highlights

36 Map of Alliances

38 Stockholders

38 Financial performance

39 Stockholder base

40 Relations with stockholders

42 Lenders

42 Volumes and uses of debt and bonds

43 Rating

44 Public loans

Economic Responsibility Fiat Group Highlights

Fiat Group Highlights(in millions of euros) 2006 2005

Net revenues 51,832 46,544Trading profit 1,951 1,000Operating result 2,061 2,215Income before taxes 1,641 2,264Net result for the year 1,151 1,420Attributable to:- Equity holders of the parent 1,065 1,331- Minority interests 86 89Basic earnings per ordinary and preference share (in euros) (1) 0.789 1.250Basic earnings per savings share (in euros) (1) 1.564 1.250Normalised basic earnings per ordinary and preference share (in euros) (2) 0.828 1.250Normalised basic earnings per savings share (in euros) (2) 0.983 1.250Diluted earnings per ordinary and preference share (in euros) (1) 0.788 1.250Diluted earnings per savings share (in euros) (1) 1.563 1.250Investments in tangible and intangible assets 3,789 3,052- of which: Capitalised R&D costs 813 656R&D expenses (3) 1,598 1,558Total Assets 58,303 62,454Net debt 11,836 18,523- of which: Net industrial debt 1,773 3,219Stockholders’ equity before minority interest 10,036 9,413Group interest in stockholders’ equity 9,362 8,681Employees at year-end (number) 172,012 173,695

(1) For additional information on the calculation of basic and diluted earnings per share see Note 12 of the Notes to the Consolidated Financial Statements of the Fiat Group at December 31, 2006. (2) Normalised earnings per share have been calculated excluding the effects arising from the assignment of prior period dividends to savings shares.(3) This amount includes capitalised R&D costs and costs charged directly to operations during the fiscal year.

Selected data by regionNumber of

Number of Number of Manufacturing Number of Revenues

Companies Employees Facilities R&D Centres (in millions of euros)

2006 2005 2006 2005 2006 2005 2006 2005 2006 2005

Italy 146 155 75,751 77,070 52 56 50 52 14,851 13,078Europe excluding Italy 285 280 42,904 43,376 56 58 32 32 20,298 18,518North America 76 80 11,714 12,572 25 28 15 17 6,315 6,048Mercosur 31 40 30,877 29,132 20 20 10 10 5,416 4,364Other regions 99 99 10,766 11,545 27 27 9 9 4,952 4,536Total 637 654 172,012 173,695 180 189 116 120 51,832 46,544

34

■ Fiat Group recorded revenues of 51.8 billion euros in 2006, up11.4% from 2005. The improvement was largely attributable toFiat Auto, whose revenues rose by 21.3%, and Iveco, up 7.7%.CNH reported a 3.1% increase in revenues (+2.4% excludingthe foreign exchange translation impact). Revenues also roseat the Components & Production Systems Business Area:+11.0% (on a comparable basis) at Fiat PowertrainTechnologies and +10.5% at Magneti Marelli. Comau revenueswere down 18.6% reflecting a severe slowdown in industry-wide demand for its services.■ In 2006 trading profit amounted to 1,951 million euros (3.8% ofrevenues), nearly doubling the 1,000 million euros levelrecorded in 2005 (2.1% of revenues). Significant improvementswere achieved in the Automobiles Business Area, particularly atFiat Auto, which reported a full year trading profit of 291 millioneuros, against a trading loss of 281 million euros in 2005, and byIveco, whose trading profit rose from 332 million euros to 546million euros. CNH posted a 5.6% increase in trading profit, from698 million euros to 737 million euros (excluding the differencein the one-time impact from a reduction in health-care costs, theyear-over-year improvement would have been 97 million eurosor 15.8%). The Components & Production Systems BusinessArea reported slightly lower trading profit (348 million eurosversus 358 million euros in 2005) reflecting a sharp drop atComau, currently in a restructuring process, only partly offset byimprovements at Magneti Marelli, Fiat Powertrain Technologiesand Teksid. Excluding Comau, trading profit of the Components& Production Systems Business Area increased by 98 millioneuros, delivering a trading margin of 3.7%.

■ Operating result for the year totalled 2,061 million euros,compared with 2,215 million euros in 2005. The 154-million-euro decrease reflects higher trading profit of 951 million eurosand lower net unusual income of 1,105 million euros (2006: 110million euros, 2005: 1,215 million euros).■ Income before taxes totalled 1,641 million euros in 2006,compared with 2,264 million euros in 2005. Net of changes inunusual items (including the 858 million euro unusual financialincome on the conversion of the Mandatory ConvertibleFacility), income before taxes improved by 1,340 million eurosin 2006.■ Net result for the year was 1,151 million euros, comparedwith 1,420 million euros in 2005. Excluding the impact of netunusual items, the Group would have posted a net loss of 376million euros in 2005 and a net income of 1,041 million eurosin 2006. Therefore, on a like-for-like basis, net incomeimproved by 1,417 million euros.■ Net industrial debt decreased during the year byapproximately 1.4 billion euros to 1.8 billion euros, reflectingpositive business performance and notwithstanding the re-acquisition of 29% of Ferrari for 919 million euros. The ratio ofnet industrial debt to equity at the end of 2006 was 0.18 (0.34at the end of 2005).■ The Group’s cash position at December 31, 2006 wasapproximately 8.0 billion euros, (7.0 billion euros at the end of2005) largely impacted by the over 3 billion euros derivingfrom the closing of the joint venture between Fiat Auto andCrédit Agricole at the end of December 2006, partly offset bythe utilisation of cash to reduce gross debt during the year.

Economic Responsibility Fiat Group Highlights 35

2006 was characterised by a dense network of commercial,industrial and financial agreements that opened the doors to newmarkets such as China, India and Russia, and by the strengtheningof the Group’s presence in Europe. The Company has decided tofollow the path of focused alliances on single projects, in theconviction that sharing development of an idea with a partnermeans saving time and energy and at the same time becomingmore competitive.Below is a description of the main alliances signed in 2006.On January 3, Fiat Auto and Severstal Auto, one of the biggestRussian automotive companies, announced the signature of anindustrial agreement that calls for the assembly of Fiat Palio andAlbea models based on CKDs produced by the Turkish Tofas, thejoint venture between Fiat Auto and the Koç Group. On February 8,Fiat Auto and Severstal Auto took a further step forward in theirindustrial cooperation when they extended the agreement toinclude Fiat Doblò models. In addition to these agreements, thetwo Companies also signed an agreement for the import anddistribution in Russia of the full product range of Fiat branded carsand light commercial vehicles. On July 24, the Fiat Group andSeverstal Auto announced a new project in the field of LightCommercial Vehicles for the production and the distribution in theRussian territory of the Ducato vehicle. On December 21, FiatPowertrain Technologies and Severstal Auto signed aMemorandum of understanding that calls for the establishment ofa joint venture in Russia for the production of FPT’s F1A dieselengine. On January 13 the Fiat Group and Tata Motors Ltd., the biggestautomobile company in India, signed a commercial agreement forthe sale of Fiat branded cars through Tata outlets throughout India.On July 25, the Fiat Group and Tata Motors announced two newindustrial cooperation agreements which, on December 14, led tothe establishment of a joint venture in India at the Ranjangaonplant. The agreement calls for the production of engines andautomobiles for the Indian market: the Fiat Siena and Adventurefrom 2007, the Grande Punto and Linea from 2008. At the sametime a feasibility study was undertaken to assess possibilities for

cooperation in Latin America. On February 14, 2007 this study ledto an agreement which calls for a Tata license to build a pick-upvehicle bearing the Fiat nameplate at Fiat’s plant in Córdoba(Argentina). On March 1, Fiat and Suzuki Motor Corporation signed a licenseagreement for the production by Suzuki of the Fiat developed 2liter JTD Multijet diesel engines, compliant with future Euro 5emission levels. On May 11, Fiat and PSA Peugeot Citroën signed an industrialagreement for the assembly at the Fiat Auto plant in Córdoba(Argentina) of a gearbox for PSA cars sold in South America.On December 28, Fiat Auto and Crédit Agricole S.A. completed thetransaction announced in July for the creation of a 50/50 jointventure, Fiat Auto Financial Services, which will handle FiatAuto’s main financing activities in Europe (retail auto financing orleasing, dealership financing, and long-term car rental and fleetmanagement). In December, FPT, Iveco and SAIC Motor Corporation, one of theleading manufacturers of the automotive sector in China, signeda Memorandum of Understanding to establish a long-termpartnership in China in the field of medium and heavy dieselengines. On September 18, the joint venture between Iveco andSAIC Motor Corporation Ltd. for the assembly of vehicles of theStralis range in the Chongqing plant becomes operational. Theagreement calls for the involvement of the Chongqing HeavyVehicle Group Co. in the investment.On September 14, Iveco signed an agreement with Nanjing

Automotive Corporation (NAC), according to which Naveco – ajoint venture between Iveco and the NAC Group itself – acquiresthe commercial vehicle-related businesses of Yuejin MotorCorporation, controlled by NAC. On October 31, Fiat Auto and Chery Automobile, a companyspecializing in the production and operation of automobilesand auto components, signed an agreement according to whichChery Automobile will supply 1.6 and 1.8 lt gasoline enginesfor application in Fiat cars to be produced in China and soldoutside China.

Economic Responsibility Map of Alliances36

Map of Alliances

ChinaSAIC Motor Corporation

■ long-term partnership in thefield of medium and heavydiesel engines■ long-term joint venture in thefield of heavy commercialvehicles

IndiaTata Motors Ltd.■ sharing of the dealernetwork■ joint venture for theproduction of automobiles,engines and gearboxesin India

FranceCrédit Agricole S.A.■ joint venture forFiat Auto’s financingactivities in Europe

ArgentinaPSA Peugeot Citroën

■ assembly of gearboxes forPSA cars

Tata Motors Ltd.■ license agreement for theproduction of a pick-up modelin Argentina

ChinaNanjing AutomotiveCorporation

■ acquisition of the commercialvehicle-related businesses ofYuejin Motor Corporation

RussiaSeverstal Auto■ commercial agreementfor the import anddistribution of Fiatbranded cars■ assembly of Fiat models■ production and distributionof the Ducato

JapanSuzuki Motor Corporation

■ license agreement for theproduction of Multijet dieselengines

Economic Responsibility Map of Alliances 37

Financial performanceFiat is listed on the Italian Stock Exchange (Borsa Italiana),and on the New York Stock Exchange (NYSE) through ADRs(American Depositary Receipts). An ADR is a tradablereceipt, similar to a stock certificate, issued by a USdepository bank, and represents the stock of a non-UScompany, the American Depositary Share deposited with thesame bank.Stock markets worldwide posted strong gains in 2006. At theinternational market level, growth was posted in the Asianstock markets, with the Hong Kong stock exchange rising by

121%. Wall Street recorded an increase of 16%. At theEuropean level, the Madrid (+32%), Frankfurt (+22%), Paris(+18%) and London (+13%) stock exchanges recordedexcellent performances. 2006 was a record year for theMilan stock exchange which posted an increase for thefourth consecutive year: MIB index +19%, S&P/Mib +16%.In 2006, the European automotive market confirmed thepositive growth trend recorded in 2005: the automotivesector index (Dow Jones Eurostoxx Auto) posted an increaseof 26%. Against this background, Fiat stock almost doubledin value posting an increase of 97%.

Economic Responsibility Stockholders 38

Stockholders

21020019018017016015014013012011010090Jan 06 Feb 06 Mar 06 Apr 06 May 06 Jun 06 Jul 06 Aug 06 Sep 06 Oct 06 Nov 06 Dec 06

MibtelDJ Euro Stoxx AutomotiveFiat Milan

130

120

110

100

90

Jan 06 Feb 06 Mar 06 Apr 06 May 06 Jun 06 Jul 06 Aug 06 Sep 06 Oct 06 Nov 06 Dec 06

DJ Euro StoxxMibtelDow Jones DJ Euro Stoxx Automotive

Performance of Fiat stock with respect to Dow Jones, Euro Stoxx Auto and Mibtel indexes

Performance of DJ, DJ Euro Stoxx, DJ Auto and Mibtel indexes


calculate the basic earnings per share, the total amountallocated to each class of stock according to this method wasdivided by the average number of shares outstanding duringthe fiscal year.

Highlights per share

(in euros) 2006 2005

Basic earnings per share

(ordinary and preference) 0.789 1.250

Basic earnings per savings share 1.564 1.250

Diluted earnings per share

(ordinary and preference) 0.788 1.250

Diluted earnings per savings share 1.563 1.250

Stockholder baseThree classes of shares are present in Fiat’s capital stock:1,092,247,485 ordinary shares, 79,912,800 savings sharesand 103,292,310 privileged shares.Fiat stock is included in 146 Stock Exchange indexes in Europeand globally. The weight of Fiat stock on some of them isillustrated in the following table:

Milan Mib Telema 2.24%

Milan Mib30 Inde 3.11%

S&P/Mib Index 2.73%

Bloomberg Europe 0.22%

Be500 Autos Inde 10.30%

DJ Euro Stoxx € 0.29%

Djes Aut&Prt € P 7.24%

S&P Euro Index 0.33%

S&P Europe 350 I 0.16%

S&P Eur 350 Auto 7.33%

S&P Global 1200 0.05%

Ftseurofirst Aut 8.73%

Ftseurofirst 300 9.34%

Official price per share:

(in euros) 12.29.06 12.30.05 12.30.04 12.30.03 12.30.02 12.28.01

Ordinary shares 14.468 7.333 5.897 6.142 7.704 17.921

Preference shares 12.119 5.935 3.976 3.704 4.348 12.267

Savings shares 13.880 6.558 4.243 3.957 4.183 11.459

Ordinary shares: 1,092,247,485

IFIL Investments S.p.A. (*) 30.40%

Unicredito Italiano 5.71%

FMR Corp. 5.05%

Generali Group 2.21%

Institutional Investors European Union 21.97%

Institutional Investors outside the European Union 7.76%

Other stockholders 26.90%

(*) Including 0.34% of treasury stock held by Fiat S.p.A.

Ifil 30.40%

Institutional EU

Investors 21.97%

Institutional Investors

outside EU 7.76%

Unicredito Italiano 5.71%

FMR Corp. 5.05%

Generali Group 2.21%

Other stockholders 26.90%

Major stockholders whose holding exceeds 2%

(as of February 15, 2007)

The capital stock of Fiat SpA consists of three different types ofshares (ordinary, preference, and savings). These differentclasses of stock enjoy different rights upon distribution ofearnings. The percentage of net income allocable to each classof stock is determined according to their respective rights toreceive dividends. Accordingly, the value of dividendsdeclared in the period for each class of stock and the value ofany other dividends contractually owed to each class in thetheoretical event that 100% of earnings are paid out aresubtracted from the Group’s net income. The residual portionof the Group’s net income resulting from this calculation wasallocated in equal portions to all three classes of stock, as ifthe entire income for the period had been paid out. In order to

The Group’s commitment to social responsibility also aims atmaking the Fiat stock attractive to those categories of Funds -particularly US and British ones - which invest in companieson the basis of their corporate social responsibility (CSR).

Relations with stockholdersFiat maintains a constant dialogue with its stockholders andinstitutional investors, pursuing a policy of open communicationwith them through its Investor Relations function. Over thecourse of the year, the Investor Relations function organisespresentations, live or through conference calls, after the regularpublication of Group results or other events requiring directcommunications with the market. Moreover, the programmeincludes several seminars that provide a more in-depthunderstanding of the operating performance and strategies of theprincipal Group Sectors, as well as meetings and roadshows thatpermit a direct relationship between the financial community andthe Group’s top management.

In 2006, communication to stockholders and the financialcommunity was as follows:■ 4 conference calls and related webcasts for the presentationof quarterly results (over 150 participants on average)■ a two-day event for the presentation of the 2007-2010industrial plan (Investor Day of November 8-9)■ meetings at the principal European financial centres (Milan,London, Paris, New York, Boston, Zurich, Edinburgh, Dublin)■ 7 group meetings■ actively participated in 8 conferences promoted/organised byfinancial institutions■ approximately 70 press releases issued■ over 10 calls a day (analysts and stockholders)

Economic Responsibility Stockholders40

Italy 41%

Rest of Europe 39%

United Kingdom 10%

USA 8%

Other Countries 2%

Stockholder distribution by geographical area

GARP 36.4%

Growth 21.0%

Core 18.9%

Index 17.2%

Value 6.3%

Other 0.3%

Stockholder distribution by investment style

Sell side analysts 52%

Buy side analysts 23%

Bankers 11%

Portfolio managers 11%

Business contact 3%

Conference calls participants

More information is available at the Group’s institutionalwebsite www.fiatgroup.com. The Investor Relations sectionprovides historical financial data, institutional presentations,periodic publications, and real time updates on Fiat stock.

Fiat stockholders may also contact:For holders of Fiat shares:Toll-free telephone number in Italy: 800-804027E-mails: [email protected]@fiatgroup.comFor holders of ADRs:Toll-free telephone number in the USA and Canada: (800) 749-1873Outside the USA and Canada: +1 (201) 680-6626Website: www.adr.db.com


Investor Relations: 2006 activities

Month Day Event Speaker Event

January 14 - 15 Bank Am Bellevue, Flims, Switzerland CEO/IR Presentation

30 2005 FY Results Conference Call CEO Conference Call

February 1 High Yield Bond Road Show, London CEO/Group Treasurer/IR Group Meeting

2 Analysts’ Meeting (SocGen), Turin, Italy CEO Group Meeting

23 UBM - Group Meeting, Turin, Italy CEO/IR Group Meeting

28 Motorshow Geneva. Switzerland IR Presentation

April 3 - 4 Borsa Italiana - Italian Investor Conference, USA CEO Presentation

5 USA Road show IR Presentation

May 3 2006 Q1 Results Conference Call CEO Conference Call

4 Goldman Sachs - Bond Road show, UK CEO/Group Treasurer/IR Presentation

10 Exane BNP Paribas - Group Meeting, France IR Group Meeting

June 14 Exane BNP Paribas 2006 European Seminar, France CEO Presentation

15 Deutsche Bank - High Yield Conference, UK CEO Present./Conference

21 - 22 The 9th Annual Morgan Stanley European Automotive Conference, London IR/Other Presentation

July 24 2006 Q2 Results Conference Call CEO Conference Call

September 22 Mediobanca - Italian Investors Conference, Cagliari, Italy IR Group Meeting

27 IAA Automotive Conference 2006. Paris, France IR/Other Present./Conference

October 28 2006 Q3 Results Conference Call CEO Conference Call

November 8 - 9 Investor Day, Turin, Italy CEO/Fiat Top Mgmt Presentation

23 Borsa Italiana - Italian Investment Seminar, Germany IR Group Meeting

29 Intermonte - Road show, Dublin IR Group Meeting

Investor Relations - Contacts

Tel. +39 011 00 62709

Fax +39 011 00 63796

E-mail: [email protected]

website: www.fiatgroup.com

Volumes and uses of debt and bonds

(in millions of euros) At 12.31.2006 At 12.31.2005

Debt (20,188) (25,761)- Asset-backed financing (a) (8,344) (10,729)- Other debt (a) (11,844) (15,032)Debt included among liabilities held for sale (33) -Other financial liabilities (b) (105) (189)Other financial assets (b) 382 454Current financial receivables from jointly controlled financial services entities (c) 143 -Current securities 224 556Cash and cash equivalents 7,736 6,417Cash and cash equivalents included among assets held for sale 5 -Net debt (11,836) (18,523)

Industrial Activities (1,773) (3,219)

Financial Services (10,063) (15,304)

(a) The amounts of “Other debt” and “Asset-backed financing” at December 31, 2005 differ from those published in the Consolidated Financial Statements at December 31, 2005 due to thereclassification described in the Notes to the Consolidated Financial Statements at December 31, 2006 of the Fiat Group.(b) This item includes the asset and liability fair values of derivative financial instruments.(c) This item includes current financial receivables from the new joint venture Fiat Auto Financial Services.

Economic Responsibility Lenders42

Lenders

At December 31, 2006 consolidated net debt (including netdebt reclassified to assets/liabilities held for sale) amountedto 11,836 million euros, 6,687 million euros less than the18,523 million euros at December 31, 2005.Asset-backed financing decreased by 2,385 million euros in2006 mainly as a result of the deconsolidation of the Fiat Autofinancial services companies transferred to the joint venturewith Crédit Agricole (approximately 2 billion euros) andforeign currency translation differences (750 million euros)connected to the appreciation of the euro against the USD.Excluding these changes, asset-backed financing would haveincreased by approximately 0.4 billion euros.Other debt was lower by 3,188 million euros. Net of debtreclassified among liabilities held for sale for 33 millioneuros, the decrease is mainly attributable to thedeconsolidation of B.U.C. – Banca Unione di Credito, whosesale was finalised at the end of August, leading to a reductionof approximately 1.1 billion euros, in addition to therepayment of bonds at maturity for approximately 2.4 billioneuros, the net reduction in bank loans and other debt for

approximately 1.8 billion euros, and foreign exchangetranslation differences totalling approximately 300 millioneuros. Conversely, during the first six months of 2006, the Groupcompleted a number of bond issuances that enabled it torefinance approximately 2.4 billion euros in debt, and inparticular:■ 6.625% Senior Notes with a face value of 1 billion eurosmaturing on February 15, 2013, issued by Fiat Finance &Trade Ltd. and guaranteed by Fiat S.p.A. and placed onFebruary 10 at a price of 100%; ■ the 500 million dollar Case New Holland Inc. bond issue(equal to 380 million euros) with a 7.125% yield and maturingon March 1, 2014. Guaranty is provided by CNH Global N.V.and the placement was completed on March 3;■ a 1 billion euro bond issue with a 5.625% yield and due onNovember 15, 2011. The offering closed on May 12 at a priceof 99.565. The notes, issued by Fiat Finance and Trade Ltd. aspart of the 15 billion euro Global Medium Term Notesprogram, are guaranteed by Fiat S.p.A.

Economic Responsibility Lenders 43

RatingOn January 26, 2007 Fitch Ratings upgraded Fiat’s rating to‘BB’ from 'BB-', while the Short-term rating was affirmed at ‘B’.The Outlook remains Positive. Standard & Poor's Ratings Services revised its outlook on Fiatrating to “positive” from “stable”, affirming the 'BB' long-termand 'B' short-term corporate credit ratings. On February 12, 2007 Moody’s Investors Service upgraded toBa2 from Ba3 Fiat S.p.A. rating maintaining the “positive”outlook. The short term rating remains unchanged.

Short-term Long-term Outlook

S&P B BB PositiveMoody’s Not prime Ba2 PositiveFitch B BB Positive

Within the fiscal year 38%

Between one and five years 53%

Beyond five years 9%

Bond debt broken down by maturity

Euro 43%

US dollar 39%

Brazilian real 10%

Canadian dollar 5%

Other 3%

Bond debt broken down by currency

2007

2008

2009

2010

2011

2013

2014

2016

2021

Total

547.5

225.7

Bond debt maturity (in millions of euros)

0 1000 2000 3000 4000 5000 6000 7000 8000

544.0

1,144.4

3,245.7

1,000.0

379.7

203.1

7.0

7,297.1

Public loansIn its use of public funds, the Fiat Group has always pursuedpolicies that promote local development by helping build asound scientific, technological and entrepreneurial foundationin the so-called “economically depressed areas and thosesuffering from industrial decline”. In doing so, the Group hassteadfastly implemented its programmes in full compliancewith mandatory legal requirements and EU guidelines,reaching the objectives envisaged by the various types offinancing facilities provided to it.Definition and coordination of financing projects presented byFiat Group companies are managed at the central level.During 2006, a major effort went into research anddevelopment programmes, for which the Fiat Group incurredcosts totaling 1,598(1) million euros at the consolidated level.For its most important R&D projects, the Group has applied forfinancing from public agencies, as provided for by currentlegislation. Multi-year research and innovation projects approved by Italianand European institutions received 20 million euros in low-rateloans and 57 million euros in grants, for a total of 81(2) millioneuros.

(in millions of euros) Fiat Group R&D expenses Loans and grants

2004 1,791 74

2005 1,558 70

2006 1,598 81

Projects in depressed areas and areas suffering from industrialdecline received grants totalling 18 million euros.Specifically, these grants almost entirely referred toinvestments made at Melfi in the SATA S.p.A. plant of theAutomobiles Sector.Outside Italy, in 2006 the Fiat Group received grants mainlyin Brazil for 308 million euros and principally from BNDES(Banco Nacional de Desenvolvimento Economico e Social).Most of this funding was earmarked to support investments infixed assets and activities of the Auto and CNH Sectors as wellas other Sectors that operate in that country (Iveco andMagneti Marelli).

Economic Responsibility Lenders44

(1) This amount includes capitalised R&D costs and costs charged directly to operations duringthe fiscal year. (2) Including permanently locked up contributions and subsidised loans, including those from theEuropean Investment Bank, but excluding interest contributions.

CRF 42%

Elasis 31%

Iveco 10%

Marelli 5%

Ferrari 4%

Fiat Auto 4%

Comau 4%

Financing facilities for research and development

projects broken down by Sector

Research work

A large proportion of the Group’s research is concentratedin Italy, and focuses on the highly specialized activities whichare essential to increasing the manufacturing sectors’ know-how and improving their competitive edge.The research and development programmes planned for 2007will address product innovation, vehicle and infrastructuresafety and how they can be integrated, quality, manufacturingsystems, and environmental stewardship.Support for these programs will be sought from a variety ofItalian and supranational sources, viz.:■ at the Italian level, with the Italian Ministry of Universitiesand Research (MIUR) through the national researchprogrammes, with the Italian Ministry of EconomicDevelopment (MSE) through participation in Calls for Proposalsfor the ministry’s Technological Innovation Fund, and fromregional funding programmes;■ through participation in the Calls for Proposals organized forthe European Union’s recently-launched Seventh FrameworkProgramme.

Economic Responsibility Human Resources 45

At December 31, 2006, the Group had 172,012 employees,compared with 173,695 at December 31, 2005. During the yeararound 18,600 new employees were hired, while a total ofaround 19,300 employees left the Group. Changes in the scopeof consolidation of the Group entailed a net staff decrease ofapproximately 1,000 employees, mainly as a result of the saleby Teksid of the French company SBFM, the sale of B.U.C. –Banca Unione di Credito and of Fiat Auto’s financial servicesfollowing the creation of the joint venture FAFS with CréditAgricole. In 2006, personnel costs amounted to 6,741 million euros.

Incentive systemsWith its Compensation System, the Fiat Group strives to:■ reward talent■ focus on performance■ attract valuable recruits■ motivate employees, ensuring that they identify with thecompany’s goals.

This is accomplished through a worldwide Group policy whichsets out common guidelines, and country-specific features thatensure a prompt, consistent response to the labour market andbusiness conditions in each manufacturing area. Fiat Group compensation includes:■ Basic compensation: In each country, basic compensationlevels are established in order to ensure that they arecompetitive with each market’s practice, taking intoconsideration the constraints and opportunities envisaged bynationwide and company collective bargaining agreements.Annual pay increases are determined on the basis of markettrends, scheduled renewals for collective bargainingagreements, and specific management requirements aimedmainly at rewarding talents. Pay increases over and abovethose mandated by law or contract are scheduled in accordancewith the Group’s policy of rewarding talented employees.■ Short-term variable compensation: In addition to the fixedcomponent of total compensation envisaged by collectivebargaining agreements, the Fiat Group’s more than 20,000professionals around the world receive an annual variablecomponent tied to their performance and that of theircompany. The annual bonus thus awarded will depend onthe employee’s role in the company, individual/Companyperformance, and compensation market conditions in thecountry concerned.■ Long-term compensation: Starting from 1999, over 500Group executives are eligible to participate in stock optionplans; options may be granted directly by Fiat S.p.A. or by theemploying company. In addition, in 2006 a long term incentive(TPP) based on a Performance Shares plan was introduced for200 CNH executives. Shares will be available starting from thefirst quarter of 2009 and their exercise is subject to theachievement by CNH of financial targets envisaged by the Plan(operating income and trading cash flow).

Human Resources

Sales volumes and market shares

Fiat Auto (Fiat, Alfa Romeo,

Lancia and Fiat Light Commercial Vehicles)

In 2006, Fiat Auto delivered a total of 1,980,300 units, for anincrease of 16.7% from 2005. In Western Europe, 1,289,600units were delivered, for an increase of 17.2%. The positivesales performance during the year stemmed from the growingsuccess of new models that had been introduced previously,first and foremost the Grande Punto and Panda, as well as theother models that were introduced during the year to enrichthe product line of the three brands. In Brazil, the Sectordelivered 464,800 cars and light commercial vehicles. Itincreased its sales by 15% from 2005 and confirmed itsleadership position on the market. This excellent result ismainly attributable to the success of flex versions (which run

Economic Responsibility Customers48

Customers

2006

2005 19,533

23,702

Revenues performance

(net revenues in millions of euros)

In 2006, the Western European automobile market expandedslightly (+0.7%) from 2005.Demand rose 3.7% in Italy and 3.8% in Germany, while itcontracted in the other principal countries: France by -3.3%,Great Britain by -3.9%, and Spain by -2%. Outside WesternEurope, demand expanded slightly in Poland (+1.5%). Incontrast, the Brazilian market expanded significantly, at a rateof 13.1%. The light commercial vehicle market performed wellin Western Europe (+5.6%) as compared with the previous year.Demand rose by about 8% in Italy, over 10% in Germany, 4.8%in France, and 5.9% in Spain, while remaining stable in GreatBritain.

2006

2005 28%

30.7%

Automobiles - Market share

2006

2005 6.5%

7.6%

Italy

Western Europe (*)

2006

2005 24.4%

25.3%

Brazil

(*) Including Italy.

2006

2005 42.4%

47.1%

Light commercial vehicles - Market share

2006

2005 10.3%

11%

Italy

Western Europe (*)

2006

2005 28.8%

26.1%

Brazil


on both alcohol and gasoline) of the Palio and Mille models,as well as the Fiat Idea, voted Carro Do Año (Car of the Year) inBrazil. In regard to light commercial vehicles only, a total of323,500 units were delivered in 2006, for an increase of 13.4%from 2005. This was largely attributable to the New Ducato,which enjoyed great success following its introduction at theend of May 2006, and the New Doblò.

Maserati

Economic Responsibility Customers 49

2006

2005 533

519



2006

2005 79.3

88

Sales performance of automobiles and

light commercial vehicles (in thousands of units)

2006

2005 90.8

110.1

France

Germany

2006

2005 53.3

76.1

Great Britain

2006

2005 687.7

808.2

Italy

2006

2005 70.3

69.6

Spain

2006

2005 1,099.9

1,289.6

Western Europe (*)

2006

2005 33.8

33

Poland

2006

2005 404.3

464.8

Brazil

2006

2005 159.3

192.9

Rest of the world

2006

2005 1,697.3

1,980.3

Total sales


In 2006, Maserati reported a distinct improvement in companyresults. However, revenues were down slightly (-2.6%), sincethe previous year had benefited from sales of the specialMC12 street version, which was no longer sold in 2006. TheQuattroporte confirmed its position as the top-selling modelmade by the Company, with over 3,800 units sold. The newExecutive GT and Sport GT versions contributed to this result.Maserati delivered 5,734 cars to the dealer network, for a 3%increase from the 5,568 units delivered in 2005. Overallgrowth stemmed primarily from the significant increasesrealised with the Spyder and Coupé models, amounting to27% and 12%, respectively. In 2006, the United Statesconfirmed its position as the most important market forMaserati. With 2,310 units sold, the Sector maintained the

healthy level of volumes reached in 2005. Excellent resultswere achieved in other countries, particularly in France, withan increase of 20%, in the United Kingdom and in Japan, bothup 15%. On new markets like China and Russia, Sectordeliveries grew respectively by 52% and 18%. At December 31,2006, Maserati had orders for 819 units (+3.8% from 2005),including 717 Quattroporte.

F430, in both the berlinetta and spider versions, and the new12 cylinder 599 GTB Fiorano. In 2006, sales of homologatedcars to the dealer network totalled 5,650 units, up 5% from2005. A total of 188 non-homologated cars were sold in 2006,compared with 18 units in 2005. The United States remainedthe principal market, with 1,709 units delivered (+8%). A totalof 3,045 units (+4.7%) were sold in Europe, including 669 inItaly (+1%). A total of 5,671 homologated cars were deliveredto end customers, compared with 5,409 homologated cars in2005, for an increase of 4.8%. The United States, Italy, theUnited Kingdom, and France made major contributions to thepositive balance for fiscal 2006. New or developing marketsalso made a substantial contribution (Middle East +84%,Eastern Europe +30%, and Asia/Pacific +15%), spurring amajor increase in volumes without compromising theexclusivity of the brand. A total of 121 cars, +95% from 2005,were sold in China thanks to a completely new commercialnetwork.


Ferrari

Ferrari closed 2006 by confirming the extraordinary appeal ofits products, not only on traditional markets but also on morerecently developed ones. While maintaining its intrinsiccachet of exclusivity, in 2006 Ferrari increased end customerdeliveries by 4.8% to keep pace with growing demand. Itsprincipal objective was to reduce delivery wait time and meetthe demands of those new markets that reported particularlyinteresting growth trends. This result was achieved with the

2006

2005 1,289

1,447



2006

2005 5,381

5,650

Homologated cars sold to the network

Agricultural and Construction Equipment

CNH-Case New Holland

In 2006, the worldwide market for agricultural equipmentreported contrasting trends for the main products and acrossthe various regions. CNH overall deliveries of tractorsdecreased from 2005, also as a result of actions to reducedealer inventories. In particular, the most significant declinewas reported in North America, where volumes were alsoinfluenced by market softness. Conversely, deliveries improved

2006

2005 5,568

5,734

Cars delivered to the network

2006

2005 10,212

10,527



sharply in Latin America and were stable in Western Europe.CNH overall market share decreased slightly while, at thesingle area level, an improvement was reported in LatinAmerica. CNH deliveries of combines to the network declinedoverall: against the backdrop of an unfavourable marketenvironment, decreases were reported in the Americas and inWestern Europe; only Rest of the World countries bucked thetrend reporting higher volumes with respect to 2005. CNHoverall market share was up thanks to an increased penetrationof the North and Latin American markets. In 2006, CNH benefited from rising demand, increasingdeliveries of construction equipment at a rate consistent withor higher than that of the market in the various regions, withthe exception of North America, where decreases werereported for all the main product lines. The Sector’s globalmarket share was unchanged from 2005, with increases inLatin America for all the main product lines.

Iveco delivered a total of 9,300 buses, marking a 9.4%improvement over 2005.In China, Naveco, the 50-50 joint venture with the NAC Group(Nanjing Automotive Corporation), sold approximately 20,000light vehicles (+11% from 2005). In Turkey, the licensee Otoyolsold 5,200 units (in line with 2005 results).The market share of Iveco in Western Europe (GVW ≥ 2.8 tons)was 10.7% (-0.2 percentage points from 2005). Its share of thelight-vehicle segment was 9.1% (-0.2 percentage points). The Daily confirmed its position as the absolute leader in the3.5 ton segment, with 17% of the market. In the medium-vehicle segment (Eurocargo), Iveco’s share, while contractingby 0.9 percentage points, was still 25.4%, confirming theSector’s position as co-leader on the European market. In theheavy-vehicle segment, Iveco’s market share was 10.9%(11.1% in 2005). In Eastern Europe, Iveco’s market share (GVW≥ 2.8 tons) rose to 11.8% in 2006 (+0.1 percentage points). Itsmarket share rose in the medium-vehicle segment, whileremaining stable in the light-vehicle segment and contractingslightly in the heavy-vehicle segment.The market share of Irisbus in Western Europe, 20.6% in 2006,rose 0.3 percentage points from 2005. In particular, its marketshare rose in France (+2.7 percentage points) and Germany(+1.3 percentage points), while remaining largely stable inItaly and falling in Spain (-1.2 percentage points) and GreatBritain (-0.9 percentage points).


Trucks and Commercial Vehicles – IVECO

In 2006, Iveco delivered a total of 181,500 vehicles, including17,600 with a buy-back commitment, achieving growth of 5.2%from the previous year. In Western Europe, 135,100 vehicleswere delivered, for an increase of 3.2% from 2005. At theindividual country level, Germany and Spain reportedsignificant increases (for the light and heavy vehicle segmentsin Germany and for heavy vehicles in Spain), while Italy andGreat Britain, partly due to their soft markets, reporteddecreases in all segments (the decline in sales wasconcentrated in the light and heavy vehicle segments).Outside Western Europe, sales volumes were up sharplyin Eastern Europe, rising in Africa and the Middle East, andvirtually stable in Latin America.

2006

2005 8,483(1)

9,136(1)



(1) In both periods the Sector is represented excluding the powertrain activities that have been conveyed in the Fiat Powertrain Technologies Sector as 7 January 1, 2006.


Fiat Powertrain Technologies (FPT) revenues increased from4,520 million euros in 2005 (referring to the powertrainoperations previously consolidated in the Iveco Sector and,starting from May 2005, to the powertrain operations that weretransferred to FPT following the termination of the MasterAgreement with General Motors) to 6,145 million euros in 2006(an increase of 11% on a comparable basis). Part of the Sector’soutput was sold to other Group Sectors, while sales to thirdparties and joint ventures represented approximately 26% ofrevenues in 2006. In 2006, the Sector benefited from the risingsales volumes of its principal customers, particularly Fiat Auto,reporting growth of 11% on a comparable basis from theprevious year.The Passenger & Commercial Vehicles product line sold2,328,000 engines in 2006, approximately 22% of which werediesel engines sold to General Motors and Suzuki, and 1,695,000transmissions, mainly sold to Fiat Auto. The Industrial & Marineproduct line sold 444,000 engines (+1.9% from 2005), mainly toIveco (44%), CNH (19%), and for 24% to Sevel, the joint venturebetween Fiat Auto and the PSA Group. Furthermore, 113,000transmissions (-1.4%) and 262,000 axles (+9.3%) were sold.


2006

2005(**) 25.6

25.9

Sales performance of trucks and

commercial vehicles (in thousands of units)

2006

2005(**) 16.8

20.3

France

Germany

2006

2005(**) 16.6

15

Great Britain

2006

2005(**) 37.9

36

Italy

2006

2005(**) 19.3

20.6

Spain

2006

2005(**) 131

135.1

Western Europe (*)

2006

2005(**) 15.8

19.7

Eastern Europe

2006

2005(**) 25.7

26.7

Rest of the world

2006

2005(**) 172.5

181.5

Total units sold

(*) Including Italy. (**) Figures for 2005 present a break-down by country different from the one published in the 2005 Annual Report as a result of an allocation of deliveries modified according to the criterion adopted for 2006.

2006

2005 4,520

6,145



Components – Magneti Marelli

Against the backdrop of a market that expanded 4.3%, MagnetiMarelli increased its revenues by 14.2% on a comparableconsolidation basis. Highlights of the performance of eachbusiness unit are outlined below.

Lighting Group

In 2006, revenues totalled 1,402 million euros, up 11.2% from2005.In 2006, approximately 80 new production programmes werelaunched which, together with the positive sales performanceof current products, enabled Magneti Marelli to achievesignificant market shares worldwide for both headlamps (14%)and taillamps (13%).

Powertrain (Engine Control)

Revenues for 2006 totalled 882 million euros, an increase of11.9% from the previous year. The revenue increase involvesall customers of the business line, in particular Fiat Auto andFiat Powertrain Technologies (for a total of +22%) andcustomers in the China area. Good sales performance was alsoachieved by the Tetrafuel system supplied to Fiasa in Brazil.

Cofap Automotive Suspension

In 2006, the business unit had revenues of 1,103 million euros(1,052 million euros in 2005), an increase of 20% from theprevious year’s figure on a comparable consolidation basis.The increase in volumes is connected to the success of Fiat’snew models and the introduction of new products for GM-Opeland PSA.

Electronic Systems

Total revenues for 2006 amounted to 534 million euros, up4.1% from 2005.Fiat and PSA continued to be the Electronic Systems businessunit’s largest customers, with a significant increase beingrecorded for Fiat (+28%). As for third parties, there was a sharpincrease in sales to the Volkswagen-Audi Group (+50% from2005).

Exhaust Systems

In 2006, revenues totalled 533 million euros, a significantincrease of 31.9% from the previous year. This sharp rise in revenues was fuelled by sales to Fiat andMercedes, where the latter was supplied with exhaust systemsfeaturing a DPF diesel particulate filter. Sales also increased inthe Mercosur, thanks to strong demand from local customers.

Motorsport

Magneti Marelli participates in the major motorsportchampionships as a technical partner. In 2006, it suppliedelectronic control systems, fuel system and electromechanicalcomponents, and telemetry and data acquisition systems to theleading Formula 1 teams. In addition to Formula 1, MagnetiMarelli is also active in other championships.


2006

2005 4,033

4,455



Metallurgical Products – Teksid Production Systems – Comau

The unfavourable market conditions negatively impactedComau revenues, which decreased by approximately 18.6%from 2005 mainly due to a slowdown in activity levels at theEuropean Body-welding operations. With markets shrinking, order intake totalled 1,194 millioneuros in 2006, down 16% from 2005. In 2006, new orders for contract work came to 929 millioneuros, down 23% from 2005. Overall, 54% of the orders forcontract work were acquired in Europe, 27% in the Nafta area,while the remaining 19% came from the Mercosur and newmarkets (5% in China). 32% of all orders came from Fiat Groupcompanies and 68% from other manufacturers. At December31, 2006 the order backlog totalled 593 million euros, downapproximately 15% from 2005. For Service operations, 2006 saw a significant increase inorders (+11%), reaching a value of 265 million euros, 25%of which coming from Fiat Group companies.


In 2006, a French company (SBFM) active in the cast ironbusiness was sold. Excluding the impact of this sale, Teksidrevenues would have increased by 3.5% with respect to theprevious year. Revenues of the Cast Iron Business Unitdecreased by 5.6% and volumes by 6.5%. The change isconnected to the mentioned sale of SBFM. On a comparablebasis, revenues would have increased by 7.2% due to bothhigher volumes (+1.5%) and the favourable effect of exchangerates, the Brazilian real in particular. Brazil was the highestgrowing area also in terms of revenues. It is worth noting thatin the cast iron business, Teksid is also active in China throughHua Dong Teksid Automotive Foundry Co. Ltd, a jointlycontrolled company accounted for using the equity method.This company recorded a 20.2% increase in volumes from2005. The Magnesium Business Unit (where Teksid operatesthrough Meridian Technologies Inc.(1), in which Teksid holds a51% interest and Norway’s Norsk Hydro Group the remaining49%) recorded a reduction in both revenues (-5.2%) andvolumes (-6.2%) due to a slowdown in the reference market,in particular the North American market, which neverthelesscontinued to account for approximately 80% of revenuesin 2006.

(1) In December 2006, the Fiat Group reached an agreement for the sale of its interests in

Meridian Technologies Inc.

2006

2005 1,036

979

Revenues performace


2006

2005 1,573

1,280

Revenues performace


Services – Business Solutions

In 2006, the Sector continued its process of transformationlaunched in the previous years. On the one hand, it continuedto sell businesses that are no longer considered priorityactivities and on the other hand it focused on reassigningservices provided to the Fiat customer. At the same time, theseactivities were conveyed in the subsidiary Fiat Services S.p.A.(formerly Fiat Gesco S.p.A.). Effective January 1, 2007,Services operations, including payroll activities, weretransferred to Fiat Services S.p.A., which is organised in threeservice units: transactional processes (Finance and Payroll), ICTservices and customs services.From 2007 onwards, Fiat Services S.p.A. and its subsidiariesoutside of Italy will be reported under Holding companies andOther companies, and the Business Solutions Sector will thusno longer be represented.

Publishing and Communications – Itedi

Editrice La Stampa S.p.A. reported an average daily circulationof 310,000 copies in 2006, a 1% drop from the 312,000 copies in2005. This erosion was largely due to the fact that the jointmarketing arrangement with Editoriale Corriere di Romagna wasdiscontinued in September 2006, as well as to lower newsstandsales. The value of production was 170 million euros, against169 million euros in 2005. This result is largely attributable tohigher advertising revenues and higher revenues fromadditional items leveraging the paper’s brand name, whichoffset the downturn in revenues from newspaper sales.Publikompass S.p.A. booked advertising billings of 332 millioneuros in 2006, compared with 328 million euros in 2005. Thisslight (+1%) increase was largely due to higher revenues fromnewspaper advertising, which offset the drop in income fromperiodicals and audiovisual media, an area where sales ofadvertising space with Warner Village did not entirely make upfor the loss of Rete A.On November 19, 2006, a new all-colour tabloid format featuringan original graphic layout was introduced for the daily LaStampa. On the same date, the new version of the newspaper'swebsite went on-line, with graphics matching those of the paperand more sections and wider coverage than ever before.


2006

2005 752

668

Revenues performace


2006

2005 397

401

Revenues performace


Sales systems and commercial channels

Fiat Auto

The dealer network is a key component in the growth strategy ofFiat Group Automobiles. Over the past few years, it has focusedits efforts on three main areas: increasing its geographicpresence, improving the quality of service, and enhancing thebrand appeal of Fiat, Lancia, Alfa Romeo, and light commercialvehicles to dealers. A team of 180 persons has been working onreorganising and upgrading of the dealer network, in which 900million euros will be invested over the next few years. In 2006

Fiat Group dealers reported good results as compared with theindustry average in terms of customer satisfaction, salesvolumes, and profitability. Over the past two years, the dealernetwork has changed significantly, by filling 440 network gaps,including 90 through new partners that formerly representedcompeting brands and another 350 through existing dealers. This reorganisation reinforced the network’s geographicpresence, bringing the total number of sales agents in Europe to4,400 in 2006. Efforts in this area were focused on customersatisfaction in terms of service quality, courtesy, and theprofessionalism of showroom sales staff.


Mirafiori Motor Village

72,000 square metres total space33,000 square metres of indoor space

3,000 square metres of green space1,300 square metres for the Fiat Showroom

700 square metres for the Lancia Showroom700 square metres for the Alfa Romeo Showroom350 square metres for Light Commercial Vehicles

1,200 square metres for the Body Shop36 car shop workstations

This is the largest multifunctional centre in Europe dedicatedto automobiles. It also represents a milestone in the historicrelationship between Fiat and Turin. Aside from its traditionalrole as a major industrial production centre, Mirafiori hasbecome a public gathering spot whose main attraction is theautomotive world. The Motor Village, which was redevelopedwith the collaboration of the Turin Polytechnic School ofArchitecture, has been constructed within the precincts of thecar plant. Visitors can look at, test-drive (virtually on thesimulator or in real life on the road) and, obviously, buy a newFiat Group car, spare parts, and gadgets, bring their existingcar in for servicing at the mechanic shops, take defensivedriving courses on the test track, and dine at the Mirafiori Café,a trendy bar and restaurant. The classrooms and workshops ofthe Training Academy, the prestigious Fiat Auto dealer networktraining school, occupies about 4,000 square metres. This iswhere dealer professionals learn customer service and carshop repair techniques. Spaces reserved for children areprovided in the showrooms, while green areas and fountains

grace the outdoor areas. The Fiat brand showroom isdecorated with Ikea furnishings, the fruit of a partnership withthe Swedish retailer that will transform the look of alldealerships in Italy and abroad. The aim of this collaborationis to simplify people’s lives with brilliant ideas, style, andcharm, bringing the brand into people’s homes as much aspossible.The Mirafiori Motor Village has also represented the idealcommon meeting ground for encounters between topmanagement and customers. On several occasions, theGroup’s top managers were given accelerated product andcustomer service training courses, and then assigned for a dayto present Fiat models to potential customers visiting theshowrooms. All of these confirm the multipurpose nature ofthe Mirafiori Motor Village, an appealing gathering spot whereeveryone can enjoy a hands-on experience with Group brandsand where top management can learn directly what customers’real needs are.

commercial successes there in coming years. In othercountries, Ferrari relies on a network of importers and dealers.There are currently 210 Ferrari points of sale worldwide.

CNH Case New Holland

CNH recognises the importance of its own dealer network inproviding end customers with outstanding service.Consequently, the support it provides to dealers cannot neglecttraining initiatives. Numerous training courses were offered in2006. In the construction equipment segment, Case hosts dealersand customers at its own “Customer Experience Centres” inMonthyon, France and Tomahawk, USA. Participants can try outthe brand’s latest construction equipment and participate intraining courses. These encounters familiarise customers withthe value of the Case brand and the advantages offered by itsproducts. In 2006 Case organised a meeting for salesmen inMonthyon, at which more than 150 distributors and salesmenfrom Western and Eastern Europe, Africa, and the Middle Eastparticipated. In addition to providing information on itsproducts, Case managers presented Company strategies andfuture prospects to meeting participants. During the sameperiod, Case organised training days in Tomahawk for over 330salesmen from dealerships in different locations scatteredthroughout the United States and Canada.In regard to construction equipment, New Holland offers trainingdays to internal personnel and dealers around the world on howto become “advisors” for end customers. More specifically,training is broken down into two types: ■ spot training sessions for dealers and in-house staff beforenew products come on the market or whenever new dealersjoin the network.■ pre-defined training:

- Value@work Project. This type of training is designed both


The Group has also intensified its presence in strategicmetropolitan areas, with direct investments in Company-owneddealerships. These investments tend to complement the existingdealer network by setting up dealerships in areas not previouslyserved by a partner. The principal cities where this initiative willbe realised include Lyon, Milan, Naples, Vienna, Lisbon, Madrid,Paris, and Düsseldorf, while Turin (with its Mirafiori MotorVillage) and Brussels represent established operations generatingexcellent returns in terms of the number of visitors and salesvolumes. This experience will assure a flow of information backto the Group that will enable it to set sales and service qualitystandards. Major investments have been and will continue to bemade in service quality and corporate identity over the next fewyears. Partly in consequence of the growth in volumes, acampaign has been launched to hire about 3,000 new salesmenby 2010. An intensive training programme will be carried out toimprove the quality of the sales process. The increase in salesand improved results reported on the Group’s principal markets –including Italy, Germany, United Kingdom, The Netherlands, andPoland – and its 90 new partners confirm the enhanced appeal ofbecoming a Fiat Group dealer. Initiatives are also underway todevelop the dealer network in countries outside Europe(especially Russia, China, India, and Japan), consistently withexpansion of the Group’s strategic agreements.

Maserati

Maserati distributes its products through two main channels:its subsidiaries – Italy, Maserati Deutschland, Maserati Suisse,Maserati GB, Maserati West Europe (France, Iberian Peninsula,and Benelux), Maserati North America (USA and Canada) –and various importers for other countries. At December 31,2006, Maserati was being sold on 58 markets through 253points of sale.

Ferrari

Ferrari operates on 52 markets and exports approximately 90%of its production. It has directly owned subsidiaries in NorthAmerica, Germany, Switzerland, Great Britain, and France(which is also responsible for Spain, Portugal, Belgium, TheNetherlands, and Luxembourg). The Company operates inChina through a joint-venture. In 2006 a regional office wasset up in Shanghai for direct management of the Asian-Pacificarea. This region, comprised by 13 markets including Japan,China, Australia, and Hong Kong, is considered to have highgrowth potential and Ferrari expects to realise major

for New Holland salesmen and dealer staff.Twenty-seven training sessions were held, involving 74dealerships, 350 salesmen, and 70 New Holland employeesassigned to the marketing and spare parts areas.- Train the trainer. This delivers the best product training toNew Holland marketing staff, who are selected to cascadeproduct knowledge to dealers salesmen.- www.newhollandused.com provides dealers with the idealtool for promoting used equipment sales. On this sitecustomers can find used New Holland equipment available atdealerships worldwide.- Target Gold Salesmen’s Club. This programme enables NewHolland dealers to earn points for the units they sell, that willconvert into money rewards. The points are than convertedinto cash rewards.- European Dealers Convention. The New Holland Europeandealers convention was held November 10 and 11, 2006 at theMirafiori Motor Village in Turin. All major European dealersparticipated at the meeting.

In North America, Case IH offers numerous training courses fordealers on agricultural equipment. During 2006, the followinginitiatives complemented routine programmes:■ Big Red Roundup 2006, Phoenix, Arizona: combined field andclassroom training for Case IH dealer salesmen.■ Combine E-Training: combine product specialists participatedin a web-based course with an interactive learning programme.

Iveco

Iveco operates through a sales network counting a total of 928dealers in over 100 countries. Of these, 416 are located inWestern Europe, 104 in Eastern Europe, 143 in the Asia-PacificBasin, 154 in Africa and the Middle East, 89 in Central andSouth America, and 22 in North America.

Number of Number of

Geographical area dealers 2006(*) dealers 2005

Western Europe 416 327

Eastern Europe 104 84

Pacific Asia 143(**) 42

Africa and Middle East 154 125

Central and South America 89 72

North America 22 –

Total 928(***) 650

(*) Data updated as of September 2006.(**) Including 79 Naveco dealers in China.(***) Including Industrial and Marine activities of Fiat Powertrain Technologies.

Customer loyalty and satisfaction

Fiat Auto

Fiat Auto Customer Care is focused on achieving two prioritygoals: improving direct relations with current or potentialcustomers and improving customer experience of Companyproducts and service. In regard to the first of these goals, FiatAuto is the first European carmaker to use a universal toll-freenumber. Callers use just one number for each brand in orderto obtain customer service support 24 hours a day, informationabout products, services, and test drives, and handling ofdirect contacts to satisfy any need that customers might have.Already available in the principal countries of Europe, it will besteadily extended to other, minor countries. The universal toll-free number is currently available to 92% ofEuropean customers, and 98% by June 2007. Acquisition ofthe Customer Centre that handles front-end service (i.e. directcontacts with Fiat customers) was completed in July 2006.Active in 13 European countries, this is the largest multilingualcall centre in Italy, with about 8,000 training hours offered inthe last four months of 2006. About 4,000 customers contactthe Customer Centre every day, receiving their file requestnumber via text message (SMS) so that solutions can betracked and identified more efficiently. Fiat Auto uses anintegrated customer satisfaction listening system implementedin collaboration with the famous American consulting firm J.D.Power in order to improve customers’ experience of Companyproducts and services and align what the brand “promises” tooffer to what customers expect to receive. Comprehension ofthe divergence between Fiat Auto and its best competitors, aswell as definition of targeted actions to improve the customer’sexperience, have resulted in the definition of operatingguidelines for various Company departments (Manufacturing,


Quality, Parts & Service, Engineering & Design, TechnicalService, Dealer Network, Customer Care, Brand & Commercial).These guidelines have made it possible to align Companyprocesses with customer needs. Thus, far, contact volumeshave risen by 30% in Europe, while handling times have beencut by 70%. Customer Care currently answers customerrequests within 3-4 business days, with 66% being satisfiedwithin five days.

Quality at Fiat Auto

With the entire Company focused on quality, 2006 markedanother year of intense work and major investments toimprove the quality of its products and services. Progress wasmade on improving product reliability and reducing the rate ofcar breakdowns, resulting in further reduction in warrantywork. Decreases in warranty work were reported on allmarkets, at rates that vary according to region. Here are thehighlights of quality programme initiatives:■ the Permanent Centre for testing performance underconditions of high temperatures in Sicily became fullyoperational in 2006; ■ during development of the new Bravo model, specific roadtests were performed in South Africa in order to reach“performance limit” conditions during the product testing andevaluation phases; ■ existing activities to test performance under conditions oflow temperatures were upgraded at facilities in Sweden;■ implementation of innovative methods and tools for virtualtesting continued as part of the ongoing programme to reducedevelopment time;■ new methods and tools were perfected for objective qualitytests of products rolling off the production line, withconsequent benefits in terms of reduced time necessary fordiagnoses and introduction of improvement techniques.

The new products rolled out in 2006 demonstrated thecomplete integration of specialists from various areas in theCompany, whose collaboration is essential so that customerscan enjoy products and services in line with the risingexpectations imposed by the market. In the manufacturing area, consistently with the decision tooperate with a production system in line with the logic ofWorld Class Manufacturing (WCM), work has intensified onimplementing new methods and tools in the Company’s ownquality system processes. With specific investments in quality

and other measures, work commenced at all productionfacilities on reorganising quality control, upgradingmetrological rooms, and involving and training all employees.The quality system standards received ISO 9001 certificationfrom TUV Italia, an international organisation that issued acertificate of compliance covering all production sites in Italy. The following achievements outside Italy also merit mentionhere:■ qualification by the Tycky plant in Poland as finalist for theEuropean Excellence Award given by the European Foundationfor Quality Management, confirming the leading role played bythe Polish operation and its products on the global automotivemarket;■ leadership by the Brazilian company FIASA in terms ofcustomer satisfaction with product quality, as documented bythe results of external surveys carried out on vehiclesproduced and sold in Brazil.Special attention was devoted to the quality of suppliesthrough the supplier collaboration programme that waslaunched in 2005 and is steadily expanding throughout theworld. In addition to the upgrading of Supplier Qualitystructures (hiring of new specialists and technical trainingtargeting supplier processes), implementation of a SupplyQuality Performance information system was completed in2006 with positive impact on the exchange of information andproblem resolution reaction time. The Technical Services area launched an upgrade of theproduct support organisation, invested in new quarters for theTraining Academy, an avant-garde training centre at the TurinMotor Village, and improved the process used to analysereturns from the dealer network, including the creation ofdedicated diagnostic structures in collaboration of qualifiedtechnical partners. The new organisation and processes, which


are integrated with consolidated field management activities,made it possible to recover efficiency and stimulate businesspartners, vendors, and the dealer network to achieve near“zero defect” targets. This is the standard applicable tocompanies that aim to achieve excellence. To support the growth of international activities in accordancewith local conditions and in close collaboration with partners,during the year resources were dedicated and programmeslaunched to develop the quality system. In coordination withthe new, centralised International Quality Operations function,new products were launched (the Perla in China and the Albeain Russia), development plans were developed for expandinglocal quality departments, audit plans were realised forproducts and processes targeting new markets, and methodsfor selection and accrediting of suppliers and qualification ofcomponents in compliance with European standards wereimplemented. In the area of cross-disciplinary initiatives, the Six Sigmaprogramme continued with success. This initiative, which isapplied to both internal processes and supplier processes, wasdeveloped in an industrial context but is focused primarily onimprovements with the customer in mind. It is an importanttool that is being steadily implemented throughout theCompany organisation. The uninterrupted positive trend of the past few monthsattests to recognition of these achievements by the market,confirms the effectiveness of customer-focused programmes,and offers a powerful stimulus to continue working in thisdirection.

Maserati

Beginning in 2005, Maserati implemented a CustomerRelationship Management (CRM) system that analyses thequalitative aspects of relations between customers and theCompany. This system supports the strategic and businessdecision-making process. The call and contact centreoperating in 17 European countries (available through the toll-free number 800.008.008 in Italy) represents the principalchannel of contact. The e-mail channel is published in various communicationmaterials and available at www.maserati.com The site also features a section reserved for owners, withexclusive content and services reserved for “MaseratiOwners.” This section includes special services such as“Itinerari Grantour,” to discover the most characteristic spots


on the Italian peninsula with Maserati, and the “MaseratiGarage,” a virtual room where you can create and “park” yourideal cars. There are currently about 8,000 registered users ofthis site. Whenever a Maserati is sold, be it to a first-time orrepeat customer, the CEO of Maserati will send hiscongratulations to the buyer in a personally signed welcomeletter. Maserati also conducts annual customer satisfaction surveys.The C.S.I. (Customer Satisfaction Index) surveys carried out in2006 reported a very positive overall assessment, rangingfrom 4.3 to 4.5 (scale 1:5; 1=minimum; 5=maximum).

Ferrari

Ferrari makes daily investments in its customer relations,seeking to improve its familiarity with them in view of bettersatisfying their needs and consolidating their loyalty. ACustomer Relationship Management (CRM) platform wasimplemented for this purpose in 2004. Recognised as the bestpractice in the luxury car sector, it was extended in 2005 to allsubsidiaries and dealers. Thus, Ferrari now possesses asingle tool at the global level for management of customerrelations. However, the cornerstone of Ferrari’s relationshipswith its customers is and will remain direct, personalisedcontact. To that end, the Company uses a plethora oftechniques to transform car purchase from a simple salesprocess into bona fide initiation as member of the club ofFerrari owners. Every customer receives a welcome letterpersonally signed by Chairman Luca Cordero di Montezemolo.Together with the car, the new buyer also receives the V.I.P.Book, or Vehicle Identification Passport, containing imagesthat reconstruct the principal phases of the productionprocess. Customers have access to a European call centrewith 16 toll-free numbers and a dedicated website(www.ferrariowners.com) that receives over 13,000 contactsannually. This is the preferred channel of contact betweenowners and the Company. The Ferrari Owners’ Site providesusers with complete technical information on Ferrari models,historic articles about Ferrari, continuous updates on the latestinnovations, and sneak preview images of new models. This site also represents the only channel for reservingparticipation at events reserved for Ferrari owners, such asfactory tours, and requesting admission to the most importantcar shows worldwide. Furthermore, customers can access theexclusive services of the Ferrari F1 Club and purchaseproducts in the Limited Edition series, which are conceived

and realised exclusively for them. A section of the site isdedicated to the racing world, from Formula 1 to customerraces, where they can experience the thrill of racetrackcompetition from a front row seat.

CNH Case New Holland

Albeit with the peculiarities that distinguish every brand, thecustomer is the focus of CNH sales strategies, with numerousinitiatives being developed in 2006. For some time now, the Case brand has been involvingcustomers in North America and Europe in the developmentof new products. In addition to exhaustive interviews,customers are invited to the CNH manufacturing locations toreview and test prototypes prior to final engineeringapprovals and tests. Case IH has developed a similarinitiative: during the product development process, itperforms various qualitative and quantitative tests thatinvolve customers in assessment of prototypes before theyare launched. Certain tests are carried out on customers’farms. An example for 2006 involved the development andlaunch of the Case IH Module Express cotton picker. The “Service Excellence” project, launched in 2006,represents a fundamental change in company culture and isan integral part of all New Holland activities in theagricultural sector. Based on the coordinated efforts ofmanagement, production, communication, training, sales, andcustomer care, the project aims to provide customers withoutstanding service from the moment they buy a newmachine until they replace it with the latest model. Theproject covers the following principal areas: customersupport during the harvesting season, management ofemergencies, development and technical training of dealers,and product improvement and support.


Iveco

Iveco’s Customer Centre was set up in 1999 in order to handleroadside assistance for all Iveco vehicles. Over the years, the Assistance Non-Stop service wascomplemented by new services: Contact Us and MarketingSupport, transforming itself from a call centre into anarticulated and efficient unified operating switchboardproviding customer services.

Assistance Non Stop (ANS)

With a simple phone call to a universal toll-free number, it ispossible to access the service 24 hours a day, 365 days a year,from anywhere in Europe.Every request for assistance is handled by a multilingualoperator who, once the customer and his vehicle have beenidentified, locates, and dispatches the most appropriate garageto the breakdown site. The involvement of the Customer Centre does not end once themechanic is dispatched. Instead, the operator continuesmonitoring the matter until repair is completed, assisting themechanic with any problem that might arise (obtaining spareparts, language problems in communicating with the driver,etc.), and keeping the customer updated on the progress ofrepairs until the vehicle is operable again.The excellent results achieved by the Customer Centre in termsof customer satisfaction are the result of careful hiring, trainingfocused on operating aspects and telephone communicationmanagement, and constant monitoring of the entire process ofproviding the service.

ANS in figures

00-800-82747368 universal toll free number reservedfor customers

24 hours a day for 365 days a year32 countries in Europe, including:

12 countries with direct coverage20 countries covered through local providers

7 languages spoken: Italian; French; English;German; Spanish; Portuguese; Dutch

90 persons, including:3 managers9 team leaders3 trainers

75 operators74% non-Italian native speaker staff

29 average age of staff1 month of training for all new hires

8,200 hours of training in 20068 different types of shifts

1,500 inbound calls on average every day350 inbound fax/email/text messages received

on average every day100,300 cases handled in 2006

15 seconds, average response time14 minutes, average time to dispatch mechanic

70% of cases with repairs completed in 3 hours

Contact Us

By accessing the website www.iveco.com, the Company canbe contacted by filling out a special form in the Contact Ussection. After determining the contents of the request, ifpossibile, the operator responds directly by providing, forexample addresses and information about the customer carenetwork, general information about products and services,and other information or forwards the request to the officewith local responsibility for the matter (estimates, brochures,technical documentation, manuals, and other documents).The Customer Centre supervises the entire process, from thefirst contact received from the customer until an answer issent to him, so that the matter is closed as quickly aspossible.


Marketing support

To maintain a direct relationship with established customers ormake new contacts with potential customers, the CustomerCentre conducts “outbound” telephone campaigns. These arean effective and essential support for strategic and operatingmarketing. The services offered are broken down intotelemarketing activities aimed at creating new businessopportunities, and market research aimed at improvingcustomer awareness and loyalty. With its wide range of services, the Customer Centre isbecoming a distinctive part of what Iveco offers customers.Orientation towards the customer continues to be a strategicpoint for continuous improvement and development of newservices.


Engines for Industrial & Marine applications are sold throughvarious sales channels according to the type of customer andbusiness. Key Account (KA) customers are managed on acentralised basis, while small customers are served throughthe dealer network. Generally speaking, the sales process islaunched upon request for a price quotation. A bid is made byidentifying the product that can best satisfy the customer, withthe support of Product Development or the specific productplatform/application. Once the bid is made, negotiations areconducted with the customer to plan project deadlines,volumes, and prices. The planned phases envisage thedefinition and scheduling of delivery of prototypes, operatingtests, and planning of final product deliveries. The entireprocess takes more or less time according to the dimensions ofthe business: in the case of KA customers, the developmentprocess requires 12 to 36 months, according to the complexityand degree of product customisation. For the small and

medium-sized customers served through the dealer network, 5to 12 months are necessary. In this latter case, the productsare more standardised, and product modifications, if any, areless complicated. The warranty for the Industrial & Marine lineof engines and principal components is offered by FPT, for aterm that depends on the final application. Any problems thatmight arise are initially managed through the network ofauthorised mechanic shops, which classify the complaints forsubsequent repair work. The repairs are recorded on specificforms, which are used in turn to compile general statistics. Inthe case of repetitive complaints, non-compliance forms arefilled out and sent to the Quality Department. International meetings with dealers are held annually in majormarkets and at important trade fairs. Incentives for theapplication area are defined annually according to budgettargets. The product managers organise planned trainingsessions and constant product updates. Customers receiveinformation directly over the Web, in the form of press releasesand news, articles published in specialised magazines, and incommercial documents. Customers are involved in product testing and/ordetermination of product features during the prototype phaseand after delivery of the first standard engines, throughperformance tests carried out to ensure proper installation onthe vehicle.

CommunicationThe Fiat Group recognises the social role of advertisingcommunication and voluntarily chooses to adopt andencourage positive and responsible attitudes in its externalactivity, based on the same ethical principles that inspire it. The“Fiat Group Advertising Code of Ethics,” first adopted in 1993and constantly updated since then, aims to define the basicrules and apply guidelines in all communication activities. As a member of the UPA (Associated Advertising Union),promoter of the Institute of Advertising Ethics (“Istituto diAutodisciplina Pubblicitaria”), the Fiat Group also adheres tothe Code of Advertising Ethics so that advertising is alwayshonest, truthful, and fair, complying with the initiatives anddecisions of the Control Committee and the Jury, which is itsadjudicating body.The purpose of institutional communication is to inform thevarious stakeholders and present the Group, or its variouscompanies, as an economic-social player in its reference areaof activity.


Sofim HPI 3.0 l - Diesel

16-valve - 230 hp

engine for marine applications

Various tools of communication are used to inform thespecific targets: public relations events and dedicatedmeetings for journalists and the business community, andconventions for dealers.Product advertising serves to reinforce the visibility andname recognition of Group products and services andpromote their image. Given the importance of the brand toend customers, major economic resources are invested inbrand advertising in order to transmit the specific values ofeach brand. Accordingly, above-the-line activities (e.g. campaigns on thetraditional media such as television networks, press,billboards, cinema, and radio) and below-the-line initiatives(catalogues, websites, promotions, and other activities) arecreated for customers. Customers loyalty campaigns areperiodically conducted through direct marketing or mailingactivities.Introductory advertising campaigns are organised toacquaint the public with new models, while promotionalcampaigns are organised for existing products to makespecial offers to potential customers, such as forms offinancing or the terms and conditions of purchase. Particular attention is devoted to special shows which areimportant occasions to acquaint the public directly with theGroup product line.Fiat spent 912 million euros on advertising in 2006 (802 in2005). Fiat Auto accounts for the lion’s share of advertisingspending (795 million euros, or 87% of the total), followed byIveco and CNH, which spent 58 and 39 million euros,respectively.

Litigation with dealers and customersThe figures illustrated in the following tables refer to all FiatGroup companies worldwide.No significant changes were reported in the progress of theselawsuits.

Litigation with dealers

2006

Settlements Suits

reached pending

Fiat Auto(*) 81 394

Ferrari 2 2

Agricultural and Construction

Equipment (CNH) 3 33

Trucks and Commercial Vehicles (Iveco) 3 24

Fiat Powertrain Technologies – –

Components (Magneti Marelli) 4 15

Metallurgical Products (Teksid) 2 –

Production Systems (Comau) – –

Services (Business Solutions) – –

Publishing and Communications (Itedi) – –

Fiat S.p.A. and affiliated companies – –

Total for the Group 95 468

(*) Including Maserati.

Litigation with end customers

2006

Settlements Suits

reached pending

Fiat Auto(*) 2,074 4,896

Ferrari 1 13




Fiat Powertrain Technologies – –


Metallurgical Products (Teksid) 8 3

Production Systems (Comau) 15 18

Services (Business Solutions) 1 10


Fiat S.p.A. and affiliated companies 2 20

Total for the Group 2,196 5,535



Before establishing any relationship, the Group and itsemployees shall check available information (includingfinancial information) on its business partners and suppliersto ensure that they are reputable and involved in alegitimate business... The supplier system plays afundamental role in improving the Fiat Group’s overallstructural competitiveness. ... The Group selects suppliers thatoffer the best capabilities in terms of quality, innovation, costsand service... Considering that it is of primary importance forthe Group that its partners share Code values, employees arerequired to select suppliers in accordance with appropriate,objective methods, taking into account the values outlined bythe Code in addition to the quality, innovation, costs andservices offered. Employees are also invited to establish andmaintain stable, transparent and cooperative relations withsuppliers... In compliance with the relevant ILO (InternationalLabour Organisation) Conventions, the Group does notemploy child labour, namely it does not employ peopleyounger than the age laid down for starting work by thelegislation of the place in which the work is carried out and, inany case, younger than fifteen, unless an exception isexpressly provided by international conventions and, possibly,by local legislation. The Group is also committed not toestablishing working relationships with suppliers that employchild labour (Code of Conduct).

Supplier relations and purchasing

processes

In 2006, the Fiat Group devoted even more attention toimproving relations with its suppliers, focusing onperformance in such key areas as quality, innovation, costsand services offered, in compliance with corporate directivesand adherence to the values embodied in the Code ofConduct. In particular, the efforts to coordinate Group-wide purchasingactivities that got under way in September 2004 with theestablishment of the central Group Purchasing unit wereintensified. The unit’s aim is four-fold:

■ to leverage potential synergies in the Group’s purchasesof direct and indirect materials and services;■ to develop and coordinate purchasing initiatives througha common strategy for suppliers/commodities;■ to promote innovation in purchasing policies and methods;■ to coordinate the implementation of the action plans agreedupon with the Sectors.The need for central coordination does not stem only from theadvantages that the synergies resulting from the Group’s sizeand worldwide span can bring: it is also clear for an analysis ofthe supplier pool and its structure. The Fiat Group’s suppliers,in fact, show a high level of concentration, with 10%, orapproximately 400 suppliers, accounting for 90% ofprocurement volumes. As a result of the programmesintroduced in the course of 2005, purchases from criticalsuppliers, or in other words those on whom the Group ishighly dependent and/or which are in financial difficulties,dropped from 15% of revenues in 2004 to 6% in 2006.Annually, Fiat Group purchases total around 31 billion euros,with 80% of this amount going for direct materials. Inaddition, 60% of direct material purchases, or around 15billion euros, are handled by suppliers who serve two or moreof the Group’s Sectors. 2006 saw sharp increases in the priceof metals, plastics (connected to the price of crude oil) andsteel. Further actions aimed at contrasting these effectshave been planned with the support of Fast Buyer, a FiatGroup company.

Economic Responsibility Suppliers 65

Suppliers

Fiat Auto 14.2

Fiat Powertrain Technologies 4.7

CNH 4.5

Iveco 4.2

Magneti Marelli 2.5

Comau 1

Total 31.1

Annual purchasing value by Sector

(in billions of euros)

Over 20-25% of the Group’s enterprise-wide procurementwas channelled through Group Purchasing, a proportionthat is expected to climb to approximately 60/70% in 2007.In particular, Group Purchasing worked in the followingareas during 2006:■ Direct Materials: Inter-sectorial groups continued to workwith the commodity classes in common use by several of theGroup’s Sectors in order to identify technically-basedsynergies and boost purchasing efficiency. A joint approachto shared suppliers was formulated which pools all of thenegotiations and procurement strategies for the Sectorsinvolved, making it possible to establish strategicpartnerships. The goal is to manage 100% of shared suppliersby 2008, as against 25% in 2006.At CNH and Iveco, a procurement integration process is nowunder way which will lead to shared negotiations and jointpurchasing processes within a single purchasing structure.

■ Raw Materials: In 2006, the Group continued to centraliseits purchases of raw materials, and of sheet steel used forstamping operations in particular, earmarked for use insideand outside the Group.■ Best-Cost Countries: The Group continued mapping itssuppliers who are located in the so-called best-cost countries,sharing qualification parameters, products supplied andmanagement procedures. Currently, 28% of all directmaterials are sourced from these low-cost countries: a totalvalue of nearly 7 billion euros. For 2010, the goal is to achievea further increase of 1.5 billion euros. In addition, apurchasing group is now being set up which focuses onexports from China to the plants in Europe and the Americas.Work is also being carried out in India to find competitiveexporters.■ Supplier Quality Assurance: The Group continued toformulate shared processes for assessing and grantingqualification approval for new suppliers. With the support ofInformation & Technology, the Group also redoubled its effortsto ensure that all information in each Sector’s Supplier Qualitydatabase can be shared. The Supplier Quality Assurance teamis working to optimise and standardise Group-wide bestpractices in this area, ensuring that all Sectors use uniformapproaches to supplier assessment and certification, in orderto achieve further significant improvement in the quality ofsupplies. In this area, the certifications that the Fiat Group’smajor Sectors require for suppliers of direct materials andequipment were mapped, enabling the Group to specify acommon qualification and ranking process for new suppliers,and formulating a single evaluation to be entered in thesupplier database.■ Indirect Materials and Services: Inter-sectorial teamscontinued to work on commodity classes used by multiplesectors. Specific local projects were also put in place in thosecountries where the Fiat Group’s presence is most significant,e.g. France, Poland and Brazil. Another project will result incentralised Group Management for a significant number ofproduct categories (approximately 80% of Europeanpurchases). A similar activity has been launched in Brazil.■ Transport and Logistics: Two inter-sectorial teams focusingrespectively on inbound and outbound movements areworking on projects which aim at achieving greater efficiencyand synergies in both processes and negotiations. Particularattention is devoted to the logistic repercussions of sourcinggoods and services from best-cost countries.

Economic Responsibility Suppliers66

Direct materials 80%

Indirect materials,

services, equipment

and machinery 20%

Procurement volumes by category (%)

Metals 49%

Electrical 29%

Chemicals 22%

Total purchases of direct materials by the Fiat Group Sectors,

broken down by product line (%)

Business ethicsGiven the fundamental importance to the Group that itspartners share the principles set forth in the Code of Conduct,suppliers are selected according to adequate and objectivemethods. These consider not only the quality, innovation,costs and services offered, but also the values set forth in theCode. With variations from Sector to Sector, and respectingtheir independent management of relationships with suppliersand partners, disclosure of adoption by Group Sectors of theCompliance Program pursuant to Legislative Decree 231/2001and the Code of Conduct continued intensely in 2006. GroupSectors inside and outside Italy disseminated the rules ofconduct envisaged in the Code of Conduct and ComplianceProgram to their suppliers. In most cases, they requiredexplicit acceptance of those principles, through appropriatecontractual obligations set forth in the general conditions ofcontract, sale, and purchase orders.

Litigation with suppliersThe figures set forth in the following table refer to all FiatGroup Companies worldwide.No significant changes were reported in the progress oflitigation with suppliers.

2006

Settlements

reached Suits pending

Fiat Auto(*) 16 35

Ferrari 1 1




Fiat Powertrain Technologies – 5


Metallurgical Products (Teksid) 1 4

Production Systems (Comau) 11 36

Services (Business Solutions) – 14


Fiat S.p.A. and affiliated companies 3 13

Total for the Group 44 145


Economic Responsibility Suppliers 67

All things which are in accordancewith Nature are worthy of esteem. Cicerone

Environmental Responsibility72 Environmental Management System

72 ISO 14001-certified manufacturing sites

76 Implementing Environmental Management Systems

81 Environmental Performance

82 Performance and efficiency indicators

102 Sustainable Mobility

104 Research and its applications

120 Implementing European Communityregulations

The Group is committed to and recognises that good health,safety and environment is critical to the success of the Group.Everyone who works for the Group is responsible for goodhealth, safety and environment.The Group operates an effective environment managementsystem which complies with all relevant national andinternational legislative requirements. It adopts the followingfundamental principles:■ never pollute;■ optimise the use of resources at all times; and

■ develop products that are ever more environmentallycompatible.The Group desires to maintain public confidence in the integrity ofits operations by openly reporting on and consulting with othersto improve understanding of both internal and external health,safety and environmental issues associated with its operations. (Code of Conduct)

The following table provides an overview of the milestones ofthe Fiat Group in the environmental field from 1989 to today.

Environmental Responsibility 70

1989 Fiat Group Single umbrella organisation set up to deal with environmental issues

1990 Fiat Group Definition of policies for sustainable mobility

Launch of the Fenice Project in the framework of a sustainable growth policy

1991 Fiat Auto Environmental and Industrial Policies Department established

1992 Fiat Group Issuance of “Fiat’s Environmental Policies”

Reference year for the first Environmental Report

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

1994 Fiat Auto “Perpetual Motion” programme launched for Italy’s middle schools

“Serena” programme for energy efficiency gets under way

1995 Fiat Group Fiat receives a prize for the year’s best Environmental Report from Italy’s Public Relations Institute (IRP)

Fiat presents its environmental activities to the European Parliament

1996 Fiat Auto Launch of “Motus Vivendi”, a highway safety programme for high school students

1997 Fiat Group Fiat Group’s environmental policies updated

Fiat Auto Launch of the Marea Bipower, a bi-feul car that runs on gasoline and natural gas

1998 Fiat Group All ecological and energy management activities of the Fiat Group assigned to Fenice SpA

Iveco New environmentally-friendly engines for trucks and buses

1999 Iveco New natural gas vehicles introduced

2000 Fiat Auto Average fuel consumption of the entire range reduced by over 4 per cent

Iveco Design of fuel cell buses

2001 Fiat Auto, Fiat Group Fiat Stilo complies with Euro 4 emission standards (2005)

Programme agreement signed by the Italian Ministry for the Environment,

Fiat and the Italian oil industry association (Unione Petrolifera) for promoting the use of natural gas vehicles

CRF Presentation of the Fiat Seicento Elettra H2 Fuel Cell prototype, awarded a prize for environmentally-friendly

innovation from Legambiente, Italy’s premier environmental watchdog group

2002 Fiat Auto, CRF Development of new Euro 4-compliant fuel saving low emissions engines

CRF The CRF, Fiat Auto and Iveco join forces in developing “telematic fleets”

Presentation of Ecodriver prototype, acclaimed by Legambiente as the most promising technology

for reducing fuel consumption and emissions in the short term.

First codified in 1997, the Fiat Group’s environmental policyis based on the conviction that the environmentalcompatibility of its products and manufacturing processes isa key factor in the Group’s development, as it bothpreserves the harmony of the operations with the needs ofsociety, and also enhances competitiveness and the creationof value.

Each Group company is responsible for the environmentalimpact of its manufacturing processes, and makes every effortto prevent harmful consequences. In addition, each companystrives to help find solutions to any environmental problemsthat may arise when its products are used. Effectiveenvironmental governance is ensured by dedicatedorganisational structures at each company.

Environmental Responsibility 71

2003 Fiat Group Publication of the Fiat Group Code of Conduct which outlines the general

principles to be observed for Health, Safety and the Environment

CRF New hybrid gasoline/diesel-electric power plants developed

Cogeneration system installed at the cafeteria of the Orbassano facility receives the European Solar Prize

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 per cent and emissions by 50 per cent

2004 Fiat Group Reference year for the first Sustainability Report , which includes and complements the Environmental Report

CRF New EGR (Exhaust Gas Recirculation) technology reduces diesel nitrogen oxide (NOx) emissions of diesel engines

CRF, Irisbus New natural gas storage system ensures higher levels of safety

Iveco Italy’s first hydrogen-powered city bus starts field trials in Turin

2005 Fiat Group Creation of the “Research and Innovation” central function

Fiat Auto, CRF Launch of new methane-powered models

Publication of the first Sustainability Report

2006 Fiat Auto Fiat Auto participates in the “4th Exhibition of Environmentally-friendly vehicles” in Rome

The Company was selected as “green sponsor” of the 2006 Olympic Games

Market launch of the “Panda Panda”, a natural gas/gasoline powered car

Presentation of the Panda MultiEco, Multipla MultiEco, Panda Hydrogen and Hyper Panda

Magneti Marelli Various prices awarded to Magneti Marelli’s FlexFuel systems, including Michelin’s Challenge Bibendum 2006 prize

Fiat’s Environmental Management System – or EMS – includesall the people, rules and actions designed to lessen the impactthat corporate activities can have on the environment andcontribute cost-effectively to achieving the goals set bymanagement at each manufacturing site.Environmental needs are built into every management decisionin each of the Group’s Sectors, and environmentalmanagement systems reflect the best international standards. All Group companies work to prevent environmental problems,employing targeted technologies and appropriate ecologicalguidelines at all manufacturing sites. Prepared with an eye toeconomic compatibility, the Group's environmental plans stemfrom constructive participation with public authorities to

ensure that the benefits they bring translate into broaderadvantages for the general public. All senior and middlemanagement receive specific environmental training, as theyare responsible for implementing the Group’s policy with anapproach based on prevention. The Group also makes sure itsemployees are adequately informed of the environmentalaspects of their jobs. A constant flow of information touniversities and schools helps raise awareness aboutenvironmental topics.In 2006, environmental training focused on keeping systems upto the mark, and thus involved fewer total hours than in 2005.The number of people who participated, however, was in linewith the previous year.

Environmental Responsibility Environmental Management System72

Environmental Management System

2006 – Contents and training hours

Managers – white-collar

workers – middle managers Internal Auditors Other employees Total

2006 2005 2006 2005 2006 2005 2006 2005

Number of people involved 5,695 6,250 380 379 40,795 38,170 46,870 44,799

Total hours 12,035 36,082 4,223 3,755 68,194 116,514 84,452 156,351

ISO 14001-certified manufacturing sitesISO 14001 is an international standard covering therequirements for an organisation’s environmentalmanagement system. It is a certifiable standard, which meansthat a certificate attesting to compliance with its requirementscan be obtained from an accredited certification body.Certification to ISO 14001 is not mandatory, but results from acompany’s voluntary decision to establish, implement,maintain and improve an environmental management systemat its facilities. In particular, ISO 14001 certification

demonstrates that the certified organisation has amanagement system capable of keeping the environmentalimpact of its operations under control, and that itsystematically seeks to improve the system in a way that isconsistent, effective and, above all, sustainable. At the FiatGroup, the number of sites that been certified to ISO 14001rose from 89 in 2005 to 96 in 2006, including 43 in Italy alone,while the number of people who work(1) at certified sitesworldwide totals 108,433.

(1) This number was calculated on the basis of all personnel at December 31, 2006 who had a regular open-ended full-time, part-time, contingent or durational employment contract with the organisation,including management and temporary workers. Consequently, this number does not lend itself to immediate comparison with the total indicated in the consolidated financial statements, partly because itincludes personnel at sites that are not included in the scope of consolidation.

Environmental Responsibility Environmental Management System 73

Verres (Aosta)Teksid■ Production of automotivemagnesium components

Tolmezzo (Udine)Magneti Marelli■ Lighting systems

Termini Imerese (Palermo)Fiat Auto■ Manufacturing of means oftransport

Pomigliano D’Arco (Naples)Fiat Auto■ Manufacturing of meansof transport

Caivano (Naples)Magneti Marelli■ Exhaust systems

Pomigliano d’Arco (Naples)Magneti Marelli■ Suspension systems

Valle Ufita (Avellino)Iveco■ Production of buses

Pratola Serra (Avellino)FPT■ Production of completeengines and relevantspareparts

Cassino (Frosinone)Fiat Auto■ Manufacturing of meansof transport

Melfi (Potenza)Fiat Auto■ Manufacturing of means oftransport

Magneti Marelli■ Suspension systems

BolzanoIveco■ Civilian and military vehicleproduction

Corbetta (Milan)Magneti Marelli■ Engine control

systems/Electronic systems

Suzzara (Mantua)Iveco■ Production of light commercialvehicles

Plants engaged in certificationprocess at 12/31/2006

Site certified at12/31/2006

TurinFiat Auto■ Manufacturing of meansof transport■ Cold stampingautomotive bodywork■ Die making for coldstamping processes

Iveco (FPT)■ NEF - production of enginesfor commercial vehicles andother applications■ Axles – production of axles■ Transmissions – transmissionand gear production

FPT■ Production of completetransmissions and relevantspareparts


Verrone (Biella)FPT■ Production of completetransmissions and relevantspareparts

Atessa (Chieti)Fiat Auto■ Manufacturing of means oftransport

Sulmona (L’Aquila)Magneti Marelli■ Suspension systems

Borgaretto (Turin)Comau■ Body assembly and weldingsystems – Final body assemblysystems

San Mauro (Turin)CNH■ Production of constructionequipment

Rivalta (Turin)Magneti Marelli■ Suspension systems

Grugliasco (Turin)Comau■ Machining and assemblysystems for mechanicalcomponents■ Moulds for plasticcomponents■ Robotics

Venaria Reale (Turin)Magneti Marelli■ Exhaust systems

Magneti Marelli■ Lighting systems

Termoli (Campobasso)FPT■ Production of engines andtransmissions and relevantspareparts

BolognaMagneti Marelli■ Engine control systems

Crevalcore (Bologna)Magneti Marelli■ Engine control systems

ModenaFerrari■ Body framing and hardwareassembly

Maserati■ Production of automobiles

CNH■ Components

Maranello (Modena)Ferrari■ Production of automobilesand racing

PiacenzaIveco■ Heavy construction vehicleproduction

FoggiaIveco (FPT)■ Production of engines forcommercial vehicles

LecceCNH■ Production of constructionequipment

Modugno (Bari)Magneti Marelli■ Engine control system

Environmental Responsibility Environmental Management System74

Plants engaged in certificationprocess at 12/31/2006

Site certified at12/31/2006

France

Bourbon LancyIveco (FPT)■ Engine production forcommercial vehicles and otherapplications

CastresComau■ Machine toolmanufacturing

ArgentanMagneti Marelli■ Engine control systems

ChâtelleraultMagneti Marelli■ Electronic systems

Ingrandes sur ViennesTeksid■ Iron casting foundry

AngoulemeMagneti Marelli■ Lighting systems

Saint Julien de SaultMagneti Marelli■ Lighting systems

Belgium

ZedelgemCNH■ Combines and agriculturalequipment

Germany

UlmIveco■ Production of heavycommercial vehicles

BrotterodeMagneti Marelli■ Lighting systems

ReutlingenMagneti Marelli■ Lighting systems

Poland

Bielsko BialaMagneti Marelli■ Suspension systems

TychyMagneti Marelli■ Suspension systems

Poland

TychyFiat Auto■ Manufacturing oftransportation means

SkoczowTeksid■ Iron casting foundry

Bielsko BialaFPT■ Production of completeengines and parts

PlockCNH■ Combines, balers

Dabrowa GorniczaMagneti Marelli■ Exhaust systems

SosnowiecMagneti Marelli■ Lighting systems

Czech Republic

JihlavaMagneti Marelli■ Lighting systems

Malaysia

PenangMagneti Marelli■ Lighting systemsIndia

New DelhiCNH■ Tractors

South Africa

GermistonMagneti Marelli■ Exhaust systems

United Kingdom

LutonComau■ Bodywork systems

Turkey

BursaFiat Auto■ Manufacturingof transportion means

FPT■ Production of engines andtransmissions and relevantspareparts

Magneti Marelli■ Automotive Lighting

Portugal

AveiroTeksid■ Iron casting foundry

Spain

ValladolidIveco■ Production of lightcommercial vehicles

BarcellonaIveco (FPT)■ Comesa - Production oftransmissions and axles

Mecaner S.A.Comau■ Castings for metal sheetcomponents

MadridIveco■ Production of heavycommercial vehicles

Barbera del VallesMagneti Marelli■ Electronic systems

Llinars del VallésMagneti Marelli■ Lighting systems

SantpedorMagneti Marelli■ Exhaust systems

China

GuangzhouMagneti Marelli■ Electronic systems

ShanghaiMagneti Marelli■ Lighting systems

Environmental Responsibility Environmental Management System 75

Brazil

BetimFiat Auto■ Manufacturing oftransportation means

FPT■ Manufacturing of enginesand transmissions and parts


Teksid■ Iron casting foundry

AmparoMagneti Marelli■ Exhaust systems

ContagemMagneti Marelli■ Lighting systems

HortolândiaMagneti Marelli■ Engine control systems/Electronic systems

LavrasMagneti Marelli■ Shock absorbers

MauáMagneti Marelli■ Shock absorbers

S. AndréMagneti Marelli■ Control arms

Sao Bernardo do CampoMagneti Marelli■ Suspension systems

CuritibaCNH■ Combines and tractors

Mexico

FrontieraTeksid■ Iron casting foundry

Ciudad JuarezMagneti Marelli■ Lighting systems

QueretaroMagneti Marelli■ Lighting systems

TepotzotlanMagneti Marelli■ Electronic systems

Canada

StrathroyTeksid■ Production of magnesiumcomponents for automotiveapplications

Argentina

CórdobaFiat Auto■ Production of enginesand transmissions

Magneti Marelli■ Exhaust systems

USA

Eaton RapidsTeksid■ Production of magnesiumcomponents for automotiveapplications

SanfordMagneti Marelli■ Engine control systems

KingsportMagneti Marelli■ Suspension systems

Fiat Auto

Conserving energy

An innovative energy consumption management system wasinstalled at the Sevel Val di Sangro pilot plant in Italy’s Chietiprovince. The system, which has a central server that can beconnected to one or more client stations, is capable of:■ displaying screen forms showing the location of allmeasurement points for each and every energy carrier used atthe plant,■ displaying trends and log reports so that consumption forprevious years can be compared,■ creating and managing reports on measurement instrumentreadings and consumption, and■ calculating periodical totals for all figures.Flexible, real-time information makes it possible to nip anyconsumption problems in the bud.

Cutting the energy consumed per vehicle produced

According to a recent analysis, the Auto Sector improved itselectric power usage across the board in terms of itsconsumption on a per-vehicle basis. Particularly significantimprovements were achieved at the Sata plant in Melfi, nearPotenza (Italy), where consumption dropped from 2.29 to 1.88GJ/vehicle, a full 18% less than in the previous year. Thisachievement was made possible by a series of targetedmeasures introduced in manufacturing facility management,and by rationalising the systems used to produce energycarriers.

Lowering VOC volatile organic compound emissions

Throughout 2006, the Auto Sector continued its campaign tocurb VOC volatile organic compound solvent emissions fromits paint shops, both to comply with specific regulatoryrequirements and in order to apply Best Available Techniquesin the Sector’s paint cycles. Technologically andorganisationally, this is an important part of the Company’scommitment to the environment. In particular, paint applicationsystems were improved to increase transfer efficiency to thebody shells, reduce drift, and thus make it possible to use lesspaint. In addition, work continued on converting paint systemsto use latest-generation low-VOC water-based paints.Fiat Auto’s investments in these measures exceed 100 millioneuros.

Environmental Responsibility Implementing Environmental Management Systems76

Implementing EnvironmentalManagement Systems

2004

2005

2006

2.29

2.11

Fiat Auto Sata plant in Melfi (Italy)

Electric power consumption in GJ/vehicles produced

0.00 0.50 1.00 1.50 2.00 2.50

1.88

Fiat Auto Sevel plant

in Atessa (Italy)

Paint spray booth

Cosene information system

Cosene is an Intranet-based information system launched in1999 for the integrated development of environmentalmanagement systems at Fiat Auto manufacturing plants.In 2000, the COSENE system was presented to ANPA, Italy’snational environmental protection agency, in the course of ameeting held in Rome to showcase Fiat’s initiatives in theenvironmental arena.Now employed at all Fiat Auto production facilities, computer-based methods make it possible keep track of environmentalmanagement data and parameters in real time, thus providinga comprehensive view of the situation at all sites, as well as auniform basis for comparing them. The system consists of fourchannels (MONITOR, SITENE, GesA and MAGENE) which dealrespectively with environmental management standards,compliance checks, verifying and analysing goals and results,and data storage. The Cosene system provides access to dataon management procedures for energy (NPE) and waste (CRL),and makes it possible to view data breakdowns by plant, byunit, etc. Through the information system, which complies withISO 14001, users have online access to industry standards andbest practices, and can keep systematic records of all energydata and environmental information for manufacturingfacilities and processes. Applying an online system also cutsoperating costs by ensuring that energy carriers are moreeffectively managed, and raw materials and waste can becarefully reused and recovered. The system also makes itpossible to rationalise the management procedures involved inobtaining environmental quality certification.

CNH

CNH and all its employees are committed to improvingenvironmental performance: a commitment confirmed byacross-the-board gains in reducing environmental incidents,waste, and paint solvent emissions. CNH’s Environmental,Health & Safety managers meet regularly in North America andEurope to share their experience, best practices and betterways of ensuring compliance with emerging regulatoryrequirements.A few examples of CNH’s accomplishments and best practicesare illustrated below.Changing the paint materials used at the Benson, Minnesotaand Wichita, Kansas plants in the United States and at theCuritiba site in Brazil reduced emissions of VOC volatileorganic compounds.Improvements in the storage facilities used for potentialpollutants at the Curitiba site and at the Grand Island,Nebraska plant reduced the risk of spills and leakage.The Racine, Wisconsin site installed a solvent distillation unitthat reclaims solvent for reuse, significantly reducing theamount of waste that must be disposed of.The wastewater treatment system at the Grand Island plantwas upgraded to increase capacity and efficiency. Capacity, infact, was boosted from 60,000 to 200,000 gallons (i.e. from227,000 to 757,000 litres) a day, and can be further increased inthe future.

Iveco

In 2006, Iveco continued to modernise its infrastructures,utilities and treatment systems, making improvements atseveral manufacturing facilities that brought measurablebenefits for the environment.

Iveco (FPT) plant in Foggia - Italy

Improved process control during engine manufacturing,together with new “smart” control units, made it possible tointroduce so-called cold testing procedures, where operatingparameters can be checked without running the engine.Installing a cold test bed alongside the conventionaldynamometers in the engine test bay thus cuts diesel fuelconsumption, in turn generating fewer emissions to theatmosphere than the hot method.

Environmental Responsibility Implementing Environmental Management Systems 77

2004

2005

2006

70.48

74.43

Fiat Auto plants in the European Union

VOC - [grams/m²]

Weighted average solvent emissions

0 10 20 30 40 50 60 70 80

60.86

Iveco (FPT) plant in Fourchambault - France

An ultrasonic washing line was installed for mechanicalcomponents. The new parts washers use a water-basedalkaline cleaning solution instead of the solvents employed inthe conventional units they replace.

Valladolid plant - Spain

At the van paint shop, protective polyvinyl chloride (PVC)compound application to vehicle underbodies was automatedby installing two robots and an automatic body shell liftsystem. The new setup reduces the amount of PVC used byapproximately 2 kilograms per van.

Brescia plant - Italy

At the cab painting facility, improvements to spray boothheating and ventilation controls optimised hot air distributionin one of the two top coating lines. By reducing air flow, thismade it possible to use less natural gas for heating, and lesselectric power to run the ventilation fans. The facility alsointroduced a system for recovering solvent-based cleaningsolution and paint during colour changes in the special coloursspray line, also known as “Easy Pig”. The new system thusreduces the product wastage that occurs each time paintcolours are changed on the coating line, so that less spentsolvent and paint must be disposed of. Total savings in 2006amounted to approximately 110,000 litres of solvent and 14,600kilograms of top coat enamel. Ingeniously simple, the systemuses a cylinder carrying a set of rubber rings. As compressedair cylinder pushes the cylinder through the line that suppliesenamel to the spray booths, the rubber rings scrape the paintoff the walls of the pipe, rapidly emptying it out and readyingit for the new colour with a minimum amount of cleaningsolution.

Reducing packaging waste and unsorted waste

In 2006, Iveco plants continued to implement plans forimproving their environmental management systems, focusingtheir efforts on minimising the unsorted waste they produceand the amount of used packaging they throw away. Toaccomplish this goal, selective collection and sortingprocedures were intensified, and the disposable packagingformerly used for raw materials was replaced with reusablecontainers.The results achieved at the Iveco plants in Foggia, Suzzara,Torino N.E.F. and Valle Ufita are shown by way of example.


New robots

applying protective

polyvinyl chloride

to the underbody

of a van at the Iveco plant

in Valladolid (Spain)

2004

2005

2006

0.312

0.336

Foggia

Kg unsorted waste/engine

0.00 0.1 0.2 0.3 0.4

0.297

Suzzara

Kg unsorted waste/vehicles

2004

2005

2006

0.0 5.0 10.0 15.0 20.0

15.78

12.17

11.14

Magneti Marelli

Brazil

At the Mauà and Santo Andrè plants, the sewage treatmentfacility uses microorganisms to break down organic material.After separating solid waste, liquid effluents are treated bybacteria in two major stages: the first anaerobic (i.e., withoutoxygen), and the second aerobic (in the presence of oxygen).Most of the treatment is carried out with gravity flow and thusdoes not use pumps, which brings significant benefits in termsof electrical power consumption.All Magneti Marelli companies in Brazil are keenly aware of theimportance of consuming resources like water and electricalenergy responsibly.

A number of steps have been taken to promote responsibleconsumption:■ At the Amparo facility, translucent awnings were installed atthe plant to take advantage of natural light and reduce theamount of electricity needed for artificial lighting.■ The Electronic Systems plant in Hortolandia launched aproject for reducing electrical energy consumption. Thisproject will perform a critical analysis and map the areaswhere action can be taken for improvement.■ To reduce their environmental impact, all Magneti Marelliplants in Brazil have a state-of- the-art treatment facility fororganic waste. At the Camisas San Bernardo plant, effluentsare processed for further industrial use. The other plants arefollowing suit with plans to install systems for reusing water.Simpler ways of saving water have already been introduced,such as the automatic taps installed in plant rest rooms toprevent water from being wasted. Reusing water also reduceswaste, since it minimises effluent disposal and reducesdemand by making it possible to use lower-quality water forcertain activities. In some cases, water is reused directly aftertreating organic effluent, and is routed from the dischargepoint to the facility where it is reemployed.

Venaria Reale plant – Italy

At the Automotive Lighting plant in Venaria, wastewater fromprocessing operations is treated in a purification facility.During 2006, a number of measures were introduced tomodernise the facility.These measures included:■ Remodeling the building that houses the facility (the floorwas made water-resistant to prevent infiltration to the subsoil).■ Treating the storage tanks with an impermeable coating.■ Implementing an electrical control panel.■ Installing a PLC (programmable logic controller) to ensurecontinuous automatic control of all process parameters,establishing alarm thresholds to shut off the system andprevent potential pollutants from being discharged.

Environmental Responsibility Implementing Environmental Management Systems 79

Torino NEF - Iveco (FPT)

Kg packaging waste/engine

2004

2005

2006

0 2 4 6 8 10 12

11.4

10.5

9.8

Valle Ufita

Kg packaging waste/bus

2004

2005

2006(1)

0 200 400 600 800 1000 1200

963.9

851.1

907.3

(1) The transitory industrialisation phase of the new Domino entailed temporary use of disposable packages,which were replaced with specific containers in late 2006.

Teksid

Teksid continued to improve its waste management practices,lessening their environmental impact by stepping up its wastetreatment efforts. This increased the proportion of waste thatcan be reused or recycled at the plant rather than sent tocontrolled landfills.

Comau

In 2006, increased use of the Environmental ManagementSystem resulted in more effective waste management byextending waste sorting procedures and increasing thepercentage of refuse that is recycled or reused.The Sectors’ work, however, did not focus solely on its in-house manufacturing processes. Attention was also directed tothe issues involved in improving the environmental impact andenergy savings that can be achieved with its product, i.e., theproduction systems it makes for customers in the automotiveindustry. With reference to internal improvement programmesaimed at improving environmental management, Comau’smeasures focused on two aspects: the Robotics business unitoptimised the approach it uses for robot transport, while theWelding Systems and Mechanical Systems business unitsreplaced their cooling systems with new ones usingenvironmentally friendly gas and lubricant storage systems.During the year, Comau renewed ISO 14001 certification for theGrugliasco (Torino) plant serving the Mechanical Systems,Robotics and Plastic Moulding business units, and for theWelding Systems business unit’s plants in Borgaretto andBeinasco, both near Torino. In recent years, Comau hasformulated new manufacturing system R&D strategies thatfocus on ecodesign to combine minimum environmentalimpact with energy efficiency and the use of innovativematerials and technologies. In this area, Comau is workingtogether with the Centro Ricerche Fiat on a number of projectswhich will culminate in energy-efficient production systemsand prototype dismantling lines for end-of-life vehicles.


2004

2005

2006

1.13

1.1

Teksid plant in Crescentino (Italy)

Waste recovered for reuse

(metric tons of reused or recycled waste/metric tons of cast-iron produced)

1.00 1.05 1.10 1.15 1.20 1.25 1.30

1.27

2004

2005

2006

92%

99%

Teksid plant in Crescentino (Italy)

Percentage of refuse sent to controlled landfills

0 20 40 60 80 100 120

81%

This section illustrates the main environmental performanceindicators used by the Fiat Group, broken down by Sectorsoperating in Italy and in the rest of the world. Indicators arereported on the basis of the set of metrics and measuresoutlined in a guide prepared by the Group’s Sectors in 1992and maintained up to date at all times.To ensure greater clarity and enable the performanceindicators to be readily compared with international standards,this year’s Sustainability Report introduces a number of newfeatures, which in some cases diverge from the approach takenin previous issues. Thus, levels of activity for the Group’sItalian plants are no longer gauged on the basis of overallmanufacturing costs, as the absolute values for the magnitudesinvolved are now reported. Energy data are now expressed ininternational units (GJ), rather than in tons of oil equivalents(TOE). Waste generated by operations has been broken downinto non-hazardous and hazardous waste, rather than intogeneral plant refuse and industrial waste as in the past. Datafor the Ferrari and Maserati Sectors are no longer presentedtogether, but in separate tables. For the first time, this year’s Report presents data for FiatPowertrain Technologies. For all of these reasons, it has notbeen possible to compare the data shown for energy andhazardous/non-hazardous waste with performance in pastyears.

Definitions of main environmental performance indicators

Electricity: The amount of electrical energy purchased fromoutside producers, whether public or private.Natural gas: The amount indicated includes only the naturalgas used directly at the sector’s manufacturing sites, either forprocessing purposes or, in cases where the plant runs agenerator facility, to produce electrical power.Other energy carriers: Include heating energy, cooling energy,compressed air and high pressure air purchased from outsidesuppliers.Water intake: The total amount of intake water used foroperations at manufacturing facilities and taken from off-sitemunicipal or industrial supplies, surface water or on-site wells. Wastewater released: The total amount of water effluentsreleased to the public sewer system, surface waters orelsewhere.Controlled landfill: A disposal facility designed and operated insuch a way as to prevent potential pollution problems. May belocated on- or off-site.Waste recycling ratio: The ratio of recycled waste to totalwaste generated at the site.Waste: Any non-product output which is, will be, or mustbe disposed of. In accordance with applicable law, wasteis classified as Hazardous Waste (HW) or Non-hazardousWaste (NW).Recycled waste: Any type of waste which is recovered forreuse off-site.Energy Recovery: Use of combustible waste as a means ofgenerating energy through direct incineration.Treatment: Disposal of waste using treatments other thanincineration with energy recovery or controlled landfilling.CO2: Carbon dioxide emitted to the atmosphere.NOx: Oxides of nitrogen emitted to the atmosphere.Paint shop VOC emissions: Emissions of Volatile OrganicCompounds.SOx: Oxides of sulphur emitted to the atmosphere.Total particulate matter: Particles suspended in the air, rangingfrom 0,5 µm to 500 µm in size.

Environmental Responsibility Environmental Performance 81

Environmental Performance

Performance and efficiency indicatorsEnvironmental performance and efficiency indicators arecompared for all of the Fiat Group’s major manufacturing sites,a total of 139 worldwide (124 in 2005), including 54 in Italy. Forthis purpose, a manufacturing site is defined as a productionfacility under single management. This definition does notnecessarily coincide with the approach taken in the Group’sconsolidated financial statements, where a manufacturing plantmay also be regarded as consisting of two or more sites. In

addition, certain manufacturing sites whose environmentalimpact is considered in this section do not belong tocompanies included in the scope of consolidation. Dataregarding the pollutants emitted in producing energyconsumed at the manufacturing site is provided only for thosesites that maintain their own generation facilities. On thewhole, the increase in the major indicators is due to the factthat more sites were monitored than in the past, as well as tothe general increase in manufacturing output.

Environmental Responsibility Environmental Performance82

Fiat Group - Plants in Italy: 54

Energy Unit of measure 2004 2005 2006

Total energy consumption GJ/year – – 19,431,694

of which: Electricity GJ/year – – 6,753,707

Natural gas GJ/year – – 4,435,735

Other fuels GJ/year – – 17,251

Other energy carriers (*) GJ/year – – 8,225,003

(*) Other energy carriers:■ Heating energy (plant and office heating, heat for processing purposes, steam, continuously available superheated processing water and seasonally available superheated processing water).■ Cooling energy (continuously/ seasonally available chilled water for processing purposes, water used to cool plants and offices).■ Compressed air/ High pressure air.

Water Unit of measure 2004(1) 2005(1) 2006

Water intake 103 m3 24,556 24,481 28,150

Wastewater released 103 m3 18,967 19,366 22,517

Waste Unit of measure 2004(1) 2005(1) 2006

Total waste generation ton 517,929 472,697 575,082

of which: non hazardous ton – – 518,787

hazardous ton – – 56,292

Total recycled waste ton 430,663 384,741 492,823

Waste recycling ratio % 83.2 81.4 85.7

Incineration with energy recovery ton 9,713 8,043 7,345

Treatment and disposal ton 32,419 40,695 57,365

Controlled landfills ton 49,717 39,561 18,401

Percentage of waste sent to landfills % 9.6 8.4 3.2

Emissions Unit of measure 2004 2005 2006

Paint shop VOC emissions g/m2 74.1 71.9 63.9

Emissions corresponding to energy use

■ SO2 ton/year – – 0.9

■ NOx ton/year – – 252.7

■ Dust ton/year – – 1.6

■ CO2 ton/year – – 131,464.0

(1) Certain values differ from those published last year due to changes made by the CNH and Comau Sectors.

Fiat Group - Plants worldwide: 139





Other fuels GJ/year – – 1,205,370




Water intake 103 m3 31,792 32,170 35,759



Total waste generation ton 1,391,456 1,435,185 1,583,135

of which: non hazardous ton – – 1,496,520











■ SO2 ton/year – – 255.9



■ CO2 ton/year – – 398,136.0

(1) Certain values differ from those published last year due to changes made by the CNH and Comau Sectors.


Fiat Auto - Plants in Italy: 8





Other fuels GJ/year – – 0



Water Unit of measure 2004 2005 2006

Water intake 103 m3 11,326 10,426 12,358


Waste(1) Unit of measure 2004 2005 2006












(1) The increase in the amount of waste generated in 2006 resulted from the insourcing programmes at the stamping centers in Cassino (July 2005) and Pomigliano (November 2005). These programmes

did not begin to have their full impact on total waste generation and recycling levels, which are heavily influenced by the metal waste produced by stamping operations, until 2006.


Fiat Auto - Plants worldwide: 12









Water intake 103 m3 13,518 13,193 15,363


Waste(1) Unit of measure 2004 2005 2006
















■ CO2 ton/year – – 50,837.0

(1) The increase in the amount of waste generated in 2006 resulted from the insourcing programmes at the stamping centers in Cassino (July 2005) and Pomigliano (November 2005). These programmes

did not begin to have their full impact on total waste generation and recycling levels, which are heavily influenced by the metal waste produced by stamping operations, until 2006.


Maserati - Plants in Italy: 2


Total energy consumption GJ/year – – 52,670

of which: Electricity GJ/year – – 29,153

Natural gas GJ/year – – 23,517


Other energy carriers (*) GJ/year – – 0



Water intake 103 m3 – – 22

Wastewater released 103 m3 – – 18

Waste Unit of measure 2004 2005 2006

Total waste generation ton – – 764

of which: non hazardous ton – – 701

hazardous ton – – 63

Total recycled waste ton – – 499

Waste recycling ratio % – – 65.3

Incineration with energy recovery ton – – 0

Treatment and disposal ton – – 198

Controlled landfills ton – – 76

Percentage of waste sent to landfills % – – 10.0


Ferrari - Plants in Italy: 2









Water intake 103 m3 – – 356

Wastewater released 103 m3 – – 227


Total waste generation ton – – 11,587



Total recycled waste ton – – 6,247



Treatment and disposal ton – – 5,104




Paint shop VOC emissions g/m2 – – 29.6





■ CO2 ton/year – – 26,178.0


CNH - Plants in Italy: 5









Water intake 103 m3 1,175 1,260 1,218

Wastewater released 103 m3 791 1,234 1,218







Incineration with energy recovery ton 238 175 32




Emissions Unit of measure 2004(*) 2005 2006






■ CO2 ton/year – – 23,044.8

(*) During 2006, CNH detected several errors regarding reporting year 2004. These errors, while insignificant in their impact at Group level, have been corrected in this year’s Report.


CNH - Plants worldwide: 24






Other energy carriers (*) GJ/year – – 34,135



Water intake 103 m3 2,490 2,502 2,274


Waste Unit of measure 2004(*) 2005(*) 2006










Emissions Unit of measure 2004(*) 2005 2006






■ CO2 ton/year – – 103,988.4

(*) During 2006, CNH detected several errors regarding reporting year 2004. These errors, while insignificant in their impact at Group level, have been corrected in this year’s Report.


Iveco - Plants in Italy: 10(*)









Water intake 103 m3 6,747 6,702 6,077








Incineration with energy recovery ton 1,383 1,231 965










■ CO2 ton/year – – 45,004.0

(*) Including three production sites dedicated to powertrain activities that were conferred to the FPT Sector on January 1, 2006.


Iveco - Plants worldwide: 27(*)



of which: Electricity GJ/year – – 1.975,061






Water intake 103 m3 7,561 7,447 6,751















■ SO2 ton/year – – 50.5



■ CO2 ton/year – – 119,738.0

(*) Including three production sites dedicated to powertrain activities that were conferred to the FPT Sector on January 1, 2006.


FPT - Plants in Italy: 4









Water intake 103 m3 – – 2,229

Wastewater released 103 m3 – – 2,077

















■ CO2 ton/year – – 17,999.9


FPT - Plants worldwide: 7









Water intake 103 m3 – – 2,394

Wastewater released 103 m3 – – 2,251







Incineration with energy recovery ton – – 2,243










■ CO2 ton/year – – 19,253.4


Magneti Marelli - Plants in Italy: 16









Water intake 103 m3 2,324 2,723 2,788










Controlled landfills ton 2,503 2,277 670








■ CO2 ton/year – – 18,960.8


Magneti Marelli - Plants worldwide: 51









Water intake 103 m3 3,279 3,735 3,983















■ SO2 ton/year – – 10.9



■ CO2 ton/year – – 37,640.1


Teksid - Plants in Italy: 2









Water intake 103 m3 2,529 2,950 2,975

Wastewater released 103 m3 698 553 563








Treatment and disposal ton 536 2,514 4,674




Teksid - Plants worldwide: 9









Water intake 103 m3 4,457 4,853 4,852















■ SO2 ton/year – – 190.3



■ CO2 ton/year – – 65,047.6


Comau - Plants in Italy: 5





Other fuels GJ/year – – –




Water intake 103 m3 107 111 127









Treatment and disposal ton 704 382 614

Controlled landfills ton 7 0 0



Paint shop VOC emissions g/m2 – – –


■ SO2 ton/year – – –


■ Dust ton/year – – –

■ CO2 ton/year – – 276.5

(1) Certain values differ from those published last year as they were reclassified.


Comau - Plants worldwide: 9









Water intake 103 m3 139 131 142









Treatment and disposal ton 707 385 627

Controlled landfills ton 53 40 28


Emissions Unit of measure 2004 2005(1) 2006

Paint shop VOC emissions g/m2 – 666.7 655.3





■ CO2 ton/year – – 1,631.5

(1) Certain values differ from those published last year as they were reclassified.


Sustainable mobility is a question of satisfying the growingneed for transportation while minimising the impacts that itcan have on the community and the environment: impactslike atmospheric pollution, greenhouse gas emissions, noisepollution, traffic congestion and accidents. Sustainablemobility is one of the Group’s prime concerns. Thus, in linewith Italy’s National Research Programme, the priorities ofthe EU Seventh Framework Programme (2007-2013) and theGroup’s strategies for safe, environmentally friendlymobility, in 2006 Fiat Group companies presented proposalsto the Italian Ministry of Universities and Research for 18major strategic projects involving a total cost of over 112million euros.At the strategic level, the Group’s research and developmentwork is coordinated by the Group Executive Council (GEC)Technical Committee. In 2006, the Group’s total outlays for research anddevelopment1 amounted to approximately 1.6 billion eurosor around 3.2 per cent of net industrial activities.Overall, R&D activities involve some 13,200 people at 116centres, spearheaded by the Centro Ricerche Fiat (CRF) andElasis.

Centro Ricerche Fiat (CRF)

Established in 1976 as the Fiat Group’s major source of expertisein innovation, research and development, the Centro RicercheFiat leverages this expertise and the results of its work bypromoting, developing and transferring new ways of ensuringthat the Group’s products are competitive and distinctive. The Centro Ricerche Fiat provides the Group with effective,innovative solutions at competitive prices, ensuring smoothtechnology transfer by further increasing the professionalqualification of personnel through training. This enables theCentre to play an active role in supporting technologicalgrowth for the Fiat Group, its partners and the communitieswhere they work in such fields as motor vehicles andcomponentry, energy, safe and environmentally-friendlymobility, telematics, innovative materials and relevanttechnologies, mechatronics and optics.In particular, the Centre’s work in innovative powerplants,alternative propulsion systems and transmissions isconducted through Powertrain Research and Technologyheaded by Fiat Powertrain Technologies, the Fiat Group Sectorset up in May 2005 which groups together all of the Group’sactivities in this area.

Environmental Responsibility Sustainable Mobility102

Sustainable Mobility

(1) Including R&D capitalised and charged to operations.

The skills of the Centre’s researchers are backed up by manyspecially equipped laboratories, including facilities forinvestigating electromagnetic compatibility and noise, the lasertechnologies centre, the optoelectronics and microtechnologieslaboratory, the fluid dynamic laboratory, engine test facilities andvirtual reality laboratories. In addition to its headquarters inOrbassano on the outskirts of Turin, the Centro Ricerche Fiat hasfour branches in Bari, Catania, Trento and Foggia, as well as acontrolling interest in the C.R.P. Plastics and Optics ResearchCentre in Udine, whose work focuses on advanced research inthe field of optics and plastics for automotive lighting systems. With a staff of approximately 870 employees, the Centro RicercheFiat made significant progress during the year, as witnessed bythe 61 new patent applications it filed in 2006, bringing the totalnumber of patents held by the Centre to over 2,100. A further 900patents are currently pending. In addition, the Centro RicercheFiat was awarded 128 projects in the EU’s Sixth FrameworkProgramme, confirming its leadership in European research. TheCentro Ricerche Fiat developed a global network of over 150universities and research centres, and has over 750 industrialpartners around the world. This network further strengthens theCentre’s global innovation strategies, ensures that it canimplement specific operations at the local level, and helps itcreate skills and monitor its competitiveness and growth. The work of the Centro Ricerche Fiat focuses on several keyareas of technology.

Powertrain Research and Technology

The major objective in this field is to develop and applyinnovative technologies for improving powerplant performance,cutting engine and vehicle emissions, and boosting fueleconomy. For conventional powerplants, the major thrust ofresearch is towards integrating mechanical and/or hydraulicdrive systems with innovative electronic regulations systems inorder to control the combustion process, exhaust gas after-treatment and power transmission to the wheels. For newpropulsion technology, research efforts concentrate ondeveloping efficient hybrid systems, particularly those that canbe used in urban transport applications. Explorative work isalso being carried out for future technologies such as hydrogenfuel cell propulsion systems, where the objective is to identifythe issues associated these technologies and assess theirindustrial feasibility.

Advanced Technology for mobility and safety

In this area, the main objective is to make available to the FiatGroup technological and systems-related skills in electronics,telematics, ICT and preventive safety needed to make vehiclessafer and more versatile. In electronics, most work focuses onsafety-critical architectures and on standardising hardware andsoftware for the host of electronic control units used in motorvehicles. In telematics and ICT, the Centre is working to extendthe advantages of the Blue&Me platform over the entire Fiatrange and ensure that its evolution is compatible with thesetechnologies’ fast-paced life cycle. In preventive safety, theCentre is developing proprietary algorithms for longitudinaland lateral vehicle control which will set the Group apart fromits competitors.

Vehicles and Advanced manufacturing and materials

The goals in this area are to develop innovative body and interiorarchitectures for vehicle systems that can increase performanceand add to the features that ensure product recognition whilemeeting all cost constraints. In particular, vehicle architectures arebeing investigated which will permit modularity (e.g., rear floormodules for housing CNG Compressed Natural Gas tanks), whileother development work addresses affordable high-efficiencyMAC mobile air conditioning systems, new solutions for vehicleinteriors (reconfigurable seating and instrument panel), advancedman-machine interface systems, and chassis control systems.For technologies and materials, the objective is to contributeeffectively to the technological development of new products,considering the entire life cycle of the product and carrying outcost-effective application, development and evaluation work atthe early stages of the vehicle and component design process.Here, the focus is on innovative manufacturing systems andmaterials, methods for improving performance levels, productcosts and perceived quality, and best practices for complying withemerging regulatory requirements for safety and theenvironment. Further information is available on the Centre’swebsite at www.crf.it

Elasis

Set up in 1988 by the Fiat Group as a company dedicated toresearch work in the framework of development programmesfor Southern Italy, Elasis has grown into a highly specialisedresearch centre whose work addresses technologicalinnovation, complete vehicle development, mobility and itsenvironmental impact, and traffic safety.

Environmental Responsibility Sustainable Mobility 103

The Centre has two sites in Pomigliano d’Arco and Lecce, bothlocated in Southern Italy, with approximately 765 employeesand is provided with sophisticated computer-aided design andcalculation tools and advanced physical and virtual testingequipment which are based on an ability to develop andmanage information systems that puts Elasis in the front ranksof the world’s R&D centres. At Elasis, work on engines andtransmissions is carried out as part of Fiat PowertrainTechnologies’ development projects.In 2006, Elasis continued to pursue its strategic objectives offorging new links in the research/innovation system’s valuechain and of promoting local development. In pursuing this objective, Elasis worked within consortiaincluding universities and private institutions in basic researchand training, continuing to sharpen its focus on the issuesrelated to mobility and its environmental impact. In addition, Elasis cooperated with the Naples Employers’Association and chambers of commerce in Southern Italy tohelp the area’s small and medium enterprises make the mostof their skills.Further information is available on the website atwww.elasis.it

Research and its applicationsSafety and the environment are major concerns for the FiatGroup. Nowhere is this attention more evident than in theGroup’s research and its real-world applications by eachSector, which pursue the following goals:■ reducing emissions of atmospheric pollutants andgreenhouse gases;■ reducing petroleum consumption and dependency;■ reducing noise pollution;■ increasing active and passive road safety;■ improving urban mobility by reducing traffic congestion.The Fiat Group works on multiple fronts:■ developing new diesel and spark ignition engines, as wellas engines powered by alternative fuels. For its dieselengines, the Group strives to bring emissions down to thelevel of their gasoline counterparts, while work on the latteraims at making them as economical to run as a diesel.Development of alternative propulsion systems makes itpossible not only to reduce emissions, but also to curbdependence on petroleum. Nor are these goals incompatiblewith improving engine performance, especially in terms ofmaking them fun to drive, comfortable and, at the same time,easy on the pocketbook;■ developing electronic applications like Magneti Marelli’sTetraFuel system, which combines the ability to meter severaldifferent kinds of fuel in a single electronic engine control unit;■ developing systems for curbing emissions, like dieselparticulate filters and the SCR Selective Catalytic Reductionsystem, an exhaust gas after-treatment method that bringsdown oxides of nitrogen (NOx);■ designing new vehicle architectures that increase active andpassive safety;■ developing telematic applications that facilitate interactionbetween the vehicle and the road infrastructure, increasingsafety and reducing traffic congestion;■ promoting approaches to personal mobility and freighttransport that reduce traffic congestion, with all the undoubtedadvantages that this can bring in terms of emissions andconsumption;■ extending the range of vehicles powered by alternative fuels,as well as of diesel vehicles equipped with the Multijetinjection system and models featuring diesel particulate filters.The major research projects that were launched during theyear and key applications by the Group’s Sectors are describedin the following paragraphs.


Efficient, clean-burning engines

Diesel engines

Current R&D work on diesel engines is spurred by a number ofdaunting challenges: the significant reduction in emissions thatwill be needed to satisfy the European Union’s stringent fuel-neutral emissions standards slated to come into effect by theend of the coming decade, the need to reduce fuelconsumption, and hence emissions of carbon dioxide (CO2) –the main greenhouse gas that contributes to the potential forglobal warming – as called for by a voluntary agreementbetween the European Commission and ACEA, the EuropeanAutomobile Manufacturers Association, and, at the same time,the need to improve engine performance in terms of both peakpower and the low-end torque that is such an important factorin driving enjoyment. Accordingly, current technologicaldevelopments include:■ further advances in electronic fuel injection control, whichare essentially based on continuing improvements in theperformance of the injection system’s hydraulic components,combined with better algorithms for controlling fuel delivery inthe combustion chamber (MULTIJET II system);■ further advances in optimising the combustion process inorder to reduce pollutants in the combustion chamber;■ further advances in integrated exhaust gas recirculationcontrol, based on the use of innovative technologies such aslow-pressure EGR – Exhaust Gas Recirculation and electronicvalve control (MULTIAIR system);■ development of advanced exhaust after-treatment systemsand control strategies for reducing NOx and particulateemissions. In particular, this involves further advances in theDPF diesel particulate filter technologies used to trapparticulates emitted by the engine, which focus on optimisingthe filter regeneration process.

FPT engines for Germany’s trains

The Stadler Rail Group, the main supplier of diesel tractionequipment for Germany’s inter-regional rail network, haschosen low-environmental impact Cursor 8 enginesmanufactured by Fiat Powertrain Technologies for itsmodern Regio Shuttle trains. Equipped with SCR SelectiveCatalytic Reduction exhaust gas after-treatment systems,these innovative engines are very much ahead of their time,as they already comply with the Stage IIIb emissionsstandards that will come into effect for the railway sectorin 2012.

New Iveco lineup debuts

Iveco’s new lineup of medium and heavy trucks withenvironmentally-friendly engines is now on the market.Immediately recognisable from the stylised hummingbird logo– a clear reference to nature – these vehicles comply with boththe current Euro 4 and the upcoming Euro 5 emissionsstandards. Iveco’s decision to equip its Eurocargo, Stralis andTrakker trucks with the new engines underscores the maker’slongstanding commitment to the environment: a commitmentbacked up by continuing investments in research anddevelopment. It’s a commitment – and a strategy – that goeswell beyond regulatory compliance, since it also ensures thatcustomers can rely on performance and profitability. Thus, thenew engines are not only cleaner than their predecessors, butthey’re also more powerful and put out more torque. Inaddition, they are also nearly 5% more fuel-efficient. Whilebuyers of medium trucks can still choose between Euro 4 andEuro 5-compliant versions, Iveco encourages a thoroughlyforward-looking approach with its new heavyweights, all ofwhich meet Euro 5 standards. To satisfy the stringent Euro 4and Euro 5 standards, Iveco fine-tuned its EGR exhaust gasrecirculation and SCR Selective Catalytic Reductiontechnologies. Used on Iveco’s light truck range, EGR cutspollutants by recirculating a controlled amount of exhaustgases back into the engine, which lowers combustiontemperature. With the SCR system, which Iveco has chosen forits medium and heavy vehicles, a large proportion ofparticulate matter is eliminated directly during combustion,while oxides of nitrogen are converted into harmless water andnitrogen by injecting a solution of demineralised water andurea called AdBlue®. As sales of vehicles equipped with SCRare expected to rise sharply, an AdBlue® distribution networkis now being set up throughout Europe. Iveco’s buses take the


process one step further, combining SCR with a continuouslyregenerated particulate filter whose temperature is controlledelectronically to ensure that it operates under optimumconditions at all times. This configuration satisfies the EEV(Environmentally Enhanced Vehicles) emissions limits, whichare even more stringent than the Euro 5 targets. Iveco is theonly manufacturer whose entire lineup is EEV-approved.

New Euro 5-compliant DPF exhaust system

Magneti Marelli’s Exhaust Systems business unit will developand supply the Euro 5-compliant exhaust after-treatmentsystem for the Fiat 1.3-litre SDE small diesel engine. Upgradingthis engine’s current Euro 4 compliance level to Euro 5 will callfor fundamental changes to the exhaust system hot-endarchitecture. Thus, the new close-coupled diesel particulatefilter system combines an oxidisation catalytic converter and aDPF in a single component. This is a major technologicalbreakthrough, since it meets Euro 5 requirements at lower costthan current system layouts, which require a separate catalyticconverter and particulate filter. And PM abatement continues tobe accomplished without chemical additives, which means thatthe end customer will spend less in operating costs andmaintenance.

Particulate filter for Fiat Auto’s range

Thanks to Multijet technology, regeneration of the dieselparticulate filter featured on the Fiat Auto range is entirelyautomatic, requiring no additives. Currently, all Fiat Automodels come with a diesel particulate filter as either standardor optional equipment, and approximately 50% of all medium-large passenger cars produced in 2006 had a DPF as standardequipment.

Spark ignition engines

Research addressed the pressing need to continue reducingfuel consumption and emissions of CO2 – the main culpritbehind the greenhouse effect – without sacrificing the sparkignition engine’s intrinsic performance benefits, ride comfortand driveability, and leveraging its potential for satisfyingfuture emissions standards using mature, low-cost exhaustafter-treatment technologies. Thus, research work in 2006 concentrated on developing newtechnologies and building prototypes to demonstrate theirpotential.

This is an area where Multiair electro-hydraulic valve controlcan make a major contribution. Accordingly, the Group’sproduct engineering work is now focusing on this technology,which cuts fuel consumption and CO2 emissions while at thesame time boosting engine performance.The groundwork for applying the technology on the Fire 1.4-litre 16-valve engine was laid during the year. Specifically, theMultiair valve actuation module architecture was optimised tobalance manufacturability, serviceability and cost constraints.In addition, development work was completed on thehardware and software needed to generate the control systemfor future production together with the system’s strategicsuppliers.Three applications are slated to enter production in 2009,including a naturally-aspirated version and two turbochargedversions of the Fire 1.4-litre 16-valve engine. These versionswill gradually replace earlier engines using conventional valvecontrol and air management systems. Multiair technology was also applied to a prototype two-cylinder engine to assess its potential in terms ofperformance, fuel economy and NVH (Noise, Vibration andHarshness) in both naturally-aspirated and turbochargedguises. A demonstrator vehicle was outfitted with theturbocharged two-cylinder Multiair engine that will be usedon the Group’s current and future A and sub-A segmentmodels.In addition, in 2006 demonstrator vehicles were produced forall of the two- and four-cylinder versions described above,giving proof of their excellent potential for enhancing drivingpleasure: a pleasure that will be all the greater considering thatthese cars will consume a minimum of 10% less fuel than theirconventional counterparts.Fiat Auto’s product strategies call for rolling out theintegrated Multiair technology in 2009, using it in all futureengine outfits.

A new turbocharged 4-valve-per-cylinder engine displacing 1.4litres (T-Jet) was also developed in 2006. This powerplant is animportant part of Fiat’s downsizing strategies: designed withan eye to low-end torque, the engine it is coupled with a wideratio spread transmission. This makes it possible to achieveexceptionally good fuel economy (and hence low CO2

emissions) under the urban and moderate-speed highwaytraffic conditions in which B and C segment cars are typicallyused.


The 95 bhp 1.4-litre 16-valve Starjet engine

While the Multiair powerplants were girding themselves forproduction, new spark ignition engines like the 95 horsepower1.4-litre 16-valve Starjet were developed. For the first timeever, the Starjet combines a variable swirl combustionchamber system combined with a variable valve timing (VVT)managed by the injection control unit, thus significantlyreducing exhaust emissions and fuel consumption. The latter isa mere 6.0 litres per 100 kilometres in the combined cycle,putting the Fiat Grande Punto equipped with the 1.4-litre 16-valve 95 bhp Starjet at the top of its class.The new 1.4-litre 8-valve powerplant with variable valve timingwas also extended to other models, as were new 75 bhp and90 bhp versions of the 1.3-litre 16-valve Multijet diesel engine.Adopted for the first time on the Grande Punto, all of thesepowerplants ensure outstanding vehicle performance and fueleconomy.

Reducing CO2 emissions

In order to reduce fuel consumption, Fiat Group Automobiles isfollowing through on its commitment to comply with thevoluntary agreement that European manufacturers signed withthe EU Commission. Said agreement calls for a reduction inCO2 emissions to an average of 140g/km for newly-registeredvehicles by 2008. In particular, 55% of the vehicles sold in 2006had emission levels that were lower than 140g/km.

Natural gas engines

The Group continued to focus much of its internal combustionengine research on gaseous fuels, and natural gas in particular,well aware that the need to improve the quality of the air webreathe – especially in our crowded cities – has never been sourgent. Action must be taken today, and today, natural gas isthe only mature, economically sustainable technology we haveat hand. Other technologies such as fuel cells may indeedoffer intriguing possibilities, but there is little hope of gettingthem into roadworthy shape anytime soon. For all its benefits, however, natural gas still has two drawbacks:■ Engine performance is slightly lower than that provided bygasoline, and■ Natural gas’s lower engine density means that large, heavyfuel tanks must be used.A major effort is being made to overcome these problems, andto make natural gas’s pollutant emissions even lower than they

are now. Thus, tests are being carried out to determine thefeasibility of supercharging natural gas-powered engines forpublic transit vehicles, and work continues on integrating gastanks in the vehicle body so that they do not subtract from thespace available for driver, passengers and cargo.Working closely with Fiat Auto, Iveco and Irisbus, FiatPowertrain Technologies continued a programme initiated bythe Centro Ricerche Fiat which aims at developing newsupercharged engines for commercial use which not only cutnatural gas consumption through their effective use ofdownsizing techniques, but also offer higher performance. Atthe same time, tests got under way to assess the effectivenessof the exhaust gas after-treatment systems developed to meetEuro 4 emissions standards, and determine whether furtherwork will be needed to bring them into line with the even morestringent Euro 5 and Euro 6 limits that the European Unionproposes to mandate in the coming decade.

FPT engines for Beijing’s city buses

On April 12, 2006, Fiat Powertrain Technologies signed anagreement with Beijing Public Transport Company to supply1,000 natural gas engines.This business is part of a cooperation programme among theItalian Ministry for the Environment and Territory, the ChinaState Agency for Environmental Protection, and theMunicipality of Beijing. In view of the upcoming 2008 OlympicGames, the initiative is based on projects to supportsustainable mobility.Manufactured at the FPT facility in Torino, the engines willequip locally manufactured city buses in Beijing.Fiat Powertrain Technologies’ natural gas engines are amongthe cleanest-burning existing today, and significantly reducethe noise levels of the vehicles they are installed on. With theirstoichiometric combustion process and three-way catalyticconverter exhaust gas after-treatment, these engines alreadycomply with the European EEV (Environmentally EnhancedVehicles) emission limits which will come into force forstandard production diesel vehicles well after 2010.

Natural gas Cityclass buses for Modena

During 2006, Irisbus Iveco delivered ten Cityclass busespowered by natural gas to ATCM, Modena’s municipaltransport agency. The buses are twelve meters long, feature airconditioning for driver and passengers, and are equipped withCursor 8 engines.


Vehicles powered by alternative fuels

Natural gas is a concrete alternative to diesel fuel andgasoline. Nonetheless, Fiat, like all forward-thinking,environmentally aware auto makers, is actively testing longer-term solutions such as fuel cell cars, without loosing sight ofmore immediately usable options: biofuels such as ethanol andbiodiesel. Biofuels are derived from agricultural products suchas beets, sugar cane and oil-producing plants like rapeseed,soybeans and safflowers, and can provide advantages that arefar from insignificant:■ they are renewable energy sources;■ they are biodegradable, and producing them leaves noresidues or waste;■ compared to ordinary diesel, they produce fewer emissions ofcarbon monoxide, unburnt hydrocarbons and particulate matter;■ they contain no sulphur or aromatic hydrocarbons, and makeless of a contribution to the greenhouse effect: the carbondioxide emitted in engine exhaust, in fact, is offset by the CO2

consumed by the plants as they grow. The Group continued to develop a range of alternative fuelvehicles, building prototypes to assess their potential, andproceeding with product engineering.

Bi-fuel

Bi-fuel vehicles feature two separate fuel systems so that theycan run on either gasoline or natural gas, like Fiat Auto’senvironmentally friendly Natural Power line. While running onnatural gas, this type of vehicles emits no particulate matter,and oxides of nitrogen (NOx) are 90% lower than dieselengines and 50% lower than gasoline. And as for unburnthydrocarbons, using natural gas minimises emissions of themost toxic components such as benzene, high molecularweight hydrocarbons, and so forth. In addition, these vehicles

emit 25 per less carbon dioxide than a comparable car burninggasoline. Today, natural gas technology is ready and willing tohelp solve the pollution problems that afflict our cities: theonly thing that still stands in its way is a broader-basednetwork of filling stations that can handle natural gas. From1998 to 2006, Fiat Auto has sold over 100,000 Natural Powervehicles in Europe, with almost 28,000 of these sales in 2006alone. Clearly, the technology is coming into its own.

During the year, Fiat Auto launched the “Panda Panda”, a newlow environmental impact city car equipped with the 1.2-litre 8-valve bi-fuel natural gas/gasoline engine. The two natural gastanks, with a total capacity of 72 litres, are tucked neatly awayunder the floorpan. As a result, the Panda Panda is just as roomyand comfortable as the standard version of the car, and hasevery bit as much storage space. Cruising range with natural gasis around 300 kilometres, while the 30 litre gasoline tank ensuresthat the car will get to journey’s end even in places where naturalgas refueling stations are still few and far between.

In March 2006, Fiat Auto presented the Panda MultiEco, aconcept car developed jointly with the Centro Ricerche Fiat andFPT with an innovative powertrain architecture consisting of a1.2-litre 8-valve FIRE bi-fuel natural gas/gasoline engine,Dualogic robotised automatic/sequential manual transmission,and BAS (Belt-driven Alternator-Starter) which quickly andsilently restarts the engine during stop-and-go city traffic,combined with the use of environmentally friendly recycled,recyclable or natural materials for body exterior and interiortrim. In addition, the Panda MultiEco shows improvedaerodynamics – with a drag coefficient of only 0.295 – andweighs 92 kg less than the standard gasoline version. Comparedto the latter, the MultiEco cuts CO2 emissions by 32% in thecombined cycle, where it produces only 90 g/km. Futuredevelopments will make it possible to use natural gas/hydrogenblends, bringing further benefits for the environment.

Tri-fuel

Tri-fuel vehicles can run on any of three different fuels:gasoline, natural gas and blends of gasoline and ethanol (from100% gasoline to 100% E85, a blend of 15% gasoline and 85%ethanol. From the environmental standpoint, ethanol’s majoradvantage is that it is a renewable energy source (it is derivedfrom various kinds of crops through a biomass fermentationprocess, or from sugar-rich agricultural products such as


cereals, sugar beets and cane, cellulose and starchy material,and pomace produced as a by-product of winemaking) andmake less of a contribution to the greenhouse effect and globalwarming: as the biomass feedstock grows, it consumes anamount of carbon dioxide equivalent to that which will later beproduced when the fuel is burned in the engine (except, ofcourse, for the CO2 emitted when producing fertilisers,ploughing fields, hauling the organic feedstock, and so forth).

In September, Fiat Auto presented the Multipla MultiEco, aconcept car developed to showcase the potential of tri-fueltechnology, as it can run on gasoline, E85 bioethanol andnatural gas). Being able to pass from E85 to natural gas opensup new horizons for sustainable mobility, out on the open roadas well as in crowded city streets. This is because bothalternative fuels permit significant reductions in CO2, whilenatural gas also cuts emissions of other pollutants. TheMultipla MultiEco builds on Fiat’s experience in Brazil, whereflex-fuel gasoline/bioethanol technology is featured on a full95% of the Fiat cars sold on the country’s market.

Tetrafuel

Tetrafuel is a technology developed by Magneti Marelli’sPowertrain business unit. It can manage four different types offuel through a single electronic engine control unit, enablingthe vehicle to run on ordinary gasoline, ethanol, natural gasand gasohol (Brazilian gasoline, made up of a blend of ethanoland gasoline). The TetraFuel system is not an adaptation, but afully integrated low-pressure system that produces real savingstogether with lower CO2 emissions.The new Fiat Siena TetraFuel, recently launched on theBrazilian market, is the first car in the world that, thanks to therevolutionary TetraFuel technology, can take four different

kinds of fuel in its stride, running equally well on gasoline,natural gas, ethanol and gasohol. Developed entirely in Brazil,the system automatically adapts to whichever fuel it receivesfrom the tank, achieving the best balance betweenperformance, consumption and emissions in all drivingconditions and situations.

Biodiesel

Biodiesel is the alternative fuel used by CNH Case New Hollandbrands. New Holland is “Clean Energy Leader” insofar as it is the onlymanufacturer of agricultural equipment to approve the use ofB20 blends (20% biodiesel and 80% petroleum-based diesel)for all CNH engines, including engines featuring Common Railtechnology. As from January 2007, New Holland approved useof EN14213-compliant 100% pure biodiesel (B100) on all itsmachinery equipped with mechanical fuel injection dieselengines and on certain models with electronic injectionengines, thanks to an adaptation kit and a specific maintenanceprogramme. Case IH approves use of B% blends on all enginesof all Case IH agricultural machinery as well as use of B20blends on all Case IH except Common Rail engines. Startingfrom March 2007, Case IH also approved use of 100% biodieselon approximately half of its models. CASE Construction Equipment was the first constructionequipment manufacturer to approve use of B5 blends in all itsmechanical injection engines. B20 blends can be used on allCase engines except for electronic injection types and theengines installed on Case 410 and 420 compact loaders.All New Holland construction equipment products areapproved for use with fuel blends up to B20, except for thosewith electronic injection engines.

Hydrogen

Throughout the automotive industry, a massive research effortis being made to develop new fuel cell propulsion system,those powered by pure hydrogen in particular. Many practicaladvantages are expected: high efficiency, zero tailpipepollutant emissions, and virtually noise-free operation.For several years, Fiat has actively developed and applied fuelcell systems: the Seicento Elettra H2 Fuel Cell unveiled in 2001,the Seicento Hydrogen in 2003, and now the Panda Hydrogen

fuel cell. Though field trials are already being carried out, a road-ready production version is still a long way away. The PandaHydrogen uses hydrogen to supply the fuel cells. Inside the fuel


cells, the hydrogen and the oxygen in the air combine to produceelectricity. And the only thing that emerges from the tailpipe ispure water vapour. The Panda Hydrogen was jointly developedby Fiat Auto, the Centro Ricerche Fiat and Fiat PowertrainResearch & Technology, with the support of the Italian Ministriesof Research and of the Environment and input from leading OEequipment manufacturers. The prototype is the third generationof automotive hydrogen propulsion systems. Performance iscomparable to that of the conventional fuel-burning standardproduction Panda: with a 60 kW propulsion system, the fuel cellcar reaches a top speed of 140 kilometres per hour, acceleratesfrom 0 to 50 kph in five seconds, and can climb 23% grades.Cruising range is 220 kilometres, and refueling takes less thanfive minutes. Unfortunately, though, the price is still high.

On February 13, 2006, Fiat and the Piedmont regionaladministration announced a wide-ranging cooperativeprogramme for hydrogen-fuelled transport, as contemplated bythe protocol of intent signed at the end of December 2005.Through this programme, Fiat and the Piedmont Region willcooperate on local and European-level programmes over theshort and long term. They will promote Piedmont as a keyresearch and development centre in this innovative area.

Electricity

Making the best use of batteries in automotive applicationscalls for a detailed knowledge of their performancecharacteristics in order to select the most appropriate type ofbattery. In addition, managing the entire electrical systemcorrectly calls for a model of how batteries behave under alloperating conditions.

The IVECO Daily Ecodriver is a minimum parallel hybrid vehicle,or in other words an architecture that can drastically reduce fuelconsumption and emissions – those of carbon dioxide inparticular – while providing flexibility and performance that is asgood or better than those of the standard Daily vehicle with thesame engine and trim level. The “hybrid” in the van’s minimumparallel hybrid designation refers to the fact that it is poweredby both an IC engine and an electric motor, while parallel meansthat power from both the engine and the motor can be routed tothe wheels at the same time, and minimum means that electricdrive is used (at the moment) only during starting and toprovide momentary torque boost in order to keep battery bulkand weight to a minimum. Plans are now being made for aversion with similar architecture and larger battery pack that willhave an extended driving range on electric power alone.

In the field of construction equipment of the CNH Case NewHolland Sector, Kobelco Construction Machinery, NewHolland’s corporate partner in the CNH global alliance, applieda new hybrid technology for its seven-ton class crawler

excavator. Now at a stage of prototype feasibility assessment,the design’s goal is to reduce fuel consumption and carbondioxide emissions by 40% compared to New Holland’s currentdiesel engine model, without sacrificing the operatingperformance capabilities of a “traditional” diesel-poweredclass excavator. CNH also introduced hybrid technology foragricultural equipment, developing a diesel-electric hybridtractor presented at the Hanover International AgriculturalMachinery Exhibition in November 2005.

Fiat Auto and Iveco vehicles powered by alternative fuels areillustrated in the following tables. The first table shows vehiclesbeing sold in 2006, while the second table lists prototypes.


Vehicles now on the market

Fiat Group Automobiles Iveco

Passenger Cars Light Commercial Vehicles Light (L) – Medium (M) Buses

and Heavy (H) Trucks

Monofuel (L) Daily (van body Europolis CNG

Vehicles running and chassis-cab unit) City Class CNG

on natural gas only (L) A50CII - School bus, Citelis CNG

Urban, Minibus EuroRider-397.12.27 CNG

(L) A50C11- CNG -Chassis Cab Chassis Standard Floor

(M) Eurocargo Agorà (Irisbus)

(H) Eurotech

(refuse collection version)

Bifuel Fiat Panda Panda Fiat Panda Van

Gasoline, natural gas Fiat Punto Fiat Punto Van

Fiat Multipla Fiat Doblò Cargo

Fiat Doblò Panorama

FlexFuel (*) Fiat Uno Fiat Fiorino

gasohol (**), ethanol Fiat Palio / Palio WE Fiat Strada

Fiat Siena Fiat Doblò Cargo

Fiat Idea

Fiat Stilo

Fiat Doblò

TetraFuel (***) Fiat Siena

Gasoline, gasohol (**),

ethanol, natural gas

Battery electric Europolis

(*) Vehicles marketed in Brazil.

(**)Brazilian gasoline, containing approximately 22% ethanol.

(***) Vehicle marketed in Brazil and Argentina.


Prototypes

Fiat Group Automobiles Iveco

Passenger Cars Light Commercial Vehicles Light (L) – Medium (M) Buses

and Heavy (H) Trucks

Bifuel Fiat Panda MultiEco (*)

Gasoline, natural gas

Trifuel Fiat Multipla Multi-Eco

Gasoline, ethanol (E85), natural gas Fiat Doblò

Hydrogen Seicento Elettra H2 (2001) City Class Fuel Cell (**)

Fuel cell Seicento Hydrogen (2003)

Panda Hydrogen (2005)

Hydrogen-natural gas Fiat Panda

Fiat Multipla

Electric Fiat Palio

Hybrid

Diesel, electric (L) Daily Ecodriver (***)

(*) With BAS + Dualogic robotised transmission. Future versions will also be able to use a natural gas/hydrogen blend.

(**) The bus was used during the Turin 2006 Winter Olympic Games, the first time that a hydrogen-power vehicle provided passenger service in Italy.

(***) Plans are now being made for a version with an extended driving range on electric power alone.


Fiat Multipla MultiEco

Safe mobility

Vehicle architecture

In vehicle architecture, Fiat’s research goal is to makecontinuing improvements in comfort levels, ease of operationand active and passive safety. These improvements arebrought about by designing and developing innovative vehiclestructures, chassis control systems, and sensors that alert thedriver to what’s going on around the vehicle. Introducing new systems that could potentially involve anincrease in the vehicle’s weight and hence in its fuelconsumption calls for particular attention in choosing materialsand innovative manufacturing processes so that overall vehiclemass can be reduced.

Safe vehicles

Integrated safety – an approach which takes the vehicle, thedriver and the infrastructure into account – is pursued througha combination of impact absorbing materials and architectures(passive safety), intelligent occupant restraint systems andadvanced driver aids based on on-board sensors andcommunication with road infrastructures (integrated active andpreventive safety).In this area, Fiat researchers have developed ways of informingthe driver of approaching obstacles as well as operating andenvironmental conditions, both by using on-board sensors inindependent vehicle-based systems, and by exchanginginformation with the road infrastructure and other vehiclesthrough cooperative systems. Often combined with innovativeuser interfaces, these systems help ensure that impendinghazards are perceived more quickly, assist the driver in criticalsituations, and reduce driver distraction.


Examples of the Group’s accomplishments during the yearinclude:■ The SDC Synaptic Damping Control system developedtogether with the Centro Ricerche Fiat is Magneti Marelli’snew take on continuous vehicle damping control. The systemincludes front and rear shock absorbers designed to ensure abroad damping regulation range via high-dynamic solenoidvalves, an electronic control unit that can manage the basicapplication software plus all variations required by thecustomer, and dedicated sensors. Highly effective inimproving vehicle dynamic performance during cornering,braking and acceleration, the SDC system is thus an optimaltradeoff between the contrasting needs of firm, responsivehandling and ride comfort, and is the starting point for futureintegrated vehicle dynamics control systems.■ The Safety Truck project. Iveco and the Centro Ricerche Fiatworked together on this project, developing an array ofintegrated engineering solutions that optimise the use ofseveral different kinds of technology and sensor. Workedfocused on a variety of driver aids and safety systems,including Active Lane Assistant, Collision Warning, LaneChange & Turning Assistant systems, night visionenhancement and driver status monitoring, with the objectiveof obtaining concept vehicles on which to test thesecapabilities and laying the groundwork for manufacturing suchsystems in partnership with qualified suppliers.■ Fiat Auto decided to offer its ESP Electronic StabilityProgramme on virtually all Fiat, Alfa Romeo and Lanciamodels. This electronic system prevents skidding andmaintains vehicle directional control under poor tractionconditions – snow, rain and slippery asphalt – and, even moreimportantly, in such emergency situations as steeringsuddenly to avoid an imminent collision. Electronic stabilitycontrol is combined with ASR advanced traction and drive-wheel slip control and the Hill Holder function that stops thecar from rolling backwards when starting on an upgrade byapplying the brakes and then releasing them automaticallywhen the driver touches the accelerator pedal. The Alfa 147,moreover, is available with the VDC Vehicle Dynamic Controlsystem, Alfa Romeo’s own original interpretation of ESP. Thissystem controls vehicle dynamic stability by sensing thedriver’s control inputs – or in other words, the driver’sintended direction – and the vehicle’s actual response. If adifference is detected which exceeds a certain margin oftolerance, the system automatically cuts in by individually

braking slipping wheels and/or reducing or increasing enginetorque until control is regained and the vehicle’s path iscorrected. ■ The Alfa 147 and Alfa GT feature a self-locking frontdifferential which limits slip (Q2) to make this high-performance sports car safer. The system is based on a Torsenmechanical limited slip differential which modulates torquesplit between the front drive wheels on the basis of wheelgrip. Combined with the exclusive double wishbone frontsuspension, the system provides exemplary roadholding andhandling.

The Fiat Grande Punto, the Fiat Bravo, the Fiat Croma and theAlfa 159 all achieved 5-star EuroNCAP ratings for safety.Assessments can be downloaded directly at the URLhttp://www.euroncap.com

Comfortable vehicles

Comfort is essential to driver alertness and safety, anddepends on a number of factors: effective climate control, airquality, ergonomically designed seating, easily understoodcontrols, readily available information, and low vibration andnoise levels. The Group’s research work focuses on continualimprovements in all of these factors in order to provide a safe,comfortable in-car environment while at the same timeincreasing the vehicle’s efficiency. In particular, the CentroRicerche Fiat is currently engaged in a project promoted byUNEP, the United Nations Environment Programme, todevelop a high efficiency MAC mobile air conditioning systemfor use on affordable, fuel-efficient vehicles to meet thedemand that is expected to arise in rapidly developingcountries.


Lightweight vehicles

Vehicle downsizing contributes significantly to reducing fuelconsumption, and makes it possible to compensate for theweight increases associated with the ever more lavishequipment levels featured on today’s cars. Research is strivingto achieve the best compromise between downsizing and costcontainment. Work now being carried out in this area includesstudies addressing the use of new high strength steels forvehicle structures, and thermoplastic or metal-plasticcomponents for closure panels such as rear hatches andliftgates and for vehicle interior components such asdashboards and seats.In addition to careful selection of materials, this researchaddresses innovative architectures that make the best use ofeach material’s properties, forming and assembly processes,and design optimisation using simulation techniques. Thesubsystems constructed as a result of this work havedemonstrated that weights can be reduced by 10% at modestcost: less than one euro for each kilogram of weight saved.Iveco, for example, continued to do innovative work withadvanced materials, embarking on several new initiatives inaddition to those launched in previous years in order to extendits expertise in key areas. In the course of 2006, a number ofresearch projects thus laid the foundations for boosting Iveco’scompetitiveness, investigating new materials for vehicle cabsand frames as well as power generation and transmission.Here, high and ultra-high strength steels, light alloys forclosure panels and structural components and non-monolithicmaterials such as sandwich panels are all expected to yieldmajor benefits for vehicle structures in terms of weight, cost,NVH and passive safety. For cab exteriors and interiors, Ivecoconducted studies and assessments of plastics for structuraland/or appearance-related applications, multifunction glassand ‘tunable’ acoustically attenuating materials such asfoam/fabric composites that can be used to suppressinterference frequencies and reduce noise. For the drivetrain,Iveco continued to analyse new lubricants and wearmonitoring systems. The information gained through thesestudies was put to concrete use in reinforced and decorativeplastics for aerodynamic kits, front grills and bumpers inmedium and heavy truck applications. In addition, theintroduction of advanced steels and structural plastics willsoon bring concrete product benefits, particularly inconnection with future design requirements for weightreduction and cost containment.

Telematic systems, mobility and intermodality

Electro-telematic mobility and inter-mobility systems can beapplied to public and private transport to ensure safer,smoother traffic conditions, and, in personal mobility, toimprove comfort, convenience and safety.Studies of innovative ways to apply telematics to mobility arenow in progress. The Blue&Me platform, for instance, isbeing used to develop new services that connect the car tothe traffic management infrastructure. Thus integrated, themobility management system will acquire further traffic data,while the driver will be provided with up-to-date and reliableestimates of travel times and a dynamic navigation service. Inthe future, the support that the telematic platform gives tomobility systems is expected to pay off in terms of improvedtraffic flow, less time spent on the roads, less congestion,lower consumption and fewer pollutants released to theatmosphere.Highlights of work in this area are as follows:■ As part of the European Union’s Sixth FrameworkProgramme, the Centro Ricerche Fiat is actively engaged ininnovative projects addressing advanced occupant safetysystems. Here, the SAFESPOT, PREVENT and CVIS projectsare three major examples. Coordinated by the CentroRicerche Fiat, the integrated SAFESPOT (Co-operative

Systems for Road Safety) project which got under way inJanuary 2006 aims to develop a cooperative system forpreventing accidents and improving traffic safety. The systemwill make it possible to extend the driver’s awareness ofpotentially dangerous situations by providing a continuousreal-time summary of the information collected by adjacentvehicles and the road infrastructure. The integrated PREVENT

(Preventive and Active Safety Applications) project, now inits third year, investigates independent in-vehicle driving aids


that can come to the driver’s assistance a split second beforean emergency occurs. The integrated CVIS (Cooperative

Vehicle-Infrastructure Systems) project centres on developingnew technologies needed to allow vehicles to communicatewith the roadside infrastructure. Its ambition is thus to sparka revolution in mobility management, bringing benefits interms of road safety and efficiency and reducing theenvironmental impact of road transport.■ As part of its participation in the major strategic projectsfunded by the Italian Ministry of Universities and Research,the Fiat Group launched the INTESA (“Vehicle infrastructuretelematic integration for individual mobility and distributionlogistics in the urban area”) research project in 2006.Coordinated by Iveco, the project’s goal is to developinnovative telematic solutions based on vehicle-vehicle andvehicle-infrastructure communication which will balance thegrowing demand for personal mobility and freight transportwith the need to limit the congestion and pollution that havesuch a negative impact on the quality of life.■ Elasis concentrated its attention on efforts to increase itsknow-how, and on participating in European Union andnational projects. The former included TRACE (TrafficAccident Causation in Europe), a project which aims toidentify the most common causes of traffic accidents andassess the effectiveness of existing safety systems. In Italy,Elasis embarked on partnerships with the provincialadministrations of Milan, Mantua and Macerata and with theMunicipality of Sorrento. These initiatives hope to makestreets and roads safer by auditing and analysing trafficaccidents.■ Through the “Productivity On the Road” initiative, Ivecolaid the foundations for marketing new types of in-vehicleservices for haulage monitoring and management which will

make a significant contribution to dealing effectively andefficiently with mobility problems.■ Satellite technologies are the last frontier in real-time trafficinformation. This is why Magneti Marelli has chosen to worktogether with Viatis Satellite Radio and Navteq to develop anew geolocalised satellite traffic information system. In 2006,the project conducted Europe’s first experiment inbroadcasting TMC (Traffic Message Channel) information overthe WorldSpace satellite digital radio network. In a recentdemonstration, Magneti Marelli equipped a vehicle with itsRT3 navigation system, which receives and handles TMC datatransmitted directly by the satellite in real time.■ One of the biggest hits at the 2006 Geneva Motor Show wasBlue&Me, the voice activated in-car infotainment systemspringing from an agreement between Fiat and Microsoft. Thenew system provides an array of functions and services,integrating with personal mobile devices like cell phones andmanaging audio content. In addition, it guarantees maximumsafety levels and user-friendliness, as voice-activation,complete integration with steering wheel control buttons andinformation on the dashboard display make it possible to useany Bluetooth-based mobile phone – even if it is an a pocketor handbag – without removing hands from the steeringwheel. Using a modern voice recognition system, Blue&MEnot only displays incoming SMS messages, but it also readsthem aloud to the driver. And this is all to the benefit ofsafety, since it eliminates the distractions of trying to use acell phone while driving. Magneti Marelli’s Electronic Systemsbusiness unit developed the system’s hardware. ■ The Multi-Function Optical Sensor (MFOS) developed bythe Centro Ricerche Fiat and Magneti Marelli features asingle viewing matrix that integrates several automotivefunctions involved in scene recognition (identifying


oncoming vehicles, tunnels and bridges) and in monitoringthe vehicle’s environment (lighting, fog, rain and windowmisting) Its main advantages include a high level ofintegration between the functions, management via a singleelectronic processing unit, a low number of sensors andcomponents, and simplified on-vehicle wiring, all of whichkeep costs low.

Personal mobility and freight transport

One of the prime concerns of Fiat research is working towardsintermodal and multimodal transport. Priority objectivesincluded improving personal mobility and freight transport,increasing safety, reducing consumption and protecting theenvironment.For personal mobility, the major goal is to develop anintegrated system that takes a broad-based, comprehensiveview of the problem, combining on-demand transport, carsharing and car pooling with public transit and private vehiclesto create a whole new approach to getting from place to place.This is an area where the Fiat Group can build on theimpressive number of pilot projects it has promoted in Italy,introducing people throughout the country to these newtransport models. Research in private transportation is working to integratenavigation systems, traffic information and ways to manageservices associated with mobility in order to ensure thatprivate road users can optimise their movements in relation toactual traffic conditions. For public transit, a key concept is that of individual publictransport, where the idea is to provide people with publicly-owned personal vehicles that encourage them to make the

modal shift away from private cars, and can be used just asflexibly. This is a concept that holds out considerable promisefor alleviating some of the problems that afflict big cities:problems like the lack of parking and restrictions on access todowntown areas. And if ecological vehicles are used for theservice, we can also expect to see environmental benefits.In Infomobility services, one of most noteworthy is theELASTIBUS service. Filling the gap between buses and taxis,this local “on-demand” public transport system is ideal forsmall communities. The demand-responsive service is tailoredto users’ needs: by phone or on-line, people who need a ridecan arrange for a vehicle to pick them up at a specified timeand place. This is a promising mobility paradigm for areas withlimited public demand, where regular fixed-route bus service isinconvenient for users because scheduled runs are tooinfrequent, and uneconomical for transit operators.

Fiat has studied freight logistics for many years, developingapplications that can be implemented by carriers of all sizes.Research is working to promote the use of freight logisticssystems on all commercial vehicles, which will have benefits interms of transport efficiency, shorter trips and, as a result, lesscongestion and consumption.Intermodality projects focus on optimising freight routes byusing the vehicle which is most appropriate – in terms ofoverall economic and environmental efficiency – for each leg ofthe route.Research projects address the specific freight mobility issuesaffecting major cities (and especially mobility and managementof goods unloading in the downtown areas), busy hubs such asports and interports, and hazardous goods.


Iveco Transport Concept

At the IAA commercial vehicles exhibition in Hanover, Ivecopresented its Transport Concept prototype tractor-trailer rigbased on the Stralis AS. The demonstrator features a wealth ofinnovations for high-efficiency freight transport.The project is a response to the long distance heavy haulagemarket’s demand for trucks that will carry more freight withlower operating costs. Some of the new ideas tested on theTransport Concept will be introduced on the next generationsof the Stralis range. To meet the need to carry more freight, the Transport Conceptuses a slightly longer trailer which increases load volumewithout going beyond the 40 or 44 metric ton GTV mandatedby law in many European countries. Efforts to bring down vehicle operating costs focused on threeaspects: ■ Tractor/trailer aerodynamic optimisation. Drag coefficient wasreduced by approximately 20%, which translates into fuelsavings up to 8%.■ Tractor mechanical optimisation, using innovativecomponents which Iveco is developing for compliance withfuture Euro 6 standards. ■ Use of innovative tires that reduce rolling resistance. Along with low operating costs, the Transport Concept boasts alevel of safety which exceeds current standards for commercialvehicles, as it is equipped with all of the active safety devicesin which Iveco has built up extensive experience, including itslane departure warning system.For the customer, the benefits are clear from the followingpercentages, which were calculated for gross train weights of40 and 44 tons: ■ 15% more payload ■ 9% higher Europallet load capacity

■ 15 to 20% higher profits ■ 9% higher revenues■ 13% fewer trucks on the road ■ 15% less fuel consumption in l/100 km ■ 24% less fuel consumption in l/ton ■ 25% lower CO2 emissions in l/ton of load

IvecoStarter

Iveco’s new light truck prototype is called Fideus. Based onthe new Daily CNG (Compressed Natural Gas), the van wasdesigned for use in the city, where it will make the leastpossible impact on traffic and the environment. Since it’sintended for delivery work, which calls for frequent trips andfast loading and unloading, a number of changes were made tothe standard Daily structure to improve accessibility andvisibility. And to bring down emissions even further, theprototype is equipped with the new IvecoStarter device whichshuts off the engine when the van is stopped in traffic or at thelights, and restarts it automatically when it’s time to getmoving again. Particular attention was also developed toreducing noise levels. The van also features a wide range oftelematic systems and innovative driver aids. An example isthe Electronic Reverse-Driving Assistance System, a sort of“autopilot” which enables the vehicle to back up – on its ownand with no driver input whatsoever – along a section of roadit has just travelled over and memorised in the computer. Allthe driver has to do is watch what’s going on through the on-board TV cameras. The device makes drivers’ lives easierduring deliveries in downtown areas, where narrow streetsoften make manoeuvring close to impossible.


Production systems

The Group’s research and development work in automation forthe automotive industry was carried out by Comau through itsbusiness lines.In the course of 2006, the Powertrain business line completedits work in the Automotive Components Service Manufacturingproject, part of a nationwide programme promoted by Comauin cooperation with the CNR - Italian National ResearchCouncil. Through this research programme, the business line developeda new three-axis machining centre with horizontal spindle androtary table, designed to perform high speed machiningoperations on automotive iron and aluminium castings. Themachining centre, on which extensive validation tests werecarried out in the first half of 2007, was developed usingDesign for the Environment criteria. In particular, solutionswere developed which reduce pollutant emissions thanks todry machining technology or MQL minimum quantity lubricanttechniques and advanced fume extraction and filtrationsystems. Machining centre design also focused in reducingenergy consumption, which was achieved by minimising axisinertia and introducing noise abatement measures.The Body Welding & Assembly business line’s research andproduct innovation work concentrated primarily on developingwelding and assembly systems in the following areas:■ Remote laser body shell welding systems (SmartLaser)■ Robotised body shall framing systems (Robot Framer)These systems were developed with an eye to flexibility andreducing their environmental impact, an approach that broughtthe following benefits:■ Lower space requirements and consumption of electricalenergy;■ Less noise;■ Less maintenance, and fewer lubricants, ferrous metals andother non-end-of-life materials to be disposed of.In addition, Comau Body Welding & Assembly participated inseveral research projects funded by the European Unionthrough the latter’s Sixth Framework Programme (2002-2006)which focused on developing low environmental impactmanufacturing processes and products. Specifically, thebusiness line contributed to three projects whose aim was todevelop innovative production systems for automotive

bodywork. MY-CAR (Flexible Assembly Processes for the Car ofthe Third Millennium) will develop methods for producinghighly personalised vehicles. Similarly, SLC (SuperLIGHT-CAR)examines welding and assembly systems for lightweightbodywork. PISA - Flexible Assembly Systems ThroughWorkplace-Sharing and Time-Sharing Human-MachineCooperation, where PISA stands for Assembly SystemsIntegrated Project, read backwards, deals with highly flexiblerobotised assembly systems.For the Robotics business line, R&D work centred on thefollowing areas:■ Completing the new robot range, developing new NM (16 to45 kg), NH (130 kg) and NJ (370 kg) mechanical units■ Developing the new-generation C4G robot control unit■ Developing the WiTP wireless teach pendant.These systems normally consist of a mechanical section, ormechanical arm, that carries the payload (a welding gun, forinstance) and a control unit that contains all of the hardwareand software systems that manage the mechanical section’smovements. The teach pendant is the programming interfacethat permits dialogue between the operator and the robotisedsystem.These new robotised manufacturing systems can yieldsignificant social benefits, since they relieve human operatorsof particularly tedious or tiring tasks, and work inuncomfortable or unhealthy areas. The new systems alsoprovide additional environmental benefits, as optimised designmakes it possible to reduce the amount of ferrous metals usedto produce them, and the new wireless teach pendanteliminates the communication cable.


Implementing European Community

regulations

End-of-Life vehicles

On September 18, 2000, EU Directive 2000/53/EC was adoptedby the European Parliament and the Council of the EuropeanUnion in order to prevent waste from vehicles by promotingthe reuse, recycling and other forms of recovery of end-of-lifevehicles, and to improve the environmental performance of alleconomic operators involved in the life cycle of vehicles, andespecially auto makers, dismantlers and shredders who aredirectly involved in the treatment of end-of life vehicles. Sincethen, nearly all EU member states have transposed the ELVDirective into their own national law. Current legislationestablishes that the last owner of an end-of-life vehicle candeliver it to an authorised treatment facility at no cost, andapplies to all passenger vehicles accommodating a maximumof nine occupants and having a gross vehicle weight up to 3.5metric tons. Starting on January 1, 2007, the ELV provisionswill apply to all vehicles in circulation. In this connection,European regulation has made vehicle manufacturersresponsible for organising dismantling networks where the lastowner of an end-of-life vehicle can deliver it for treatment atno charge. The form these networks take may vary fromcountry to country. Thus, setting up an efficient network withhigh quality standards and sufficient geographical coverage isthe sine qua non for dealing effectively with end-of-lifevehicles. Both independently and in cooperation with otheroperators involved in recycling, Fiat Auto is creating networksof dismantlers throughout Europe where Fiat, Alfa Romeo,Lancia, Autobianchi and Innocenti vehicles are collected at nocost to the owner. Though the Fiat networks already complywith applicable regulations, they will be continuouslymonitored to guarantee that they provide both thegeographical coverage and the quality standards required bythe law. To provide its customers with the best servicepossible, Fiat Auto is using all available channels ofcommunication to inform the public: the Internet, call centresin all European languages, owner’s handbooks, and signboardsidentifying authorised treatment facilities. Fiat Auto isconvinced that communication is crucial to the effectivenessand sustainability of vehicle dismantling and recyclingnetworks: the mainstays on which the ELV Directive’s successor failure in reaching its environmental objectives will depend.End-of-life vehicles contain many different types of material:

steel, plastics, rubber and a whole list of others. In Italy,around 1.5 million vehicles are scrapped every year, with over1.2 million tons of material that must be disposed of in someway. Clearly then, an extremely high potential value iswrapped up in these ELVs, a value that must find a sustainablemarket outlet.For today’s automakers, then, producing vehicles for trulysustainable mobility is not just a question of reducing tailpipeemissions or investing in alternative propulsion systems. It alsomeans designing vehicles and dealing with them at the end oftheir life cycle in a way that ensures maximum recovery ofmaterials, maximum optimisation of energy, and the minimumpossible amount of residual waste. This is the only way to bringthe manufacturing cycle around full circle, and start again withefficient recovery. With this in mind, Fiat Auto is concentratingon increasing the recyclability of its new models.In particular, the new 2006 Ducato achieved recyclability levelsin excess of 90%, well over the target which the EuropeanUnion’s new RRR (Reusability, Recyclability, Recoverability)Directive 64/2005 will mandate for all new vehicle typesstarting on December 2008.To comply with Directive 2000/53, all Fiat Sectors –Fiat Auto,Maserati, Ferrari and Iveco – continue to update theinformation networks developed together with competitors tooptimise dismantling procedures and keep track of thematerials used in vehicle components: the InternationalDismantling Information System (IDIS), and the InternationalMaterial Data System (IMDS). The IDIS system providesdismantlers with a dismantling manual in electronic format.Currently, the IDIS consortium brings together 23 vehicleproducers who make a total of 58 brands and providesinformation about approximately 1,000 different models.For the IMDS system, 2006 was a year of consolidation: theamount of data received was very high. For the Ducato,coverage was 95%, despite the model’s complexity and thelarge number of versions in which it is produced. The systemwill thus make it possible to take up the new environmentalchallenges to be faced in the coming years, both as regardsmaterials – where Fiat began eliminating hexavalent chromiumin 2006, with a view of meeting the mandated deadline in July2007 – and as regards REACH, the European Union’s draft lawon hazardous chemicals.Important increases were also made in the amount of recycledmaterials used on passenger cars, providing new outlets formaterials recovered from end-of-life vehicles.


To handle the issues involved in implementing the EUdirective, Fiat Auto set up an interfunctional ELV & VehicleRecycling team, which also draws on the expertise provided bythe Centro Ricerche Fiat.For the team, the Centro Ricerche Fiat assesses and developsthe best available technologies for separating the materialsgenerated when end-of-life vehicles are dismantled. Here, thegoal is to reduce the amount of waste produced and optimisethe process of reusing components and recovering andrecycling energy from separated materials, thus ensuring thatthe process is economically sustainable and making it possibleto reach the ambitious environmental targets set by thedirective.In this area, the Centro Ricerche Fiat is a partner in several EUSixth Framework Programme projects, including CONCLORE -CONtrolled Closed LOop REcycling and PROMISE - PROductlifecycle Management and Information tracking using SmartEmbedded systems. The primary objective of these researchprojects is to monitor the product’s entire life cycle, and itsactive use in particular, in order to make the most of itspotential for end-of-life reuse and recycling. The projects propose to develop new methods such asalgorithms for estimating components’ remaining life, and toapply new technologies like RFID radio frequency identificationfor automatically collecting information that can be useful inmanaging the entire vehicle life cycle, from the timecomponents are designed and produced, to vehicle operationand maintenance, and through to dismantling at the end ofthe vehicle’s life so that components can be reused ormaterials can be separated and recycled.

Magneti Marelli Lead-Free RoHS-Compliant control unit

On July 1, 2006, EU Directive 2002/95/EC on the restriction ofthe use of certain hazardous substances in electrical andelectronic equipment (RoHS) went into effect. The hazardoussubstances covered by the directive include lead, mercury,cadmium, chromium VI and certain bromine compounds foundin the base materials used in making printed circuits, e.g.,PBBs (polybrominated biphenyls) and PBDEs (polybrominateddiphenyl ethers). The restrictions are binding for electrical and electronicequipment used in domestic appliances, computer equipment,consumer goods and toys, but are not mandatory for thoseused in automotive, medical, aerospace and militaryapplications.

Nevertheless, Magneti Marelli Electronic Systems has decidedto comply voluntarily with the directive, and graduallydiscontinue the use of all substances that can be hazardous tohealth and the environment in its welding processes.In July 2006, the EUROLINE line run by the Corbetta plant’sTelematics Unit assembled Magneti Marelli’s first productmanufactured using lead-free technology: the ConvergenceC1V2 electronic control unit for the Blue&Me system featuredon the Grande Punto.

Life Cycle Assessment for the Fiat Croma headlamp

Working together with the Centro Ricerche Fiat, the MagnetiMarelli Automotive Lighting plant in Venaria - Italy introduceda new LCA (Life Cycle Assessment) programme.The pilot project got under way in 2005 for the B-MPV Comfortinstrument panel produced at the Magneti Marelli ElectronicSystems Corbetta plant and installed on the Idea / LanciaMusa.In 2006, the project was extended to automotive lighting, andapplied to the headlamp installed on the Fiat Croma.Life Cycle Assessment evaluated the headlamp’s overallenvironmental impact, taking every stage of its life intoaccount: producing the materials used to make it, themoulding, washing, painting and metalizing processes carriedout for each of its component parts, putting these componentstogether and transporting the finished headlamp to the FiatAuto plant in Cassino where it is installed on the Croma, usingthe headlamp on the car, and dismantling and recycling it atthe end of its service. The results of this study will provide an invaluable informationbase for making decisions about future product innovations inresearch, development and design. By identifying criticalpoints in the life cycle, in fact, it will make it possible to planways to reduce environmental impact by reducing pollutantemissions and the amount of energy used in processing, forexample.


The economics that disregard moral and sentimental considerations are like wax works that, being lifelike, still lack the life of the living flesh. Gandhi

Social Responsibility 124 Human Resources

124 Composition

127 Equal opportunities

128 Employee turnover and inter-group transfers

129 Health and safety

131 Industrial relations

135 Training and development

139 Internal communication

140 Employee benefits

142 Initiatives for Fiat Group employees

148 Community

148 Charitable gifts

151 Community investments

154 Commercial initiatives with social impact

156 Socially sustainable businessinitiatives

158 Institutional relations

158 Relations with associations

159 Relations with the media

CompositionAt December 31, 2006 the Fiat Group employed 172,012 people(173,695 at December 31, 2005), 44% of whom in Italy (44%also in 2005) and 24% in the rest of Europe (27% in 2005).The Group also employs a large number of people in Centraland South America, where 20% of Group employees works(19% in 2005), particularly in the Mercosur, where the Groupemploys approximately 31,000 people, and in North America,where 6% of its employees are located (7% in 2005). Three percent of employees work in the rest of the world (4% in 2005).Group employees are broken down into three macro-categories:■ Blue-collar workers

■ White-collar workers■ Professionals (personnel with management and specialistroles) who are in turn broken down as follows:

- Professionals and Professional Experts, correspondingto middle management (quadri) in Italy;- Professional Masters, Professional Seniors and Executives,corresponding to senior management (dirigenti) in Italy.

Temporary employees with fixed-term contracts accounted for6.4% of the total workforce at December 31, 2006 and 4.2%at the end of 2005. The percentage was lower in Italy, whereemployment arrangements of this kind involved 2.3% of theworkforce in 2006 and 2.5% in 2005.

Social Responsibility Human Resources124

Human Resources

Professional Master/

Total Professional/ Professional Senior/

2005 Headcount Headcount Blue-collars White-collars Professional Expert Executives

World 173,695 116,643 29,399 25,184 2,469

Italy 77,070 50,643 10,783 14,091 1,553

Europe (excluding Italy) 43,376 26,586 10,429 5,891 470

North America 12,572 6,798 2,661 2,851 262

Central and South America 32,996 27,219 3,760 1,848 169

of which Mercosur 29,132 23,963 3,238 1,767 164

Africa 596 279 232 84 1

Asia 6,237 4,733 1,198 298 8

Australia 848 385 336 121 6

Professional Master/

Total Professional/ Professional Senior/

2006 Headcount Headcount Blue-collars White-collars Professional Expert Executives

World 172,012 116,602 28,204 24,833 2,373

Italy 75,751 50,171 10,160 13,889 1,531

Europe (excluding Italy) 42,904 27,138 9,670 5,697 399

North America 11,714 5,986 2,641 2,807 280

Central and South America 35,392 29,293 4,012 1,941 146

of which Mercosur 30,877 25,399 3,500 1,838 140

Africa 420 173 166 80 1

Asia 5,028 3,477 1,247 293 11

Australia 803 364 308 126 5

Generally speaking, the age of employees in Italy is higherthan the average age of Group employees worldwide, and thuscompany seniority is higher there. Company senioritydecreased from 2005, especially in Italy, where approximately4,000 persons were hired in 2006.

There are no significant differences between Italy and othercountries in terms of educational levels, although the percentageof employees with the equivalent of a first-level university degree(“Laurea”) is slightly higher outside Italy, while the percentage ofthose with a high school diploma only is higher in Italy. However,

Social Responsibility Human Resources 125

Under 30 years: 20%

31 to 40 years: 33%

41 to 50 years: 27%

Over 50 years: 20%

Workforce broken down by age - World - 2006

Under 30 years: 11%

31 to 40 years: 35%

41 to 50 years: 32%

Over 50 years: 22%

Workforce broken down by age - Italy - 2006

Less than 5 years: 31%

6 to 10 years: 18%

11 to 20 years: 29%

21 to 30 years: 14%

Over 30 years: 8%

Workforce broken down by seniority - World - 2006

Less than 5 years: 24%

6 to 10 years: 15%

11 to 20 years: 37%

21 to 30 years: 17%

Over 30 years: 7%

Workforce broken down by seniority - Italy - 2006

Not mapped: 4%

University degree or equivalent: 13%

High school diploma: 33%

Elementary/ middle school: 50%

Workforce broken down by level of education - World - 2006

Not mapped: 3%

University degree or equivalent: 10%

High school diploma: 35%

Elementary/ middle school: 52%

Workforce broken down by level of education - Italy - 2006

it must be remembered that this comparison can be misleadingdue to the objective difficulty in comparing the quality and levelof skills represented by Italian educational credentials with thoseof other countries. The increased percentage of employeeswhose education terminated at the middle school level that

appears in a comparison with the previous year can be explainedby the increase in “mapped” employees (i.e. those who providedinformation about their own educational credentials) and thesignificant number of blue-collar employees that represented75% of hires worldwide (70% of new hires in Italy).


Headcount broken down by Sector (Consolidated companies)

2005 2006

Italy Rest of the world World Italy Rest of the world World

Fiat Auto 29,136 16,963 46,099 28,720 15,971 44,691

Maserati 580 26 606 574 75 649

Ferrari 2,582 227 2,809 2,684 186 2,870

Agricultural and Construction Equipment (CNH) 4,223 21,197 25,420 4,425 20,910 25,335

Trucks and Commercial Vehicles (Iveco) 14,923 17,450 32,373 14,926 17,863 32,789 (*)

Fiat Powertrain Technologies 7,424 2,687 10,111 7,534 2,722 10,256(*)

Components (Magneti Marelli) 7,096 17,117 24,213 6,679 18,516 25,195

Metallurgical Products (Teksid) 1,092 7,860 8,952 818 7,524 8,342

Production Systems (Comau) 2,695 10,030 12,725 2,710 9,583 12,293

Services (Business Solutions) 2,892 2,544 5,436 2,286 2,771 5,057

Publishing and Communications (Itedi) 846 - 846 836 - 836

Holding companies and Other companies 3,581 524 4,105 3,559 140 3,699 (*)

Group Total 77,070 96,625 173,695 75,751 96,261 172,012

(*) These values differ from those published in the consolidated financial statements for the following reasons:■ the Iveco Sector includes 8,256 employees assigned to powertrain activities in the Fiat Powertrain Technologies Sector;■ Holding companies and Other companies include 412 CRF employees assigned to powertrain activities in the Fiat Powertrain Technologies Sector;■ the Fiat Powertrain Technologies Sector figures do not, therefore, include the Iveco (8,256) and CRF (412) employees assigned to powertrain activities.

Equal opportunitiesThe Group is committed to providing equal opportunities to allits employees, both on the job and in their careeradvancement. The Head of each office shall ensure that inevery aspect of employment, such as recruitment, training,compensation, promotion, transfer and termination, employeesare treated according to their abilities to meet job requirementsand all decisions are free from any form of discrimination, inparticular, discrimination based on race, sex, age, nationality,religion and personal beliefs. (Code of Conduct)

Workforce by gender

At the end of 2006, women accounted for 16% of the Group’sentire worldwide workforce. Though the percentage of womenemployed in office and clerical positions exceeds that in otherjob categories, women are also well represented among theGroup’s professionals.A comparison with 2005 data shows that there are noparticular differences at the global level.

Gender profile by geographic area (%)

2005 2006

Men Women Men Women

World 84.1% 15.9% 83.9% 16.1%

Italy 82.2% 17.8% 82.6% 17.5%

Europe (excl. Italy) 81.1% 18.9% 80.7% 19.3%

North America 83.2% 16.8% 82.7% 17.3%

Central and South America 92.8% 7.2% 91.9% 8.1%

Africa 81.9% 18.1% 79.0% 21.0%

Asia 84.5% 15.5% 78.7% 21.3%

Australia 84.2% 15.8% 81.2% 18.8%

Percentage of women by job category

2005 2006

World Italy World Italy

Senior management 7.7% 8.4% 7.6% 8.0%

Middle management 14.4% 15.7% 14.4% 15.9%

White collars 31.0% 32.9% 31.0% 31.1%

Blue collars 12.4% 15.0% 12.9% 14.9%

Total 15.9% 17.8% 16.1% 17.5%


Women’s employment in Fiat Group Companies in Italy(Women as a percentage of the total number of employeesbroken down by job category)

2005

15.7%8.4%

32.9%15%

17.8%

2004

14.8%7.8%

37.5%14.5%

18.0%

2003

14.6%7.8%

38.0%14.4%

18.1%

2002

14.2%7.0%

38.9%13.7%

18.3%

2001

12.8%5.7%

35.0%14.2%

17.7%

2000

11.3%4.9%

35.1%15.4%

17.9%

1990

5.6%2.0%

32.7%13.1%

14.9%

1985

4.5%1.6%

36.1%13.2%

15.1%

2006

15.9%8.0%

31.1%14.9%

17.5%

White-collarworkers

Middlemanagement

Seniormanagement

Blue-collarworkers

Total

Promoting equal opportunities for men and women in theworkplace is a goal shared by the Company and employeerepresentatives. This issue is tackled within the framework ofthe social dialogue, in compliance with local laws andpractices.

In Italy, Equal Opportunity Committees are operating withinthe Automobiles and Trucks and Commercial Vehicle Sectors.Made up of Company and employee representatives, thesecommittees:■ monitor women employment■ study and promote initiatives■ conduct reviews on a pre-emptive basis of any dispute in theapplication of the equal opportunity practices.At the Group’s other Sectors, biennial reports on the workforcegender profile are examined together with the trade unions atthe meetings according to the National Collective LabourAgreement provisions.In 2006, all Group Companies in Italy prepared andsubmitted the report on male and female employment for2004-2005 to the Regional Equal Opportunity Directors andRSUs at the various production units, as envisaged by Law125/1991.

Employee turnover

and inter-group transfers

The variations in the number of employees recorded withrespect to December 31, 2005 are due to changes in thescope of consolidation, as well as new incoming andoutgoing personnel.

In 2006 changes in the scope of consolidation (due todisposals, acquisitions, or changes in the scope ofconsolidation of Group Companies) led to a net decrease in theGroup workforce by approximately 1,000 employees. Thetransactions that had the greatest impact on this change werethe sales of the French company SBFM of Teksid, B.U.C. –Banca Unione di Credito, and the financial services of FiatAuto, following establishment of the FAFS joint venture withCrédit Agricole. In 2006 about 60% of the new employees were hired underfixed-term contracts. During the year, over 3,700 (includingapproximately 1,100 in Italy) of these agreements weretransformed into open-ended employment contracts. These

involved persons hired on a temporary basis in previous yearsor in 2006, and who could subsequently be employed on apermanent basis due to increased production levels at theGroup.Over 900 recent university graduates were hired worldwidein 2006, mainly in the engineering area.

Approximately 10% of staff reductions resulted from collectiveredundancy procedures carried out as part of restructuring ororganisational streamlining programmes. Whenever possible,the various situations were managed with recourse to “socialshock absorbers” envisaged by law and definition of planswith trade unions to attenuate the impact of these measureson workers.Finally, the dimensions of the Fiat Group offer opportunitiesfor transfers between Sectors and manufacturing units.In 2006, approximately 1,700 persons, including almost 1,000in Italy, were affected by transfers between Sectors andbetween different plants within the same Sector.


2006

173,695

Fiat Group employee turnover - World

2005

172,012

18,654

1,037

-19,300

Employees at Dec. 31, 2005

Incoming

Outgoing

Δ scope of consolidation

Health and safetyAll employees shall take such steps as are necessary to maintain agood working environment in which the dignity of all is respected.In particular, all Fiat Group employees:■ shall not work whilst under the influence of alcohol or drugs;■ shall be sensitive to the needs of those who will physicallysuffer from the effects of “passive smoke” in their place ofwork, including in those countries where smoking in theworkplace is permitted; ■ shall avoid behaviour that might create an intimidating oroffensive climate with respect to colleagues or subordinatesfor the purpose of marginalising or discrediting them in theworkplace.(Code of Conduct)

All of the Fiat Group employees, at whatever level in theorganisation and whatever their responsibilities andassignments may be, are involved in preventing risks andimproving safety at the workplace. Each Group Company is responsible for the impact that itsmanufacturing processes have on the work environment, andfor ensuring that they comply with the laws of each countrywhere they operate and with the following principles:■ All activities affecting occupational safety and health,ergonomics and fire prevention are vital aspects of work; theyare closely connected with it and cannot be separated from itor performed separately.■ Promotion of these activities is an essential part of the dutiesof all managers at the various levels of the organisation.■ Information and training must be provided on the matters inquestion, and constitute an integral part of everyone’sprofessional knowledge.

Occupational accidents

Every Company reports its occupational accident statistics inaccordance with the statutory and regulatory provisions of thecountry where it operates and regarding the specific nature ofits production process. Since the systems for reporting,measuring, and certifying occupational accidents can vary fromcountry to country, the results of the various statisticscustomarily collected at the national level cannot be compared.For this reason, the 2004 Sustainability Report providedinformation only on the situation in Italy, while, starting from2005, the report includes information about situations at thosesites outside Italy where Fiat has a significant presence.

The results reported here refer to almost 90% of all Groupemployees, including nearly all Group employees in Italy and90% elsewhere worldwide. However, it is important toremember that the only reason for adopting just one method isto dispose of uniform data for merely statistical purposes.This is done with the awareness that the provided data cannotbe confirmed in any reports prepared locally for managementpurposes or in satisfaction of obligations imposed by nationalpublic authorities. In light of these methodological considerations, the Italiansituation is illustrated as follows, comparing it with thesituation in 2004 and 2005, while the comparison is limited to2005 in the case of foreign entities.The data provided here report the occurrence of accidentscausing more than three days of absence from work byemployees (excluding senior managers and senior manager-equivalent positions) in the industrial sectors and central andadministrative departments. Only Itedi employees (PublishingSector) are excluded from these figures.

Fiat Group accidents in Italy

2004 2005 2006

Frequency rate 1.54 1.34 1.26

Severity rate 0.31 0.29 0.28

Fatalities 1 1 0

The statistics regard employees of Fiat Group companies whoare exposed to risks and thus enrolled with INAIL, the Italianagency for accidents on the workplace. Senior managers andaccidents suffered during travel to and from the workplace areexcluded.The frequency rate is the ratio between the number of reportedaccidents (i.e. causing the employee to miss more than threedays of work) and the number of hours at work, multiplied by100,000.The severity rate is the ratio between the days of absence andthe number of hours at work, multiplied by 1,000.


The statistics for 2006 confirm the trend of reducing frequencyof accidents, accompanied by a moderate decrease in theseverity of those accidents.

Fiat Group accidents worldwideRest of the

2005 Italy world World



Fatalities 1 0 1

Rest of the

2006 Italy world World



Fatalities 0 0 0

Medical and occupational safety costs

Just under 163 million euros, or 2.5% of the cost of labour, wasspent on improving workplace safety and environmentalconditions (plant improvements, protection of workers, plantand work environment inspections), and employee health(medical expenses) at the Fiat Group.A total of about 360,000 medical check-ups were performed,including both preventive and periodic check-ups and thoserequested directly by employees themselves. This works outto an average of two check-ups per employee.

Occupational safety training

A total of about 540,000 hours in training were dedicated toinforming and raising employee awareness on accidentprevention and occupational health and safety. These trainingactivities involved over 76,000 Group employees worldwide,with 80% of these being blue-collar workers. Over 2% of thehours actually worked by blue-collar employees werededicated to occupational safety training.

Occupational health and safety certification

PN-N 18001 occupational health and safety certificates wereissued for two Fiat Auto and FPT plants in Poland, and OHSAS18001 (Occupational Safety and Health Administration System)certificates were issued for the Magneti Marelli Powertrainplant in Corbetta, Italy and the Electronic Systems plantlocated in Châtellerault, France, as well as for the Teksid do

Brasil ltda. and Shanghai Meridian Magnesium ProductsCompany plants(1). These certificates cover a total of 10,093employees. The Brazilian plants of Magneti Marelli alsocreated an integrated policy for the environment andoccupational health and safety. The objective is to permitfuture integration of environmental and safety managementsystems in accordance with a unified policy while respectingthe local characteristics and structure of each plant.

Involvement of labour representatives

Improving the health and safety of workers is one of therecurring topics addressed with Employee SafetyRepresentatives, in compliance with applicable laws and thecollective bargaining agreements in effect in the variouscountries.In Italy, the Fiat Group national agreement envisages morefavourable treatment, both in terms of the number ofrepresentatives and the matters addressed, than what isenvisaged by law for disclosure to and consultation withEmployee Safety Representatives.

No-smoking policy

As a step to protect non-smokers health, the Fiat Group hassince long adopted a policy aimed at avoiding risks derivingfrom “passive smoke”. This issue is clearly addressed in theCode of Conduct, which requires all employees, includingthose working in countries where smoking in the workplace ispermitted, to “be sensitive to the needs of those whophysically suffer from the effects of passive smoke”.Most companies belonging to the Group adopt a “no smoking”policy. In Italy, in particular, smoking is prohibited not only incompliance with industrial accident prevention regulations, butalso in view of employees’ health protection. Smoke is bannedin meeting rooms and working places where smokers and non-smokers are present. Since 2005, the smoking ban has beenapplied to all indoor working places and extended to publicpremises.


(1) In December 2006, the Fiat Group reached an agreement for the sale

of its interests in Meridian Technologies Inc.

Industrial relationsThe Fiat Group recognises the role of employeerepresentatives and trade unions constituted in accordancewith local law and practice in the countries where it operates.Relations with the unions are conducted in a spirit of mutualrespect, dialogue and constructive confrontation.

In 2006 a constant dialogue was maintained with trade unionsand representatives of employees at the company level inorder to find consensus solutions to handle the consequenceson workers of measures taken to respond to market needs,improve competitiveness, flexibility, and organisationalefficiency. Collective bargaining at the various levels was also intense,and major agreements were reached with the trade unions todefine pay conditions and rules in the various countries wherethe Group operates.

Trade union membership

Employees are free to choose whether to join a union inaccordance with local law and the rules envisaged by thevarious trade organisations. As certain countries – France andGermany, for example – regard the decision to join a union asa purely personal matter for employees, who are thus notrequired to inform the Company, it is not possible to trackoverall union membership.By contrast, union members in other countries may authorisetheir employer to deduct union dues from their paycheck, thusproviding a means of determining the number of members.This is the case in Italy, where 41.3% of Fiat Group employees(senior managers excluded) belong to a trade union.

Certain Fiat Group employees in Italy are represented by theFiat Middle Managers’ and Supervisors’ Association, whosemembers in 2006 accounted for 45% of eligible employees.

Employee representatives

In most European countries there are representative bodieselected directly by employees.Italy, for example, has the so-called Unitary WorkplaceStructures or RSUs, trade union representative bodies electedby all workers (“dirigenti” excluded) from nominees submittedby the trade unions. Elections are held every three years ateach manufacturing unit. As of December 31, 2006, RSUmembers at the Group’s metalworking companies in Italynumbered 934.

The Fiat Group also formed a European Works Council, arepresentative body at the European level, in compliance withEU Directive 45/94/EC for the purposes of informing andconsulting employees in Community-scale companies.


FIOM 11.7%

FIM 10.2%

UILM 8.8%

FLM 0.1%

FISMIC 6.8%

UGL 2.1%

FAILMS 0.7%

Other 0.9%

The Fiat Group in Italy - Trade union membership: % of headcount

(blue collars, white collars, middle management)

Total 41.3%

Fiat Group European Works Council (EWC)

The European Works Council was established in 1997, inapplication of the Constitutive Agreement signed in 1996 andsubsequently renewed with amendments and integrations. Thecurrent regulations were defined by the agreement signed onJune 29, 2005 by the European Metalworkers’ Federation (EMF –which represents the trade union organisations of the Europeancountries where the Fiat Group is present) and the Italian tradeunions. The agreement, that will be effective until the end of 2009,changed the distribution of seats by country so that employees ofthose countries that joined the EU as a result of its enlargementof May 1, 2004, are also represented on the EWC. It is comprisedby 30 representatives of the various countries in proportion to theemployment distribution of the Fiat Group in Europe. The EWC holds a plenary meeting once a year, usually before theend of November.Management also holds an additional meeting with the SelectCommittee (which consists of six members of the EWC) in thefirst half of each year.In 2006, the meeting with the Select Committee was held on May12, and the annual plenary EWC meeting took place on November13-14. The latter was attended by the Group’s CEO SergioMarchionne.

European Works Council (CAE) of the Fiat Group:

members by country

Italy 13 + 1 representing middle management

France 3

Belgium 2

Germany 2

Poland 2

Spain 2

Austria 1

Portugal 1

United Kingdom 1

Czech Republic 1

Hungary 1

Total 30

Social dialogue

At the European level, issues concerning the condition of theFiat Group, especially those that have a transnational impact,were subject of information and consultation with the Fiat

Group European Works Council (EWC), as required under EU

Directive 45/94/EC. The Fiat CEO, Sergio Marchionne, spoke atthe annual plenary meeting held on November 13 and 14, 2006,when he presented the results achieved, objectives andstrategies of the Group for future years.

In Italy, constructive dialogue continued with the trade unionsat the national and local level. Representatives of employeeswere provided with constant updates on the evolution of theFiat Group industrial plan, initiatives taken to achieve setobjectives, programmes to renew the product range, andproduction allocations. The meeting held at the Mirafiori Motor Village on June 28,2006 was of key importance. Sergio Marchionne presented anupdate on Group performance, the results achieved andobjectives to be realised. He pointed out that the improvedsituation had made it possible to maintain production activityat plants in Italy and created the conditions for renewing theGroup Supplemental Collective Agreement. This agreementwas formally signed by the Company and the trade unions atthat meeting. Additional updates on the Group’s growth prospects werecommunicated to the trade unions upon presentation of the2007-2010 Plan targets at the “Fiat Investor & Analyst Meeting”(Investor Day) held on November 8 and 9, 2006.The production and employment implications of the Plan werethen discussed at the meeting with trade unions on December15, 2006, when the various Sectors illustrated their individualfinancial targets and product renewal and investment plans,which represent the premise for assuring full use of Groupresources in Italy. These forecasts made it possible to reachthe labour agreement on December 18, 2006 that shares, onthe one hand, the need to overcome remaining overstaffingsituations, through “mobilità lunga” (long-term mobilitybenefit to bridge the period prior to retirement) for 2,000


Group employees. On the other hand, it expresses thecommitment made by the trade unions to supportimplementation of actions aimed at improving workplaceorganisation, work shifts and schedules as necessary toincrease use of production capacity and thus employment.Satisfaction of the conditions for granting the Fiat Group theportion of “mobilità lunga” indicated in the agreementmentioned above was officially recognised at the meeting heldon February 19, 2007 at Palazzo Chigi in Rome (seat of theItalian Prime Minister and Council of Ministers Office). At thatmeeting, the Chief Executive Officer Sergio Marchionneillustrated the Group’s development plans for 2007-2010,particularly in regard to the Italian situation. The meeting,attended by the Italian Prime Minister, the Ministers of Labourand Transport, and the Vice Minister for EconomicDevelopment, as well as representatives from the head officesof national trade unions, concluded with the signing of minutesin which the Italian Government affirmed its willingness tosupport the Company’s efforts to grow. In particular, thissupport would be dedicated to close assessment of initiativesin support of investments and research. It agreed that“mobilità lunga” benefits were necessary. Furthermore, itenvisaged setting up a discussion group with the participationof local government authorities to examine the measuresnecessary to overcome the logistical and economic restraintsexisting at the Termini Imerese plant in Sicily so thatproduction of a new model could be allocated to it startingin 2009.

Collective bargaining

Over 80% of Group employees worldwide are covered bycollective bargaining agreements.In Italy, all Group employees are covered by collectivebargaining. The National Collective Labour Agreement (CCNL)for metalworkers applies to the blue-collar and white-collaremployees and the middle management of almost all GroupCompanies (with the exception of Itedi, which is covered bythe Typographers and Journalists CCNL, and certain servicecompanies). “Dirigenti” are covered by the IndustrialEnterprise “Dirigenti” Agreement, entered into byConfindustria and the national senior managers union(Federmanager), which specifies the minimum salary levelsand general rules for employment of these people. Outside Italy, a lower proportion of Group employees (just over70%) are covered by collective bargaining agreements.

However, this is only an average, reflecting different situationsaccording to local custom and laws in the various countries. Forexample, almost all Group employees are covered by collectivebargaining agreements in Europe and the Mercosur area. The situation in North America (USA) is different, where tradeunions represent employees at only a few Group plants, for atotal of approximately 1,000 blue-collar workers. Nevertheless, even “non-union shops” at Group plants andfacilities generally define collective aspects of the employmentconditions (work shifts, internal regulations, benefits, etc.)through policies that are applied to all affected employees andformally communicated to them (e.g. the Handbook for 6,700CNH employees in the United States).

Collective bargaining is carried out at levels and in accordancewith procedures that vary from country to country according tolocal law and practise.For example, in certain countries (Italy, Germany, andBelgium), economic and regulatory matters are subject tonational or regional agreements made by employers’associations and trade unions for several companies (so-called“multi-company or sectoral agreements”), together with theadditional application and supplemental agreements that mightbe made by each individual company.In other countries, agreements are made only at eachindividual company, even in regard to wage-related aspects.

The various companies of the Fiat Group entered into over 600collective bargaining agreements at the company or plant levelin 2006 (450 in 2005). More than half of these agreementsaddressed management issues (assignment of work shifts,organisation of work, productivity, flexibility, etc.), 23%regarded compensation issues, 7% the consequences ofrestructuring or reorganisation processes on workers, and theremaining 15% miscellaneous matters.

Collective bargaining agreements made at the company

or plant level in the Fiat Group worldwide

Issues 2004 2005 2006

Compensation 101 92 139

Management 167 254 341

Restructuring 87 36 44

Other – 68 90

Total 355 450 614


In addition to these agreements, collective bargainingagreements with trade unions were reached in Italy at the

Group level. These agreements fall in the category ofcompany-wide agreements but were made by Fiat S.p.A. onbehalf of various Group companies, whose names are specifiedin the preamble of every such agreement.For example, this is the case of the Fiat Group supplementalagreement, renewed pursuant to the June 28, 2006 agreementthat applies to approximately 74,000 employees of Groupmetalworking companies in Italy. It defines the parameters,amounts, and rules for implementation of the PerformanceBonus (an annual bonus that varies according to achievementof financial and/or production targets defined a priori) andcertain regulatory aspects in addition to those envisaged in thenational industry-wide collective agreement.

Wage-related bargaining agreements

The agreements reached call for wage increases that aregenerally in line with or slightly higher than the rate ofinflation. The purpose of these agreements was to helpemployees preserve their purchasing power and link anyfurther wage increases to the achievement of the targets toimprove the Company’s performance.In Italy, metalworking companies ended in Januarynegotiations for a two-year renewal of the compensationprovisions of the National Collective Labour Agreement forMetalworkers (white and blue collar). This contract, whichcovers about 74,000 of the Fiat Group’s employees, expired atthe end of 2004. Negotiations between Federmeccanica (anational organisation that represents Italian metalworkingindustry) and the national trade unions Fim-Cisl, Fiom-Cgil,Uilm-Uil and subsequently Fismic were particularly long andchallenging. Only an agreement to extend the validity of thenew contract by six months (i.e., until June 30, 2007)succeeded in breaking a stalemate in negotiations at thebeginning of 2006. When fully operational, the agreementsigned on January 19, 2006 will provide an overall increase incompensation of about 6%, as follows: an average monthlywage increase of 100 euros (implemented in three stages: 60euros beginning in January 2006, 25 euros in October 2006 and15 euros in March 2007) plus a lump-sum payment of 320euros for 2005.On June 28, 2006, after just over a month of negotiations andwithout strikes, the agreement for renewal of the Fiat GroupSupplemental Agreement was signed with the Fim-Cisl, Fiom-

Cgil, Uilm-Uil, Fismic, and Ugl trade unions. The newagreement recognised the contribution made by workers toimproving the situation of the Fiat Group, envisaging anincrease in the annual performance bonus – an annual bonustied to Group performance – according to the achievement ofprofitability targets of the Company. The June agreement alsoestablished the terms and conditions for applying theprofessional Apprenticeship Agreement at the Fiat Group.

Outside Italy, the principal collective bargaining activitiesconducted at the company level in 2006 include: ■ the annual negotiations held in France, which resulted in payincreases of between 2% and 3% according to the differentcompanies; ■ the agreements made in most Group companies in Poland; ■ the agreements reached in Brazil for the definition of annualbonuses of varying amounts according to company results.In Germany, collective bargaining was conducted at theregional level for renewal of the metalworking sectoragreement, which is applied by most of the Group companiesoperating in that country. The new agreement envisagedaverage wage increases of about 3%.

Managing the consequences of production

requirements on employees

The improved market situation and higher sales in mostSectors entailed the need to increase production volumes,which were generally tackled through use of overtime workand temporary workers. In order to increase the rate of plantuse, work shifts distributed over six days of the week wereimplemented at the Melfi (SATA S.p.A.), Pratola Serra (FMAS.r.l.), and Termoli (Fiat Powertrain Technologies S.p.A.) plants.


In contrast, less and less recourse was made to the CassaIntegrazione Guadagni (Temporary Layoff Benefits Fund) overthe course of the year. Recourse to the “Cassa Integrazione Straordinaria” (Longer-term Temporary Layoff Benefits Fund) for the reorganisation ofthe FPT Mirafiori plant concluded in autumn 2006, following thereturn to work by employees within the envisaged deadlines. At December 31, 2006, a total of 234 employees from theadministrative, technical, and sales department of Fiat Auto, atMirafiori, and 324 at Arese were still receiving benefits under“Cassa Integrazione Straordinaria in deroga” (a waiver for theLonger-term Temporary Layoff Benefits Fund). Outside Italy, the plants in Brazil and Poland in particular wereaffected by the need to increase plant output rates. Thisinvolved extensive use of overtime work, which in certaincases exceeded 10% of the normal schedule, an increase in thenumber of work shifts, and the hiring of temporary workers.Agreements for work shift flexibility according to fluctuationsin production requirements were applied in Germany (Iveco),Belgium (CNH), and Poland (CNH). Restructuring and production streamlining measures were morelimited. Streamlining of excavator production was particularlysignificant in this context, resulting in the halt of these activitiesat the CNH plant in Berlin. The employment impact of thismeasure was defined in “reconciliation of interests”agreements and the September 2006 social plan, which ended alabour dispute that had lasted approximately six months.

Labour disputes

Labour disputes at the company level were down sharply from2005 and involved specific situations, such as the dispute inBerlin, or episodes of small-scale labour unrest at certainproduction plants on specific, limited problems.

Training and developmentThe Fiat Group for Human Resources

In 2006, the Fiat Group implemented a human resourcesmanagement policy to refine tools and solutions promotingthe development of its employees. Since personal well-being and professional motivationcontribute to industrial competitiveness, the Fiat Group iscommitted to placing its employees in the position ofrealising their aspirations. This is an all-embracing challengefocused on the individual and his or her potential. This newpolicy took the form of specific measures aimed at differenttargets in the Company work force. Consistently with theCode of Conduct, according to which “the Group’s mission isto grow and create value,” planning began in 2006 on acourse of on-boarding dedicated to promoting the integrationof new employees in the Company. This involved assigningmentors to new hires, in view of matching individualexpectations and corporate values.One indicator of the attention that the Group wishes todedicate not only to the first delicate phases of its employeesprofessional experience, but also to the entire course of theirprofessional life, is that the leadership and performancereviews conducted in 2006 involved a portion of the corporatepopulation in each Sector. These systems provided eachemployee with his own professional development plan inorder to orient and support career development by defininghis aspirations, short and long-term objectives, strengths, andareas for improvement. The Company committed itself tohelping employees accumulate growth-oriented experience.Fiat gave priority to training – both in the classroom andthrough distance learning techniques – in its human resourcesmanagement policy. Training plays an overarching role insupporting an individual’s career and job skills in view ofcontinuously improving the Company’s general knowledgebase. The amount of Company resources invested in trainingactivities in 2006 (approximately 95 million euros) offersencouraging evidence of this commitment. Participation in


the various courses totalled 169,834, up sharply from 2005,due to greater use of technical and professional trainingcourses. The various training courses varied in terms of content,objective, and target groups. The common denominator of allthese activities was the intention of giving value to all

segments of the company population. A total of 2,763,316training hours were offered, broken down as follows:■ Technical and professional continuing education: 74.9%■ Institutional training for career advancement: 2.2%■ Foreign language courses: 11.9%■ Other types of courses: 11.1%

The regional distribution of training activities shows that theywere dedicated particularly to employees working at GroupCompanies located outside Italy.

Training hours Training hours

Company(*) Italy Rest of the world

Fiat Auto 404,709 877,033

Iveco 33,681 46,545

CNH 36,768 255,814

Comau 33,841 87,215

Magneti Marelli 87,978 369,698

Fiat Services 34,232 50,691

(*) Only data of companies with significant presence abroad are shown.

The major investment made in training at the Group’s foreignsubsidiaries is consistent with its objective to consolidate itsinternational position. Isvor Fiat, the Group’s training services company, offered atotal of 18,505 classroom/tutor days as part of its training,consultancy, and support activities. This figure iscomplemented by a total of 118,699 Web-based distancelearning hours logged by 24,685 users. The Group’s investment during the year confirmed the key roleplayed by training in the professional development of Fiatemployees. The demand for on the job training expanded in2006, and the Company responded by offering dailyopportunities in this area. These took the form of experienceswhere the value of learning is measured by the scope of theindividual and group challenge of working in favour ofconsolidating and improving Company know-how.The aggregate figures on training courses and participationconfirm the Group’s commitment not only to managing humanresources, but more specifically to developing them.


Indicators 2006 2005

Total training expenses (total direct and indirect costs) 95,340,000 88,955,000

Type of training (direct costs)

■ Institutional (career advancement courses) 2,967,000 8.1% (*) 2,477,000 7.2% (*)

■ Language 3,849,000 10.5% (*) 3,471,000 10.1% (*)

■ Refresher courses (technical/job training) 20,894,000 57.0 % (*) 22,294,000 64.7% (*)

■ Other 8,958,000 24.4% (*) 6,243,000 18.1% (*)

Impact cost of labour 1.3% 1.4%

(*) Percentage calculated on direct training costs.

Offered in collaboration with the Italian Ministry of Labour tomore than 21,500 Fiat Auto employees, the Fiat Projectcelebrated its third anniversary. It represents the biggestcontinuing education programme ever realised in Italy andEurope and offers participants the chance to learn newvocational skills and improve their job prospects through: ■ development of skills useful to company activities;■ protection of employment levels in the affected regions;■ facilitation of access to the job market in general.This three-year project ran from 2003 to 2006 and provided97,000 training days.

Talent Network

The Group continued to invest heavily in the establishmentand consolidation of national and international networksbringing together the job market and educational institutions.The strategic value of its partnership with the universityworld is effectively represented by the high number ofongoing relationships between Group Companies anduniversities. The Group participated in a total of 647events/initiatives worldwide, 260 of which in Italy and 387outside Italy.The Group’s participation at 178 career days marked a slightincrease from 2005. 90% of the career days at which GroupCompanies participated were held outside Italy. The Group also participated at 135 Group and Sector

presentation events on university campuses, 85 of whichwere held in Italy, where it presented the Fiat brand andexperience. Numerous university courses also hosted company lectures

given by experienced personnel from various Group Sectors.These lectures confirmed the academic world’s appreciation ofthe experience and professionalism associated with the Fiatbrand. A total of 150 university lecture courses were offered,including 73 given at universities outside Italy. GroupCompanies opened their doors to a large number of students(16,826). A total of 11,727 middle school and high schoolstudents and 5,099 university students participated in guided

tours of Company plants.The figures for all these courses were higher than thecorresponding numbers for 2005. The Group is committed topromotion and recruitment, in view of tapping the best talentsavailable on the job market. For this reason, the Fiat Groupconfirmed its participation in 2006 as supporting partner of 37post-graduate courses offered by leading universities inside

and outside Italy. For each of these post-graduate courses,the Group’s commitment translated into:■ guaranteeing top-quality instruction;■ offering participants a close-up view of Group activities;■ offering participating employees a course of study that isofficially recognised by the academic world;■ permitting Group companies to contribute to the definitionand refinement of winning skills requirements for theirbusiness, in partnership with the educational institutions.In particular, Fiat Auto renewed its commitment in 2006 withthe Master in Marketing and Master in Finance offered by theUniversity of Turin – School of Economics. These courses arecomplemented by the Master in Quality and Master CustomerFirst (MIP). Fiat Auto’s commitment also involved continuationof the Grande Punto Italia Programme, which was launched in2005. This programme organised events for presentation ofthe product at six different Italian universities.Iveco sponsored six different masters courses:■ Master in Organisational Management Systems (Qualityand Innovation Engineering University Consortium / Universityof Pisa);■ Master in Lean Manufacturing (Milan Polytechnic - MIP);■ Master in New Product Innovation and DevelopmentManagement (Turin Polytechnic);■ Marketing Academy (Bocconi University);■ Sales Academy (Bocconi University);■ Service Academy (Bocconi University).Elasis sponsored two important masters courses: Uninauto,a second level masters course in automotive engineering incollaboration with the University of Naples “Federico II” andthe Sannio Master, a second level masters course in softwaretechnology, in collaboration with the University of Sannio –Benevento.


CRF sponsored the Ridef Master “Energy for Kyoto” – MilanPolytechnic. Comau participated in the Master for Generationof Complex Forms – Turin Polytechnic, and organised theMaster in Project Management and Industrial MaintenanceManagement in collaboration with PUC-Minas, EspecializaçãoEngegneria Automobilistica and Especialização RH Estratégicowith UFSC in Brazil. Fiat Services sponsored the Master inInformation System Integration and Auditing (SAA), the Masterin Business Processes and Information Systems (SAA), and thesecond level Master in Integrated Management of Real EstateAsset, Property, and Facility Management (Valle Giulia Schoolof Architecture, Rome). FPT participated in the initiativessponsored by Istud for the masters courses offered by theUniversity of Turin. Magneti Marelli co-sponsored an MBA atthe Milan Polytechnic and confirmed its commitment to aninternational level network by launching:■ a Master in Moulding Plastics at the University of ThomasBat’a (Czech Republic);■ Master in Workplace Safety and Accident Prevention at theUniversity of Katowice (Poland);■ Master in Human Resources Management at the KatowiceAcademy of Economics and Business (Poland);■ a masters degree course at UTEP Juarez University – JuarezTech/Monterrey Tech (Mexico).

The Fiat Group also distinguished itself through itsparticipation in two major and prestigious initiatives

recognised at the international level for their educational andcompetitive value. The Formula ATA Project and theprogramme for Internationalisation of the Automotive

Engineering Degree (Turin Polytechnic) merit special mention.

ATA Formula

The Fiat Group sponsored the Formula ATA Project as part ofits collaboration with universities inside and outside Italy. Thisproject took the form of two major technical sports events:Formula SAE ITALY and Formula TECH, which were held on theFiat Auto Test Tracks at Balocco.Over 200 students and recent university graduates fielded 30teams from universities around the world, participating inthese two competitions that reward enthusiasm and creativity.Formula SAE rewards the university and students who realisedand entered the best project on the track. The teamsparticipated by presenting a prototype one-seater racing carthat was designed and built in the workshops of severalleading European universities. Formula TECH, dedicated toalternative propulsion vehicles, using fuel cells, hybrid electricpowertrains, and hydrogen, aims at encouraging students andyoung engineers to participate with ideas and innovativedesigns for ecologically sustainable mobility, reducing theenvironmental impact of land vehicles as much as possible.Designs, components, and prototypes realised by universitiesin collaboration with the Fiat Research Centre and automotivesector companies were presented and then judged byinternational automotive experts.


Internationalisation of the Automotive Engineering Degree

In collaboration with the Turin Polytechnic, Fiat sponsoredand promoted the first edition of a project that enabledforeign students to receive scholarships for participation inthe first level university degree course in automotiveengineering (2006-2007 academic year) at the TurinPolytechnic. Fiat sponsored five scholarships for studentsfrom China. Fiat’s commitment to the success of this projectled to the creation of a network for promotion of the initiativethrough personnel located in different countries andparticipation in the different phases of selecting thecandidacies received.This initiative testifies to the Fiat Group’s interest inpromoting opportunities for growth and development offuture talents with an increasingly global perspective.

Opportunities for Growth

The attention dedicated by the Fiat Group to promotion of itsbrand, collaboration with educational institutions, andsponsorship of future talents is flanked by its commitment tooffer occasions to young people entering the job market for thefirst time to experience a dynamic, stimulating context. Theinternships and training courses offered by the Group furtherconsolidate the ties between Fiat and national universities. Atotal of 2,438 training courses were held in 2006, with 722 inItaly and 1,720 in other countries. A total of 180,582curriculum vitae were received by Group Companiesworldwide in 2006 (up from 150,631 the previous year). Thefact that 46% of the candidates submitted their curriculumvitae “spontaneously” – independently of any specific adspublished by the Group – confirms the improved perception ofGroup brands by Italian university students.The encouraging recruitment numbers were confirmed by thestatistics for hiring of young recent university graduates. TheGroup hired a total of 900 recent university graduates in 2006,including 239 in Italy and 661 outside Italy.

Internal communicationAt the Fiat Group, internal communication is achieved througha variety of channels that differ in their objectives, contentand frequency as well as in the size and geographicaldistribution of their audience. However dissimilar they maybe, however, they all share one aim: providing everyone, at alllevels of the organization, with full information and a chanceto exchange views. On the one hand, they provide the latest

corporate news about important events for the Group and thesingle companies, helping forge a common culture throughoutthe Group, with shared values and shared goals. In addition,they foster cooperation between and among the Group’ssectors, giving employees a forum for expressing theiropinions and needs and thus enabling the company to bringits personnel policies – and the services it offers – into betterfocus. Magazines, newsletters and intranet sites are just a fewof the ways that the Group and its employees cancommunicate.

Company publications

For over fifty years, the monthly Illustratofiat has beendelivered to the homes of the Group’s employees and retireesin Italy. Connecting colleagues in different sectors, Illustratofiatis also the Group’s link with the families for whom it provides alivelihood. Alongside news about life at the company, themonthly thus devotes ample space to the doings of the Group’smany associations and social organizations – the Fiat GroupSeniors Association, the Fiat Managers Association, the ScuolaAllievi Fiat Alumni Association, and Cedas Social Centers – aswell as to health, travel and culture. In 2006, the monthly wascompletely redesigned, and from the first issue in 2007features all-new graphics, livelier style, and more articles ofinterest to young people. And alongside interviews withcelebrities, the monthly puts the spotlight on the not-so-celebrated but no less important, with feature articles aboutFiat’s employees and the vital work they do. One thing thathasn’t changed, though, is the emphasis on dialogue withreaders: on the two-way communication it’s promoted for allthese years.Along with the Group’s monthly, the over 93,000 current andretired employees belonging to the Fiat Group SeniorsAssociation receive the latter’s review Percorsi, which coverstopics of general interest and the Association’s activities. LikeIllustratofiat, this periodical also boasts a brand-new look for2007, especially in its graphics and page layout.Providing up-to-the-minute information about major events,products and projects is the mission of the Group’s twonewsletters, Flash and Indiretta. The biweekly Flash isdistributed to the Group’s employees, either directly to theirdesks, or posted on office bulletin boards and the intranet.Regularly every fifteen days, it fills readers in about what’sgoing on at the Group and in their Sector, with each companyproducing its own edition to ensure that employees are


informed about the issues that affect them most closely. Bycontrast, Indiretta has no regular publication date, as it isissued only as special editions that inform employees aboutparticularly important events affecting the Group at the sametime as the outside media.

Group Intranet

Galileo, the Group intranet portal, was expanded in 2006,sharpening its focus on life at Fiat. It provides content andsupport services for employees, reinforces corporatecommunication, and promotes internal marketing initiativesthrough competitions and other new approaches to employeeengagement and training. In addition, Galileo has been thevehicle for reengineering several process and encouragingemployees to use self-service tools, such as those that helpthem manage their own work schedules or provide input forcompany processes. Other strong points of the intranet include the opportunities itprovides to work together, sharing knowledge and experience:document sharing, project management tools, meeting rooms,live chat and surveys.During 2006, approximately 500 new cooperation areas wereset up: rooms where work teams and communities can sharedocuments, which are particularly useful for professionalfamilies or inter-sector groups. For example, the Six Sigma andICT Security communities are especially active in these areas,as they involve a large number of users from different Groupsectors, often located at a considerable geographical distancefrom each other, and rely on the collaborative tools thusprovided for creating standards, methods and best practices.

Employee benefits

Fiat Associations

The Fiat Group promotes a number of internal associations,particularly in Italy. In 2006, the Group invested 2,199,000euros in the activities of these associations. Fiat associations include:■ UGAF, the Fiat Group Seniors Association, with a worldwidemembership of over 95,000 employees and former employeeswith at least 25 years of seniority.■ the Fiat Senior Managers Association (GDF), whichrepresents the Group’s current and retired senior managers.The association has 3,060 members around the world.■ Fiat Apprentices School Alumni Association (Ex-Allievi Fiat),with 3,200 members who prepared for their careers through anon-the job experience at the Company’s Apprentices School.■ Social Activity Centres (Cedas), an organization totallingmore than 96,000 members in Italy, which promote andcoordinate cultural, recreational, sports and leisure timeactivities for Fiat employees, their families and friends.

Supplementary Pension Plans

Almost 60% of the Group Companies offer supplementarypension plans, introduced in all countries where locallegislation and social security systems allow such plans. As ageneral policy, the Group prefers defined contributionretirement plans, though defined benefit plans are also used inareas where they are the market standard or were already inplace at the time the company involved was acquired by theFiat Group. Defined benefit plans are essentially restricted tothe English-speaking countries, Great Britain and the UnitedStates in particular.

Supplementary Health Plans

Nearly all of the Group Companies participate insupplementary health plans, nearly all of which are providedby insurance companies. Coverage levels vary from country tocountry, depending on local public healthcare systems and thelocal market restrictions, opportunities and competitiveness. Inmany countries, moreover, Fiat provides health care servicesdirectly at its own facilities, which include examining roomsand other specially equipped areas.In most cases, supplementary health plans are available tosenior managers, professional staff and their families, andinvolve a population of approximately 100,000 people.


Scholarships

The Fiat Grants and Scholarships Programme for children ofactive Group employees in Italy and around the world incountries where Fiat Group has a significant presence such asPoland, Brazil, the USA, France and Spain, continued in 2006.During the year, the programme was also extended to China. In2006 a total of 636 scholarships were assigned, of which 185 inItaly and 451 abroad, for a total amount of 1,072,000 euros. Inaddition, several scholarships were granted by the Sectors ofthe Group. Furthermore, UGAF assigned 560 scholarships tochildren of former employees.

Vacation location

In Italy, the Fiat Group offers its employees’ children, agedbetween 8 and 12, a two-week vacation at the seaside or in themountains between mid-June and mid-August.In 2006, 1,240 children stayed at the Group’s vacation centresat a cost to the company of 955,000 euros. Abroad, vacationsare being organized in Argentina, Brazil and Poland. During2006, more than 9,500 children took part in the initiative, with acompany’s contribution worth 756,000 euros.

Sports activities

Turin - Sisport

Active under various names since 1922, Sisport Fiat S.p.A. isthe Group’s sports company. Sisport centres are located inand around Turin, where they cover approximately 300,000square meters. In 2006, around 500,000 people used Sisport’sfacilities. Since 1928, Sisport Fiat organizes the AgnelliTrophy, a nationwide competition featuring a number ofdifferent sports events, joined by all of the Group’s plants andfacilities in Italy. 2,516 people participated in the 2006 editionof the Agnelli Trophy, for a total of 5,501 participants in the

various competitions of the Trophy. In 2006, the Group’scompanies contributed around 1,715,000 euros to supportsports activities for their 28,800 employees working in theTurin area.

Other locations in Italy

The sports, recreational and leisure activities offered toemployees of other premises of the Group are financiallysupported by the respective Group companies, throughagreements with sports centres, organization of tournaments,sports competitions, participation in the Agnelli Trophy andsubscription to sports clubs. These initiatives were joined bymore than 19,000 people and received contributions fromGroup companies for 1,240,000 euros.

Abroad

The Fiat Group organizes and financially sustains sports andrecreational activities in the main countries where it operates.During 2006, approximately 26,800 employees and theirfamilies participated in these activities, for a total cost for thecompany of over 570,000 euros.

Other benefits

The Group also extends discounts and interest-free or low-interest loans to its employees for purchases of its products,cars in particular.


Initiatives for Fiat Group employeesFor any company, staying competitive and profitable hinges onbeing able to rely on employees who are creative, dedicatedand committed to their jobs. This is why the Fiat Group has fielded a range of initiativesfocusing on employees’ needs and interests that are designedto create a work environment that encourages – and rewards –proactive participation.

Family Day, surrounded by supercars and gospel singers

Nearly eleven thousand people took part in the Family Dayorganised at the Mirafiori Bodywork plant to celebrateproduction startup for the Grande Punto. Employees and theirfamilies streamed through Gate 3 to visit the lines where thenew car is made. Nor were the assembly lines the onlyattraction: the day was also enlivened by an exhibition ofvintage and classic cars, a carousel, jugglers, stiltwalkers and agospel chorus. And to top it all off, the plant organised a prizedrawing and the chance to take the new car though its paceson the plant’s track, coached by a professional test driver. FiatEngineering & Design also held a successful Family Day, whenemployees and family members got behind the wheel of dreamcars and trucks, including a Ferrari Formula 1 racecar, aMaserati luxury sedan, and Iveco’s range-topping Stralis.“Driven by passion, and a passion for driving” was the themeof the day, where the idea was to give everybody a feel forwhat a test driver’s work is like. And so for the over 15,000participants, there were test drives to suit all tastes.Giving employees’ families a change to spend a day at theirbreadwinner’s workplace is a Fiat Group tradition, a traditionthat’s honoured at many other Group companies around theglobe, from CNH’s worldwide facilities to Ferrari’s annualOpen Day.

Children’s Christmas Festival

The Fiat Children’s Christmas Festivals are a perennial favourite,organised around the world for the children of employees. Thisyear, the Group’s employees in Torino and its surroundings weretreated to a Christmas party that was bigger and better than ever,with the entire Lingotto Oval transformed for the occasion in anenormous amusement park, with entertainment for everyone:clowns, jugglers, mimes, rides, inflatable playhouses, slides, boothsfor preparing and cooking pizzas or enjoying the fresh tastes of thevegetable garden, plus an exhibition of the Group’s products, fromthe Grande Punto to the Ferrari, with CNH tractors standingalongside Iveco trucks, and combine harvesters next to Comaurobots handing out chocolate bars. In this magical atmosphere,nearly 35,000 gifts were distributed to all the little girls and boysborn between 1996 and 2006: a whole mountain of presents underthe tree. The Children’s Christmas Festival is also a time-honouredtradition at Ferrari, where the factory turns into a paradise of funand games for the little ones. This year, the children wereentertained by a lavish show put on by the celebrated Ambra OrfeiCircus, in a tropical setting where they visited Pirates’ Island in aseafaring spectacle replete with buccaneers, Caribbean dancers anda coral reef stocked with every imaginable kind of fish. Beforegoing home, all the children received Christmas presents. Fiat Auto Poland organised a get-together with Santa Claus foremployees’ children at the Kinoplex cinema in Bielsko-Biala andthe Novekino cinema in Tychy, inviting the children from localorphanages and a number of educational centres in the region.Gifts were passed out to around 2,400 children. At the Elasisresearch centre in Pomigliano d’Arco, employees and the “IGiocondi” cultural association set up a living nativity scene andorganised an art competition for children of employees. Thewinning drawings were featured on the Centre’s greeting cardsand calendars.


School for safety

Winners of several in-house competitions promoted by theEngineering & Design and After Sales units won a drivingsafety course. In the classroom and on the asphalt, participantswere filled in on the fine points of safe driving by instructorsfrom the Andrea De Adamich school, ably assisted by a bevy offour-wheeled teacher’s aids: the Fiat Grande Punto, Alfa 147,Alfa GT and Alfa Brera. Basic principles were illustrated in theclassroom: correct hand position on the steering wheel, how totake curves, predicting how the car will react in varioussituations, and how safety devices work. And then it was off toMirafiori’s historic test track to put it all into practice, withchicanes, braking tests and high-speed cornering.

A whole other tune

For once, the Christmas compilation was recorded by theemployees themselves.The initiative got under way at Engineering & Design, as partof a project that uses music-based methods for teamworktraining, and whose slogan is: “A whole other tune …marching to the beat of a winning team”. During the summer,four groups of co-workers organised bands, performing inenjoyable musical evenings in the facility’s inner courtyard.To make sure this spirit of togetherness, leadership andcooperation continues to thrive, E&D gave all employees a CDwith live recordings of the bands’ “greatest hits” at Christmas.

Quality challenges at the factory

Competitions among the UTEs have been launched at all FiatAuto’s plants in Italy. The UTEs, or Elementary TechnologicalUnits, are the workgroups in Fiat’s body framing, painting andassembly facilities, and they’re vying with each other to showwho’s best in terms of quality, productivity and lowabsenteeism. Winners are rewarded with weekends in Italy’sprime cultural destinations and Fiat-branded products such asbicycles and clothing.Other competitions have been promoted to encourageinnovative thinking and reward individual initiative andprofessionalism.

Showtime tonight: all seats reserved for Fiat

For the Christmas holidays, Fiat put on a special show for all ofthe Group’s employees in Torino and its environs: Italy’s mostpopular TV and radio personality, the one and only Fiorello:irreverent, unexpected, caustically witty and completely

irresistible. During the show’s six-day run, around 60,000people flocked to the Isozaki Olympic Stadium to enjoy anevening of unforgettable entertainment from the man with ahundred faces, a hundred voices, and an utterly unique appeal.

Children’s health begins … at the factory

The number of overweight and obese children has risen sharplyin all industrialised nations over the last twenty years. That’swhy it’s important to make parents aware of the value ofmaking sure their children are active and involved in sportsfrom an early age, preventing all the problems triggered by asedentary lifestyle. This is the rationale behind the “Junior Wellness” initiativepromoted by Fiat Sata in Melfi together with the Potenzaprovincial administration, which provides medical checkups foremployees’ children to help them choose the sport that’s bestfor them.Around 2,000 children from 6 to 13 years old participate in theproject, which is sponsored by Italy’s Minister for Youth Policyand Sports, Giovanna Melandri. Junior Wellness isn’t the firstprogramme designed specifically for young people and theirworld: it takes its cue from a similar initiative, “Junior WellnessFormula”, introduced a few years ago to provide checkups andsports opportunities to the children of Ferrari and Maseratiemployees. During the summer, moreover, Melfi organised theSport Camp, directed by Dino Meneghin, Italy’s all-time greatestbasketball champion. Over a thousand boys and girls, childrenof the employees who build the Grande Punto, participated in aweek of sports under the supervision of a team of coaches andinstructors trained at the School of Human Movement andSports Sciences of the Universities of Foggia and Potenza. In Torino, the first of what is intended to be a series of annualsports orientation days was held for Fiat Auto employees’


children between five and fifteen years of age. Sports are morethan just competition, they’re also fun, as the Sisport sportscomplex proved in a green oasis filled with music andentertainment from Play Radio and games for all.

A write-it-yourself commercial for the new Ducato

“Write-it-yourself” was the title of the idea contest that FiatLight Commercial Vehicles launched for its employees, whothus had a chance to author the new radio ads for the Ducato.To get everybody in the spirit, comics Lillo and Greg playedaround with the titles of well-known movies, spinning theminto a series of side-splitting gags. Employees were quick torise to the challenge, as more than two hundred from all overItaly emailed ideas, scripts, dialogs and jokes for promotingthe new Ducato.

Art at the factory

The murals enlivening the long corridors of the MirafioriBodywork plant are the work of creative employees. To channelthis creativity, the plant held a competition, asking aspiringartists to submit their sketches. The first assigned theme wasthe Fiat 600. In the mural by Antonio Panino, a worker in theplant’s paint shop, two striking yellow and green bands with thewording Seicento – Six Hundred – run along the top and bottomof the wall, set off at the centre by two stylised red Fiat 600s.An old brick wall that crumbles to pieces, clearing the way fora 600 racing towards Torino’s landmark Mole Antonelliana andthe mountains is the subject depicted by the second winner,Antonio Lampis, a workman on the assembly line. The thirdwinner, Rovituso, saw the 600 as the quintessential family car:his mural has a couple like the winsome pairs painted byRaymond Peynet, with a little boy, a little girl and a cat, allaround the car in a flowery meadow.

Another nine walls at the plant will be frescoed, each takingthe name of a car built at Mirafiori.The workers at Melfi decorate the plant, by painting a muralentitled “The Grande Punto and the countryside in Basilicata”with the help of several local artists.

Music for Sevel’s 25th birthday

The 17th of December was a red-letter day for the employeesat Sevel Val di Sangro, who celebrated the plant’s 25thanniversary with music, shows and entertainment. A 36-meterlong wall – renamed the “wall of pride” – was adorned withphotos and images of Sevel’s first quarter-century, and allemployees signed their names.The high point of the event was a concert by Pooh, Italy’slongest-lived pop band, who were also celebrating ananniversary of their own: forty years in music. Over 40,000people – employees, friends and family members – enjoyed theshow staged at the Sevel complex.

Going the extra mile

For its employees, Sevel Val di Sangro has organised a seriesof talks entitled “Going the extra mile…” where people whoselives have pushed the limits tell about their experiences. Thefirst appointment was in November, with Alex Bellini and hisincredible feat: rowing solo across the Atlantic. Between hisdeparture from Genoa and arrival at Fortaleza, Brazil, Bellinispent 226 days at sea: ten thousand kilometres, alone andunassisted. An exploit that was a formidable test of courage, ofspirit of initiative, of the ability to forge ahead and go thatextra mile.

Employee financing at the Motor Village

A new Sava financing outlet especially for employees wasopened at the Mirafiori Motor Village as part of a strategy thatrecognises the employee’s fundamental role as an automaker’sfirst and closest customer. Because of this special relationship,Fiat Group employees have access to financing on particularlyfavourable terms. And with the new initiative, they can nowbenefit from low-interest personal loans for the first time.

Giant foosball

In July, the “Mirafiori 4 Us” foosball tournament was held infront of the office building at the Torino plant. Sixty teams ofFiat Auto employees participated, including one consistingentirely of women. Eleven rounds were played on a seven


Wall graffiti

by Antonio Lampis:

a crumbling brick wall

disappears to make

space for a Fiat 600.

(Source: Illustratofiat 8/06)

meter long foosball table that takes eleven players per side, withseven balls in the field at the same time. The Italian TableFoosball Federation coordinated the event and refereed thegames. At the end, prizes were awarded to the eight finalistteams, one of which was the all-woman lineup.

Breakfast with the Chairman

“Breakfast with” is the new internal communication initiativeorganised by New Holland Construction. In February 2007, shopfloor workers at Italy’s San Mauro plant, like the workers at Leccebefore them in September and October 2006, were invited byFranco Fenoglio, New Holland Chairman, to an informal meetingat the beginning of the 6 AM shift. Sitting down to breakfasttogether proved to encourage direct dialogue about a number ofissues affecting employees, and was much appreciated by allparticipants.

Fiat Auto Poland’s initiatives for employees

In 2006, the company introduced a series of initiatives forimproving the workplace, building on its long-standingprogrammes for employees. Company cafeterias, cafes and dining halls were modernised,completely refurbishing the kitchens, infrastructures and majorutilities systems. Locker rooms were also modernised, and tennew relaxation areas for employees were set up. At the Tychy plant, 12 Intranet terminals were installed, providingemployees with access to information about a host of subjects,including the activities of the company’s CRiK Recreation andCultural Centre. In addition, round-the-clock surveillance wasintroduced at the corporate parking lots to increase security. For employees at Bielsko-Biala and Tychy, Fiat Auto Polandorganises transportation from their homes to the plant. Thanks toan extensive network served by over 100 buses, approximately

80% of employees make daily use of rides to and from work.Fiat Auto Poland provides non-reimbursable financial help foremployees and retirees who are facing a difficult situation. In2006, outlays through this programme totalled 129,000 PLN, oraround 33,120 euros. During the school year, the company covers part of the expenseof sending employees’ children to the so-called “Green Schools”.In 2006, 106 children benefited from these companycontributions. In addition, the company provides financial aid forparents whose children cannot attend the summer campsorganised by the company because of poor health, but need toparticipate in rehabilitation sessions.

Down on the farm

In Brazil, CNH organises tours to give its employees a chance tosee New Holland and Case IH farm machinery in action. It’s alsoan opportunity to meet dealers and customers in the regionvisited during the outing. Tours take place several times a year,particularly during the harvest period, and are way of lettingpeople get a first-hand look at what CNH products can reallyaccomplish in the fields. And to forge closer links with thecompany’s world, regular visits are organised to the CHN standsat the most important farm machinery and constructionequipment trade fairs in Brazil. The initiative is repeated severaltimes a year, and is open to all employees. At the CHN facility in Racine, Wisconsin, employees canparticipate in the annual Racine Family YMCA Corporate Cup.Enjoying themselves and building community spirit at the sametime, employees challenge each other in a series of eventsincluding bowling, golf, tennis, card games, cookingcompetitions, basketball, archery, billiards, football and manymore. The competitions are designed so that everyone can takepart, regardless of age or fitness level.


Social Responsibility Community148

Community

Types of commitments towards the community

2006 2005

Charitable gifts 6,486,300 4,361,300

Community

investments 9,805,700 5,684,800

Commercial

initiatives

with social

impact 25,508,300 5,082,700

Socially

sustainable

business

initiatives 2,521,000 1,643,800

Total 44,321,300 16,772,600

charitable gifts, with no concern for

a return to the business

costs and investments for initiatives

in favour of the communities where

the headquarters and/or plants are located

costs and investments for social

initiatives aimed at promoting

commercial initiatives

costs and investments

for business initiatives

with high social value

(1) The indicated amount was obtained through the processing of out-of-balance-sheet data.

Fiat is an international group which, because of its size,activities and geographical spread, plays a significant role in theeconomic development and welfare of the communities where itoperates…The Fiat Group and its employees are stronglycommitted to behave in a socially responsible manner, …, suchas to observe and respect the cultures and traditions of eachcountry in which it operates. (Code of Conduct)

The Fiat Group is aware that its work has a profound influenceon the economic and social growth of the countries where itoperates. Knowing this, the Group has always paid closeattention to the wellbeing of the communities where itoperates, working together with local associations and

institutions. In 2006, the Group’s contributions to thesecommunities in each of the categories contemplated by theLondon Benchmarking Group model totalled 44,321,300 (1)euros, or 2.27 per cent of operating income.Though the Group’s initiatives in this area for 2006 are toonumerous to describe in detail, a few of the more unique orsizeable activities in each category are discussed below.

Charitable gifts During 2006, Fiat’s worldwide contributions to charity amountedto over 6.5 million euros: all donations given with minimalconcern for a return to the business. In particular, cashcontributions or in-kind donations were made in support of majorprojects for social solidarity promoted by nonprofit associations

and foundations. Significant sums were also earmarked forscientific research, such as the contributions the Group made tofighting cancer, multiple sclerosis, Down syndrome, Alzheimer’sdisease, and many other afflictions. In addition, Group companiesaround the world took the lead in a wide range of socially-oriented programmes promoting health, education and the arts.

The Giovanni Agnelli Foundation

Research is useful when it fuels public debate and contributes toidentifying priorities and pathways for the country’s future: sothe Giovanni Agnelli Foundation sees its role as an independentnonprofit research and cultural institute. Established by Fiat andIFI in 1966 to mark the centenary of the birth of Fiat’s founder,Senator Giovanni Agnelli, the Foundation operates from itsTorino headquarters thanks to its own endowment fund andoutside contributions. The Foundation’s strategies focus onmultidisciplinary research in social sciences, with seminars,conferences and a variety of publications produced under theGiovanni Agnelli Foundation imprint. In 2006, the Foundationcontinued its work on People, generations and development, aprogramme that investigates demographic changes and theirimpact on Italian society, integration of immigrants, generationalshift and the formation of human capital, with particularattention to the choice of university studies. The Foundationalso tracks the growth of nonprofits and the trends they followthrough its documentation centre, the Centro di Documentazionesulle Fondazioni, which recently distinguished itself for itsfruitful participation in the ministerial committee set up to revisethe legal framework governing private foundations establishedin the first book of the Italian Civil Code. Equally intense workon Italian migrations was conducted under the aegis of anotherof the Foundation’s specialised centres, the Centro Altreitalie. Inaddition, the Foundation encourages young scholars throughseveral research grants and scholarship programmes, includingthe Giovanni Agnelli grant for studies of the economics ofcontemporary art offered together with UniCredit PrivateBanking and now in its third year, and the scholarships awardedto children of Fiat Group employees who intend to pursuemaster’s degrees or participate in ERASMUS exchangeprogrammes in the sciences and technology. The Foundationbelongs to the Associazione Torino Internazionale, participatesactively in the debate concerning the future of Turin, and is nowconcluding a research project begun in 2005 which scrutinisesthe growth prospects for the urban system and the outlook foryoung adults in Turin. The Foundation participates in the major

networks of Italian and European foundations, and is part of theEuropean Foundation Centre. In 2005, Fiat donated 50,000 eurosto the Foundation.

Fondazione Edoardo Agnelli

Created by Senator Giovanni Agnelli and recognised as acharitable trust in 1950, the Fondazione Edoardo Agnelli perAttività Assistenziali e Sociali (“Edoardo Agnelli Foundation forCharity Work and Social Activities”) sponsors programmes infavour of social solidarity. Its work is concentrated in favour ofthe most disadvantaged persons and institutions that operatein the field of social welfare and public health, instruction, andeducation. The principles, terms, and conditions for financialsupport are defined by the Foundation Board of Trustees,consistently with the objectives set forth in its bylaws. The FiatGroup has supported the Foundation since its formation,granting it 123,500 euros in 2006.

La Stampa-Specchio dei Tempi Foundation

Since 1982, the Foundation has provided readers of the dailynewspaper “La Stampa” with a forum for expressing theirsolidarity with people who need help, and given them achannel for doing something concrete about the situations thathave sparked their concern in news articles or letters. In Italy,the Foundation continued to distribute a 400 euro “Christmasbonus” to needy people over 75 who live alone. In 2006, theprogramme ensured happier holidays for around 2,000impoverished senior citizens, many of whom were brought tothe Foundation’s attention by volunteer groups.

A new engine for the Walkirye

Niky is a ten-year-old boy whose asthma is so acute that he’sforced to live on a boat, the Walkirye. This year, Niki was

Social Responsibility Community 149

Niky and his

family on board

the Walkirye

named a UNICEF Junior Ambassador for children’s rights toeducation in the Mediterranean, and Fiat PowertrainTechnologies is sailing along with him. FPT is doing morethan just going along for the ride, in fact, since it haspresented Niky’s family with a brand-new engine: a 330horsepower six-cylinder NEF. Produced at the NEF facility inTorino, the powerplant is now being “marinised” at the FPTplant in Pregnana Milanese, adding everything needed tomake it seaworthy.

Fiat with the sick children at the Ospedale

Regina Margherita in Turin

In November, solidarity took to the soccer pitch in Turin for afour-sided celebrity tourney between teams fielded by Italianfashion designers, members of Parliament, the popular TVsports satire “Quelli che il calcio”, and the Fiat FreestyleTeam consisting of champions in the many sports sponsoredby Fiat Auto. The event raised funds for cancer andleukaemia treatment at one of Italy’s foremost hospitals, theOspedale Regina Margherita in Turin, whose Pediatric andSurgical Departments offer hope to children suffering fromrare and complex diseases in the region and throughout thecountry.

Shining a light: Mission accomplished for the Daily

Once again, Iveco has demonstrated its commitment to life’sfundamental values: respect for mankind and theenvironment. This time, Iveco shared an extraordinaryexperience with Miki Biason, winner of a World RallyChampionship title and a world all-terrain truck title, who hasjust come back from Ecuador.The celebrated race driver had an idea that struck animmediate chord with the company: why not lend a hand to

the Salesian Fathers in that country by providing them with aDaily that they could use for emergency services and fortransporting the electrical generators that are so sorelyneeded in a country as poor and as beautiful as Ecuador. Thetruck is a four-wheel drive Iveco Daily 40.10WM based on amilitary vehicle and produced in Iveco’s Bolzano plant alsofor civilian buyers in markets outside Europe. For theSalesians, the truck was outfitted with a special cargo bodyto accommodate the five generators that the project donatedto local communities and all the medical equipment neededfor ambulance service.And then Miki Biason took the wheel, driving a full 4,000kilometres. Starting from the capital Quito, Biason crossedthe entire country, accomplishing his humanitarian missionin two weeks. After delivering the generators to thecommunities perched at altitudes of almost five thousandmeters in the Andes, the mission continued as far as theborder with Peru, on the edges of the Amazonian rainforest.Finally, the Daily was officially handed over to the ClaudioBenati Hospital in Zumbahua, a three hours’ drive fromEcuador’s capital.

A minibus for the diocese of Luxor

Iveco donated a 19-seat A45.12 Top Orlandi minibus to theDiocese of Luxor, which for years has helped the poor in its22 parishes. Carlo Audero, Area Manager for Egypt and theArabian peninsula, handed over the keys to Mons. JoannesZakaria, Coptic Catholic Bishop of Thebes.

An Iveco vehicle for the Holy Father

A new vehicle has joined the Vatican fire brigade: a FalconFire Fighting built by Iveco Magirus, the Iveco Group’sspecialist in fighting the flames. Presented to Pope Benedict


XVI in a ceremony at the Vatican by Iveco Chief ExecutiveOfficer Paolo Monferino and Andrea Comba, Chairman of theCFT Foundation, the vehicle is a tribute to the Pope from theworking world, and a welcome addition to the Vatican City’semergency response team. Featuring a comprehensive arrayof modern fire fighting equipment, its compact size andexcellent manoeuvring make the Falcon outstandingly nimblein tight spots and narrow city streets. As the perfectcombination of a fire truck and rescue vehicle, the IvecoMagirus unit is the ideal first responder for any urbanemergency.

The Jonathan project at Alfa’s Pomigliano plant

Together with the Jonathan Association of Naples, anonprofit group that has been working to fightmarginalisation among young people for many years byrunning residential communities, organising trainingprogrammes for social workers, and helping troubledadolescents become useful members of society,Alfa Romeo in Pomigliano d’Arco participated in a projectwhich helps teenagers released from juvenile detentioncentres find a job.In 2006, the Pomigliano plant hired two young men from theJonathan community with a durational employmentcontract, together with a social worker who acted as theirtutor. From April to the end of September, the three workedat the factory’s assembly stations, monitored by a UTE(Elementary Technical Unit) supervisor. In 2007, theinitiative was repeated: another pair of young men and theirtutor worked on the Alfa Romeo assembly line fromFebruary to May.

Community investmentsIn 2006, the Fiat Group invested 9.8 million euros forsocially-oriented projects in the communities where it hasoffices or manufacturing sites. These investments involvemedium- to long-term programmes and projecst in thecommunity to address social issues, exercise stewardshipover the local environment and promote important culturalor artistic initiatives. Once again, much of the year’s effortsin this sphere centred on Brazil, where the Fiat Group hasextensive manufacturing operations. In particular, the Grouppromoted education by providing monetary incentives andorganising sports and cultural events. Nor was this worklimited to Brazil: all around the world, the Group cooperates


with local schools and universities in sponsoring educationalinitiatives and assisting outstanding students withscholarships.

Iveco rewards students at the Don Bosco Institute in Egypt

As part of the support for technical education in Egypt whichit provides by agreement with the Egyptian Ministry ofEducation and the Italian Embassy in Egypt, Iveco awardedscholarships to the most promising students who completedthe first and second years of the course for automotive repairtechnicians run jointly with the Salesians’ Don BoscoInstitute in Cairo. Started two years ago, the programme isdesigned to prepare young mechanics for the job market byproviding them with cutting-edge technical skills. Thecurriculum covers the most recent advances in truck andcommercial vehicle technology and diagnostics, enablingstudents to build up the know-how they need to deal withproducts that grow more sophisticated every year andcustomers that demand the most from their vehicles.

Fiat Auto South Africa and the Christmas spirit

Fiat Auto South Africa joined forces with other localorganisations to create a playground for the children ofSoweto. The playground is the newest part of the Fiat SportsGrounds, born in 2003 out of Fiat’s commitment to improvethe quality of life for young people in the community. Afteronly six months, in fact, a soccer field equipped with anautomated sprinkler system was complete, and changingrooms were added in 2005. In the first half of 2006, an eight-lane athletics track, a basketball court and a volleyball courtwere constructed. And then, with Christmas just around thecorner, Fiat took the opportunity to give children a safe placeto play.


The Fiat Group in Brazil

Fiat continued its work in Brazil with the “Árvore da Vida” –Tree of Life – programme to improve the social and economicwellbeing of children, teenagers and adults in the communityof Jardim Terezópolis in Betim. In 2006, around 1,100 peopleparticipated in social and educational activities such assports, dance and music, as well as in vocational trainingcourses. At its factories in Brazil, Magneti Marelli and the IochpeFoundation have set up on-site vocational training schools foryoung people from low-income families in the community.Designed to build strong professional skills, the programmedraws on the help of company employees who volunteer toteach vocational courses. In 2006, eighty young peoplecompleted the courses, which will be resumed in 2007. Theinitiative is complemented by Fiat’s support for associations

who provide targeted training in a professional environment toyoung people from sixteen to eighteen years old, increasingthe employment opportunities available to them. In 2006eighty-eight young people took part in the initiative, whichthey attend in addition to their regular public schoolprogramme. CNH also has a number of projects in Brazil, including thecourses organised for expectant mothers to provide answers tofrequently asked questions and thus prevent potentialproblems from arising, and a variety of educationalprogrammes that have enabled other students to earn adiploma.

Making wishes come true

For the eighth year in a row, CNH in North America entered aNew Holland demonstrator rig in the Make a Wish TruckConvoy sponsored by the Make-a-Wish Foundation, thecharitable organisation that grants the wishes of children withlife-threatening illnesses. Every year, the convoy attractsthousands of people along the 27-mile route, collecting thegifts and donations that support the foundation’s work. Andevery year, a CNH volunteer drives the company’s truck,carrying a special passenger – one of the Wish Children thatthe foundation helps. Other CNH volunteers contribute toorganising the event.

Socially responsible CNH employees

To commemorate the centenary of the Zedelgem plant inBelgium, CNH and its employees have inaugurated aprogramme to support important social solidarity projectspromoted by local associations. For projects to be eligible forthe programme, CNH employees must be actively involved inthe sponsoring organisations. Sixteen projects were approved.


Commercial initiatives with social impactIn 2006, Fiat invested 25.5 million euros around the world incommercial initiatives with social impact, i.e., in brand-promoting efforts associated with programmes of major socialvalue. The arts, culture and sports were all key areas duringthe year, with sports taking centre stage. Fiat not onlycontributed economic resources and professional skills to theTorino 2006 Winter Olympics, but also paid tribute to thecourage and determination shown by disabled athletes asOfficial Partner of the IX Paralympic Games. Naturally, one ofFiat’s greatest contributions was in supplying vehicles: over3,000 thousand cars and 1,200 Iveco buses had the honour ofproviding transportation for athletes, journalists, volunteerstaffmembers and spectators. In addition, New Hollandsupplied the Olympic venues with 33 vehicles that worked dayand night to ensure that streets and squares were kept clear ofsnow and ice at all times.

We’re all travelling the same road

Iveco is a partner in TIRispetto (a play on words that conflatesthe Italian for “I respect you” with the TIR TransportInternational Routier convention that’s given its name to

Europe’s long-haul trucks), a road safety campaign whosetheme is “We’re All Travelling the Same Road”. In 2006, Ivecojoined up with the trucking industry to promote highwayeducation and respect for other road users, contributing threeheavy tractor-trailer rigs to the campaign’s roadshow. Theinitiative is sponsored by the Italian Ministry ofInfrastructures and Transport through the trucking industryassociation’s central committee and the Advisory Council onRoad Transport and Logistics. Convinced that publicawareness is the key to safer roads, Iveco sees the TIRispettocampaign as a perfect opportunity to spread the word aboutits work in improving safety technologies and theinvestigations of truck accidents and their causes which itcarries out together with the CSST Centre for the Study ofTransportation Systems.

Safe Driving Championship

Alfa Romeo, Magneti Marelli and Iveco joined several othergroups in sponsoring the Italian Safe Driving Championshipbacked by the Prime Minister’s Office and the Ministry ofInfrastructures and Transport. Nationwide in scope, the eventaims at reducing accident rates and risks among young peopleby making them more aware of everything they have to gainby driving safely, and providing them with role models thatwill inspire them to be more responsible behind the wheel.The Championship is open to young people between the agesof 18 and 25 who want to demonstrate their mastery of safedriving techniques. To win the title of Italian Safe DrivingChampion, participants are judged on the basis of drivingquality and technique, and their knowledge of the conceptsunderlying road safety. In addition to sponsoring the event,Alfa Romeo supplied fifteen 120 HP 1.9-litre M-Jet Alfa 147cars, three of which were awarded to the contest’s winners.


World Fencing Championships

Iveco sponsored the 2006 World Fencing Championships,supplying the organising committee with two heavy trucks.The first was a Stralis tractor-trailer hospitality vehicle thathosted a exhibition of photographs capturing fencing’s mostmemorable moments. The second, also a Stralis tractor unitwith a Viberti trailer, was outfitted with a mobile piste whereprofessional fencers demonstrated their art to appreciativeaudiences around Piedmont: the two vehicles participated in aroadshow that travelled to the cities of Casale Monferrato,Collegno, Cuneo, Asti and Caravino, as well as the celebratedpark of the castle of Masino.

Lancia and the cinema, a historic partnership

Lancia turned one hundred this year, celebrating a century ina class all its own, a century spent building an image that hasmade Italian design famous the world over. To commemoratethis historic anniversary, Lancia paid homage to its near-coeval the film industry, acting as main sponsor to the 63rdVenice International Film Festival. Innovation, originalengineering, performance, luxurious materials and attention todetail: the not-so-secret secrets of Lancia’s success. And bypartnering with Italy’s most important cultural event, Lanciareiterates its dedication to everything that “Made in Italy” hascome to mean. In particular, Lancia supplied the organisation with 32 of itsthree most distinctive models: the Musa, Phedra and Thesis.

Alfa Romeo and sports

The many projects that Alfa Romeo sponsored in 2006 includedthe 30-metre maxi yacht that has been dominating the regattasof both hemispheres for years. In 2006, the yacht continued toleave rivals in its wake, taking Line Honours – as first to cross

the finish line – from Portofino to Porto Cervo, from St. Tropezto Malta, through to its spectacular victory at the BaracolanaAutumn Cup in Trieste, the world’s most crowded mass startregatta.

Ferrari and music

From April to August, the Galleria Ferrari in Maranello hosted anoriginal themed exhibition that featured stars from the world ofmusic alongside four-wheeled automotive legends from Ferrari. With three rooms dedicated to the show, which runs alongsidethe permanent display of Ferrari’s most important Formula 1racers, its technology, its engines, and its GT models, the Galleriapays tribute to the link that for sixty years has joined Ferrari tothe artists who have left their mark on the history of music. More than thirty of the best-known names on the internationalmusic scene accepted the invitation to participate: Italiansingers and songwriters as well as world-renowned artistsfrom every musical genre – classical, opera, jazz, rock and pop.These artists contributed to the event with their portraits andsome of the most meaningful symbols of their musical careers,providing instruments, awards, stage costumes and otherpersonal items: treasures like Miles Davis’ trumpet, PlacidoDomingo’s Othello costume, the drums played by Nick Masonin his world tour, one of the hats sported by Jamiroquai’s JayKay, guitars owned by Eric Clapton and by Per Gessle ofRoxette, and the first recording microphone used by Italiansongwriter/performer Lucio Dalla. In addition, a series ofconcerts with established stars and up-and-coming talents wasstaged outside the Galleria.

Safer farms for America’s children

Every year, 22,600 children who visit or live on America’sfarms and ranches have accidents, and over 100 of these


accidents are fatal. But these accidents can be prevented ifchildren know the simple safety precautions they shouldfollow. That’s why Case IH, CNH’s agricultural equipmentbrand, supports the Progressive Agriculture Safety Dayprogramme conducted by the Progressive AgricultureFoundation. The programme’s mission is to make farm andranch life safer and healthier for all children througheducation and training.

Fiat Auto Poland’s cultural, sports and charitable initiatives

Ever mindful that its own wellbeing and that of thecommunities surrounding its plants go hand in hand, Fiat AutoPoland has always been a strong supporter of sports, culturalevents and philanthropic initiatives in the areas where itoperates. The value of this commitment is confirmed by thefindings of the surveys that Fiat Auto Poland regularlycommissions to gauge how the company is perceived by thegeneral public. In 2006, Fiat Auto Poland continued to sponsor avariety of local and national initiatives, as well as sports clubs.It actively supported the 63rd Tour de Pologne, the BKS StalBielsko-Biala women’s volleyball team, the GórnoÊlàski KlubSportowy hockey team, the fourth annual Tyskie KryteriumFiata bicycle race, the XIV Fiat Footrace in Bielsko-Biala and thecompany’s official 1600 Trophy auto racing team. As part of itsparticipation in the arts during 2006, Fiat Auto Poland continuedits sponsorship of major cultural events in Bielsko-Biala andTychy. Thus, the Eleventh Polish Composers’ Festival under thehonorary chairmanship of composer Henryk M. Górecki, and the11th Âlàska Jesie? Gitarowa International Festival – one ofEurope’s most important guitar venues, both took place inBielsko-Biala, supported as always by Fiat Auto Poland. And forthe first time, Fiat Auto Poland joined the sponsors of theJazzowa Jesie? Festival in Bielsko-Biala, one of Poland’s biggestjazz festivals, and helped organise another truly memorableevent – the concert by Piotr Rubik and Zbigniew Ksià?ek entitled“Oratorium Tu Es Petrus”. In addition, the company took part inorganising such important events as the Bielsko-Biala Days andTychy Days, the Polish Theatre’s presentation of “TestamentTeodora Sixta”, the 25th anniversary of the Faculty ofMechanical Engineering and Computer Sciences at theUniversity of Bielsko-Biala, the Sprzàtania Êwiata initiativeorganised by the Polish League for Nature Protection, and theconcerts organised by the Bielsko-Biala State School of Musicand the Tychy Choral Association. Fiat Auto Poland alsosupports the volunteer blood donors’ club, whose membership

includes over 500 of the company’s employees. In addition todonating blood (over 300 litres were given last year), membersalso organise awareness-raising conferences, especially forkindergartners and children in the area’s schools.

Socially sustainable business initiativesDuring 2006, Fiat invested 2.5 million euros in businessinitiatives of significant social value around the world. Theseinvestments are connected with core activities – the sale ofgoods and services – that can satisfy important expectationsand needs of society.

Fiat Autonomy

Autonomy is Fiat Auto’s mobility programme, inauguratedeleven years ago in the conviction that helping people withphysical and intellectual disabilities is an essential part of a carmaker’s corporate citizenship. One of the things that makes the Autonomy programme sospecial is its network of Mobility Centres: 18 in Italy, 3 in Brazil,and others dotted throughout the rest of Europe, that givepeople faced with special challenges free, concrete assistancein getting ready to drive. At each centre, aspirant drivers withdisabilities can try out their skills on the driving simulator, takespecially equipped vehicles out for a spin to get their first feelfor what it’s like to drive, or, if they’ve already had a change toacquire some street smarts, see how their own adaptiveequipment can be improved. In all of this, the Centre’sspecialists and physiotherapists are on hand with help andadvice. The driving simulator is an array of sophisticatedelectronic instrumentation that assesses disabled drivers’ability to control a car and cope with what’s going on out thereon the road, and lets them get acquainted – and feelcomfortable – with the kind of adaptive equipment they will


need. Simulators are available for people with either lower-limb or upper-limb impairments. Each Mobility Centre workstogether with its area’s local medical advisory board (ASL),which is responsible for certifying a disabled person’s ability todrive, and for prescribing the adaptive equipment he or shemust have. To help the advisory board conduct its medicalreview, the Mobility Centre will provide disabled candidates fora driver’s license with a report on the assessment carried outthrough the Autonomy Programme. During 2006, a newMobility Centre was set up in Terni and an agreement wassigned with the local medical advisory board in Udine.Through the Autonomy Programme, any car, van or lightcommercial vehicle in the entire Fiat, Lancia and Alfa Romeocan be outfitted with advanced driving aids, adaptiveequipment and wheelchair lifts.

A few figures about the Autonomy Programme in Italy 2006 2005

Vehicles sold (Fiat, Alfa Romeo,

Lancia and Light Commercial Vehicles) 12,120 10,600

Mobility Centre visitors 900 800

In 2006, two celebrity athletes acted as spokespersons for theAutonomy Programme: Alfredo Di Cosmo, the only disableddriver who competed in the 2006 Italian GT Championship, andMelania Corradini, flag-bearer for Italy at the Torino 2006Paralympic Winter Games.Disability is a challenge. And no one knows this better thandisabled athletes. As a tribute to the spirit, the courage, andthe determination they show in facing up to this challenge –and facing it down – Fiat chose to be Official Partner of the IXParalympic Games held in Torino in 2006. In addition, theGroup arranged for all transportation during the event, withFiat Auto and Iveco providing cars, buses and minivans, plus a

whole fleet of vehicles with wheelchair lifts and other mobilityaids for the disabled. In October, Fiat sponsored the fifthParalympic Day, which showcased physically challengedathletes and their more fortunate compeers competingtogether in a range of events. Alfa Romeo added a little extraspice to the competition by organising a raffle that gave all theItalian athletes who participated in February’s ParalympicWinter Games the chance to win an Alfa 147. The car, a three-door Distinctive version with Selespeed automatictransmission, was won by Ambrogio Magistrelli of Italy’snational hockey team, and was outfitted to meet the winner’sspecific needs by adaptive equipment installer Guidosimplex,absolutely free of charge and without interfering in any waywith the 147’s hallmark roominess, comfort and safety.To ensure that the Programme’s message reaches a youthfulaudience, Fiat Autonomy stages a presentation at the BolognaMotor Show every year, and 2006 was no exception. Two carsshared the spotlight: the first was a Dynamic version GrandePunto with a 90 horsepower 1.3-litre engine, converted byadaptive equipment installer Handytech to feature combineddouble-action accelerator and brake controls, an automaticwheelchair hoist, and an electrically operated door that swingsand slides out of the way for easy, unimpeded access. Theother was an Alfa 159 Sportwagon with a 2.4-litre JTD engineand the new six-speed ‘Q-Tronic’ transmission, outfitted withan electronic accelerator ring mounted on the steering wheeland a lever extension for the brakes so that they can beoperated with the hands alone. Also on show was the 16-valve2.0-litre Alfa 147 TS that Di Cosmo drove in all ten heats of theItalian GT Championship, finishing the season in 15th place.For the Motor Show, skier Melania Corradini received the keysof a Grande Punto Emotion.Also as part of the effort to reach a wider public, the AutonomyProgramme launched a new communication campaign in 2006that shows that many of the things that the rest of us take forgranted can open up a whole new world of freedom andmobility for the disabled.

To find out more about the Autonomy Programme:

Fiat Auto Mobility Centres Coordination at 055/331459 or

055/3215537, 8:30 AM to 5:30 PM Monday through Friday.

www.fiatautonomy.com


Ambrogio Magistrelli

of Italy’s Paralympic hockey

team, receives the keys

of his new Alfa 147

from Antonio Baravalle,

Alfa Romeo Brand Manager

Institutional relationsA business of the size and scope of the Fiat Group necessarilyplays a major role in ensuring economic growth and a higherstandard of living in the communities where it is located. And as Italy’s largest manufacturing enterprise, it hasnumerous relationships with Italian institutions, which arecarried out in a spirit based on proper, transparent conduct, inaccordance with the principles set forth in the Fiat Group Codeof Conduct, which governs all its activities. These relationshipsare realised through the creation and maintenance of anetwork of relationships, both with the central government(ministries) and the local authorities that are mostrepresentative of national society, involving all the numerousand diversified aspects of Group activity: from information onthe economic performance of Group companies to those of themarkets on which it operates; from the issues connected withgeneral economic development to the problems connectedwith the labour market (flexibility, training, pension systems);from the specific needs of productive and commercial activity(technical, commercial, and tax regulations) to the complexinteraction between the quality of life in urban centres ad theworld of transport (sustainable mobility, the environment). Thenumerous contacts with Italian governmental authorities atvarious levels are of particular importance (from ministries tomunicipal, province, and regional administrations) forpromotion and management of initiatives and projects onspecific environmental and social topics, with both nationaland international impact (promotion for the development ofmethane as vehicle fuel through the establishment ofProgramme Agreements with public agencies and associations(for example, encouraging taxi drivers to replace aging vehicleswith natural-gas powered cars) and the implementation ofenvironmental projects with public agencies, associations, andlocal authorities (for example, the network for dismantling andrecycling of end-of-life vehicles). Ridding the road of old, high-emissions cars is another important part of environmentalpolicy. Thus, it is clear that such a complex activity ofcontribution and support for Italian and European Union publicagencies and institutions, characterised by such a broadspectrum of relations and content, entails a major effort to givethem organic character and coherence. This represents a majorchallenge, including in terms of external communication, whichthe Fiat Group plans to confront by pursuing the path it hasfollowed thus far with maximum transparency and fairness inits relations with those entities.

Relations with associationsThe Fiat Group participates actively in the major Italian andinternational associations whose work addresses the issuesthat, directly or indirectly, affect the automotive industry. At the international level, Fiat is a charter member of ACEA

(Association des Constructeurs Europeen d’Automobiles), theBrussels-based organisation that represents the 13 majorEuropean car, commercial vehicle and bus manufacturers inthe EU. Among its many other activities, ACEA participates in the EU’slegislative process through position statements that express theshared interests of its membership. In addition, it monitors,studies and analyses major economic, environmental, technical,commercial and tax-related issues, and provides its members andthe public with information about these issues. ACEA maintainsclose relationships with other automobile manufacturers’associations and industry organisations, both in Europe and otherparts of the world such as the USA, Japan and Korea.Fiat is also a member of EUCAR (European Council forAutomotive R&D), set up by automakers to promotecollaborative automotive research in such areas of commoninterest as safety, the environment, energy, mobility andtransport. Other European associations of which Fiat is a member include:■ ECG, European Car-transport Group of Interest, which groupstogether the 54 leading European vehicle logistics companies;■ EIRMA, European Industrial Research ManagementAssociation, which aims at improving innovation mainlythrough market-centred research and development activities;■ ENGVA, European Natural Gas Vehicle Association, whosemission is to develop a market for NGVs throughout Europe;■ ERT, European Roundtable of Industrialists, which aims atpromoting the competitiveness and growth of Europe’seconomy;■ ERTICO, European Road Transport Telematics ImplementationCoordination Organisation, a group dedicated to thedevelopment of intelligent transport services and systems thatwill contribute to a more sustainable mobility;■ EUROMOT, the European Association of Internal CombustionEngine Manufacturers, an organisation serving the interests ofthe internal combustion engine manufacturers supplying theEU market:■ SAE International, Society of Automotive Engineers,the premier company dedicated to advancing mobilityengineering worldwide.


At the national level, Fiat belongs to ANFIA, (AssociazioneFiliera Industria Automobilistica), the Italian AutomotiveSupply Chain Association, whose membership groups togetherItaly’s makers of automobiles, commercial vehicles, buses,bodywork and vehicle components. ANFIA acts as its membercompanies' official spokesman, representing their interestswith public and private institutions. As such, it promotesdialogue spanning all of the issues involved in personalmobility and freight transport, be they technical, economic,tax-related, regulatory, statistical or quality-oriented in nature. The participation of Fiat in UNI, the Italian national standardsauthority, and CUNA, the Technical Committee for AutomotiveStandardisation, is of critical importance. These Italianauthorities define and unify standards in the automotive field,in collaboration with analogous international entities, whichare of fundamental importance in the field of highway safetyand respect of the environment. Other associations include the following: AICQ the ItalianAssociation for Quality, AILOG the Italian Logistics and SupplyChain Management Association, AIPnD, the Italian Associationfor Non-Destructive Testing and Monitoring Diagnostics,ASSONIME the Association for Italy’s Limited LiabilityCompany, ATA the Italian Automotive Engineering Association,CSAO the Organisational Safety Centre; and UPA AssociatedAdvertising Union. Fiat also contributes indirectly, through local industrial andrepresentative associations of the sector, to the activity ofConfindustria, which is the leading organisation representingItalian manufacturing and service enterprises. Finally, the FiatGroup actively supports the activity of the Italian Aspen

Institute, the Amici dell'Accademia dei Lincei and theAssociazione Guido Carli.

Relations with the mediaFiat maintains extensive links with the major national andinternational media, as well as with local media, particularly inthe areas surrounding the Group’s manufacturing sites. Incommunicating information, the Group assigns the utmostimportance to:■ Complying with the Code of Conduct,■ Respecting the rules of journalism,■ Ensuring that the information provided is clear and timely,■ Equal treatment for all channels of information,■ Willingness to provide regular information, and■ Preparing quality informational material.The press office deals chiefly with economic, financial, labour,ecological and environmental issues, scientific research andinnovation, cultural matters and general topics affecting theGroup and requiring media coverage. In addition, the mainoperating Sectors (Fiat Group Automobiles, Maserati, Ferrari,CNH, Iveco, Magneti Marelli) have their own internal pressoffices that handle media contacts in Italy and elsewhere forinformation regarding their products and marketing activities. In 2006 the Fiat press office issued 70 press releases andorganised three institutional press conferences and 42 pressconferences for the launch of new models or events connectedwith the product. Furthermore, when the quarterly results were presented,journalists were able to follow, online, conference calls withanalysts.The press office also manages daily activities in response tojournalist requests for interviews, detailed information,informational material, photographs, and films. The Group website, as well as the Sectors websites, contains adedicated area for the media (“press room”) that is constantlyupdated and, together with press releases, contains variousinformation and material prepared specifically for journalists.


Contacts for Journalists

Fiat Group CommunicationsVia Nizza 250 - 10126 Turintel. +39 011 00.63088 - fax +39 011 [email protected]

Embrace your happiness and assume your risk. Your allure will convince them. René Char

Appendix162 Methodology

163 Report of the Auditing Firm

164 Main Performance Indicators

168 Acclaim for the Group’s Work

173 Glossary

177 Assessment Questionnaire

The Sustainability Report is prepared on a voluntary basis by anentity in order to inform all stakeholders about its commitmentin the social and environmental fields. So that the informationprovided in this report can be compared with that found inreports by similar organisations, this Sustainability Report isprepared in reference to international standards that also ensurestakeholders receive useful information.Consequently, the Sustainability Report provides informationabout projects previously undertaken and accomplished by theorganisation, as well as its future programmes, with all of thesetestifying to the company’s social responsibility. TheSustainability Report is generally defined as Triple Bottom Line(TBL), insofar as the company’s overall responsibility is realisedwhen the pursuit of profit (economic responsibility) isaccomplished by engaging the members of society (socialresponsibility) and the environment (environmentalresponsibility) that interact with the life of the business itself ona daily basis. The expression “bottom line” literally means thelast line on the financial statements (i.e. net profit).This Sustainability Report was prepared in accordance with theinternational standard established by the Global ReportingInitiative(1) (GRI2). For measurement of community investments,the classification used in the London Benchmarking Group(2)

(LBG) model is used. The Global Reporting Initiative is anindependent international organisation that develops anddisseminates guidelines for reporting on the social,environmental, and economic aspects of organisational life.The London Benchmarking Group (LBG) is based in London. Ithas developed a method for identifying and classifying allinitiatives undertaken by businesses in favour of the localcommunities where they are located.

Note on method

The data and information set forth in this document refer to allFiat Group Companies and Sectors, unless indicated otherwise.The Fiat Group presents the income statement by function (i.e.“cost of sales”), which is considered to be more representative

than presentation according to the nature of expense. Thechosen form is consistent with the procedures for internalreporting and management of the business and is consistentwith international automotive industry practice. However, thischoice did not permit restatement of the income statementaccording to the added value format. All assets and liabilities of consolidated companies basedoutside Italy that are expressed in currencies other than theeuro are translated using the exchange rates in effect at thereporting date. Revenues and costs are translated at theaverage exchange rate for the fiscal year.The figures on employee training are presented in the sectiondedicated to training and development of human resources.Certain of these data are presented with greater detail in thesections dedicated to training on corporate governance,occupational health and safety, and the environmentalmanagement system. Since January 1, 2006, the FiatPowertrain Technologies (FPT) Sector embraces not only thepassenger vehicles engines and transmissions activities, overwhich Fiat regained control after termination of the MasterAgreement with General Motors, but also the powertrainactivities that were included in the Iveco Sector until December31, 2005. Nevertheless, due to practical considerations formeasurement (e.g. environmental performance, headcount, andother indicators), in certain cases the data and information forthe powertrain activities were consolidated as part of the IvecoSector. These instances are explained case-by-case in thespecific notes as necessary. On February 1, 2007, the Fiat AutoSector was renamed Fiat Group Automobiles; however, the oldname is normally used in the Sustainability Report, particularlyin regard to the data and information that refer to fiscal 2006.The new name is used in a few cases, where appropriate.

Contacts

This edition of the Sustainability Report can be consulted onthe website: www.fiatgroup.com and may be ordered from:Fiat S.p.A. CommunicationsVia Nizza 250 - 10126 Torino - tel. +39 011 [email protected]

Appendix Methodology162

Methodology

(1) www.globalreporting.org

(2) www.lbg-online.net

Appendix Report of the Auditing Firm 163

Report of the Auditing Firm

GRI2

Core/ Additional GRI2

Indicators Code GRI2 Description Page

Core EC1 Net sales 34

Core EC2 Geographic breakdown of markets 34

Core EC3 Cost of all goods, materials, and services purchased 65-66

Core EC4 Percentage of contracts that were paid in accordance with agreed terms, excluding agreed penalty arrangements –

Additional EC11 Supplier breakdown by organisation and country 65-66

Core EC5 Total payroll and benefits (including pension, other benefits, and redundancy payments) broken down by country or region 45

Core EC6 Distributions to providers of capital 42

Core EC7 Increase/decrease in retained earnings at end of period 34

Core EC8 Total sum of taxes of all types paid broken down by country 34-35

Core EC9 Subsidies received broken down by country or region 44

Core EC10 Donations to community, civil society, and other groups 148-157

Additional EC12 Total spent on non-core business infrastructure development 148

Additional EC13 The organisation’s indirect economic impacts –

Core EN1 Total materials use other than water, by type 65-66

Core EN2 Percentage of materials used that are wastes (processed or unprocessed) from sources external to the reporting organisation 82-99

Core EN3 Direct energy use segmented by primary source 82-99

Core EN4 Indirect energy use. Report on all energy used to produce and deliver energy

products purchased by the reporting organisation (e.g., electricity or heat). Report in joules –

Additional EN17 Initiatives to use renewable energy sources and to increase energy efficiency 76-80

Additional EN18 Energy consumption footprint of major products –

Additional EN19 Other indirect (upstream/downstream) energy use and implications,

such as organisational travel, product lifecycle management, and use of energy-intensive materials –

Core EN5 Total water use 82-99

Additional EN20 Water sources and related ecosystems/habitats significantly affected by use of water –

Additional EN21 Annual withdrawals of ground and surface water as a percent of annual renewable quantity

of water available from the sources. Breakdown by region 82-99

Additional EN22 Total recycling and reuse of water. Include wastewater and other used water (e.g., cooling water) 82-99

Core EN6 Location and size of land owned, leased, or managed in biodiversity-rich habitats –

Core EN7 Description of the major impacts on biodiversity associated with activities and/or products and services

in terrestrial, freshwater, and marine environments –

Additional EN23 Total amount of land owned, leased, or managed for production activities or extractive use –

Additional EN24 Amount of impermeable surface as a percentage of land purchased or leased –

Additional EN25 Impacts of activities and operations on protected and sensitive areas.

(e.g., IUCN protected area categories 1–4, world heritage sites, and biosphere reserves) –

Additional EN26 Changes to natural habitats resulting from activities and operations and percentage of habitat protected or restored –

Additional EN27 Objectives, programmes, and targets for protecting and restoring native ecosystems and species in degraded areas –

Appendix Main Performance Indicators164

Main Performance Indicators

GRI2



Additional EN28 Number of IUCN Red List species with habitats in areas affected by operations –

Additional EN29 Business units currently operating or planning operations in or around protected or sensitive areas –

Core EN8 Greenhouse gas emissions (CO2, CH4, N2O, HFCs, PFCs, SF6) 82-99

Core EN9 Use and emissions of ozone-depleting substances 82-99

Core EN10 NOx, SOx, and other significant air emissions by type 82-99

Core EN11 Total amount of waste by type and destination 82-99

Core EN12 Significant discharges to water by type. See GRI Water Protocol 82-99

Core EN13 Significant spills of chemicals, oils, and fuels in terms of total number and total volume –

Additional EN30 Other relevant indirect greenhouse gas emissions. (CO2, CH4, N2O, HFCs, PFCs, SF6) 82-99

Additional EN31 All production, transport, or import of any wastedeemed “hazardous”

under the terms of the Basel Convention Annex I, II, III, and VIII 82-99

Additional EN32 Water sources and related ecosystems/habitats significantly affected by discharges of water and runoff 82-99

Additional EN33 Performance of suppliers relative to environmental components of programmes and procedures

described in response to Governance Structure and Management Systems section 65-66

Core EN14 Significant environmental impacts of principal products and services 102-121

Core EN15 Percentage of the weight of products sold that is reclaimable at the end of the products’ useful life and percentage

that is actually reclaimed. “Reclaimable” refers to either the recycling or reuse of the product materials or components 120-121

Core EN16 Incidents of and fines for non-compliance with all applicable international declarations/conventions/treaties,

and national, sub-national, regional, and local regulations associated with environmental issues –

Additional EN34 Significant environmental impacts of transportation used for logistical purposes –

Additional EN35 Total environmental expenditures by type –

Core LA1 Breakdown of workforce, where possible, by region/country, status (employee/non-employee),

employment type (full time/part time), and by employment contract (indefinite or permanent/fixed term or temporary) 124-127

Core LA2 Net employment creation and average turnover segmented by region/country 128

Additional LA12 Employee benefits beyond those legally mandated 140-141

Core LA3 Percentage of employees represented by independent trade union organisations or other bona fide

employee representatives broken down geographically 131

Core LA4 Policy and procedures involving information, consultation, and negotiation with employees over changes

in the reporting organisation’s operations 132-133

Additional LA13 Provision for formal worker representation in decision making or management, including corporate governance 131

Core LA5 Practices on recording and notification of occupational accidents and diseases, and how they relate

to the ILO Code of Practice on Recording and Notification of Occupational Accidents and Diseases 129-130

Core LA6 Description of formal joint health and safety committees comprising management and worker representatives

and proportion of workforce covered by any such committees –

Core LA7 Standard injury, lost day, absentee rates and number of work-related fatalities 129-130

Core LA8 Description of policies or programmes on HIV/AIDS –

Additional LA14 Evidence of substantial compliance with the ILO Guidelines for Occupational Health Management Systems 130

Additional LA15 Description of formal agreements with trade unions orother bona fide employee representatives covering health

and safety at work and proportion of the workforce covered by any such agreements 133-134

Core LA9 Average hours of training per year per employee by category of employee. (e.g., senior management, middle management,

professional, technical, administrative, production, and maintenance) 130

Additional LA16 Description of programmes to support the continued employability of employees and to manage career endings 135-139

Appendix Main Performance Indicators 165

GRI2



Additional LA17 Specific policies and programmes for skills management or for lifelong learning 135-139

Core LA10 Description of equal opportunity policies or programmes, as well as monitoring systems

to ensure compliance and results of monitoring 127-128

Core LA11 Composition of senior management and corporate governance bodies (including the board of directors),

including female/male ratio and other indicators of diversity as culturally appropriate 124-127

Core HR1 Description of policies, guidelines, corporate structure, and procedures to deal with all aspects of human rights

relevant to operations, including monitoring mechanisms and results. State how policies relate to existing international

standards such as the Universal Declaration and the Fundamental Human Rights Conventions of the ILO –

Core HR2 Evidence of consideration of human rights impacts as part of investment and procurement decisions, including selection

of suppliers/contractors 65

Core HR3 Description of policies and procedures to evaluate and address human rights performance within the supply chain

and contractors, including monitoring systems and results of monitoring. “Human rights performance” refers

to the aspects of human rights identified as reporting aspects in the GRI performance indicators 65

Additional HR8 Employee training on policies and practices concerning all aspects of human rights relevant to operations.

Include type of training, number of employees trained, and average training duration –

Core HR4 Description of global policy and procedures/programmes preventing all forms of discrimination in operations,

including monitoring systems and results of monitoring 127

Core HR5 Description of freedom of association policy and extent to which this policy is universally applied independent

of local laws, as well as description of procedures/programmes to address this issue 131

Core HR6 Description of policy excluding child labour as defined by the ILO Convention 138 and extent to which this policy

is visibly stated and applied, as well as description of procedures/ programmes to address this issue, including monitoring

systems and results of monitoring 65

Core HR7 Description of policy to prevent forced and compulsory labour and extent to which this policy is visibly stated

and applied as well as description of procedures/programmes to address this issue, including monitoring systems

and results of monitoring. See ILO Convention No. 29, Article 2 –

Additional HR9 Description of appeal practices, including, but not limited to, human rights issues.

Describe the representation and appeals process 29-30

Additional HR10 Description of non-retaliation policy and effective, confidential employee grievance system

(including, but not limited to, its impact on human rights) 29-30

Additional HR11 Human rights training for security personnel –

Appendix Main Performance Indicators166

GRI2



Additional HR12 Description of policies, guidelines, and procedures to address the needs of indigenous people.

This includes indigenous people in the workforce and in communities where the organisation currently

operates or intends to operate 142-156

Additional HR13 Description of jointly managed community grievance mechanisms/authority –

Additional HR14 Share of operating revenues from the area of operations that are redistributed to local communities 148

Core SO1 Description of policies to manage impacts on communities in areas affected by activities, as well as description

of procedures/ programmes to address this issue, including monitoring systems and results of monitoring.

Include explanation of procedures for identifying and engaging in dialogue with community stakeholders 148-157

Additional SO4 Awards received relevant to social, ethical, and environmental performance 168-172

Core SO2 Description of the policy, procedures/management systems, and compliance mechanisms for organisations

and employees addressing bribery and corruption. Include a description of how the organisation meets

the requirements of the OECD Convention on Combating Bribery 30

Core SO3 Description of policy, procedures/management systems, and compliance mechanisms for managing

political lobbying and contributions 30

Additional SO5 Amount of money paid to political parties and institutions whose prime function

is to fund political parties or their candidates –

Additional SO6 Court decisions regarding cases pertaining to anti-trust and monopoly regulations –

Additional SO7 Description of policy, procedures/management systems, and compliance mechanisms

for preventing anti-competitive behaviour –

Core PR1 Description of policy for preserving customer health and safety during use of products and services,

and extent to which this policy is visibly stated and applied, as well as description of procedures/programmes

to address this issue, including monitoring systems and results of monitoring. Explain rationale for any use

of multiple standards in marketing and sales of products 113-114

Additional PR4 Number and type of instances of non-compliance with regulations concerning customer health and safety,

including the penalties and fines assessed for these breaches –

Additional PR5 Number of complaints upheld by regulatory or similar official bodies to oversee or regulate the health

and safety of products and services -

Additional PR6 Voluntary code compliance, product labels or awards with respect to social and/or environmental responsibility

that the reporter is qualified to use or has received. Include explanation of the process and criteria involved –

Core PR2 Description of policies, procedures, management systems, and compliance mechanisms

related to product information and labelling –

Additional PR7 Number and type of instances of non-compliance with regulations concerning product information and labelling –

Additional PR8 Description of policies, procedures, management systems, and compliance mechanisms related

to customer satisfaction, including results of surveys measuring customer satisfaction.

Identify geographic areas covered by these policies 58-63

Additional PR9 Description of policies, procedures, management systems, and compliance mechanisms for adherence

to standards and voluntary codes related to advertising. Identify geographic areas covered by these policies 63-64

Additional PR10 Number and types of breaches of advertising and marketing regulations –

Core PR3 Description of policies, procedures, management systems, and compliance mechanisms for consumer privacy.

Identify geographic areas covered by these policies –

Additional PR11 Number of substantiated complaints regarding breaches of consumer privacy –

Appendix Main Performance Indicators 167

During 2006, the Fiat Group received a host of accoladesfor the work of its companies, the characteristics of itsproducts, and the quality of its management. The followingtable shows just a few of the most significant of the awardsassigned to Fiat companies and products, grouped accordingto the three reporting areas of economic, environmental andsocial responsibility.

Award Granted by Recipient Motivation

Economic responsibility

Year’s Best Reporting FERPI – Italian Public Fiat S.p.A. As the citation for the award assigned to Fiat in the

Initiative for 2006 Relations Federation 'Large Enterprises and Companies” category states,

“The Report on Operations gives full details of economic

and financial performance in each Sector, while

maintaining a clear vision of the Group. From the

accounting standpoint, disclosure of financial information

is complete and open, and is also well organized and

expressed. The information in the section on governance

is comprehensive and wide-ranging. The Triple Bottom

Line approach is completed by an extensive Sustainability

Report. Also important is the fact that the commitments

stated in 2004 are followed up by a discussion of the

progress made towards achieving them”.

Global Automotive PricewaterhouseCoopers Fiat S.p.A. Fiat S.p.A. won the PricewaterhouseCoopers

Shareholder Value Award award in the 'Global vehicle manufacturers' category’

for its total shareholder return performance

in the past one- and three-year periods. In 2006, Fiat posted

a 120% increase in total shareholder value, compared

to a sector increase of 35%. Over the past three years,

Fiat has posted a 150% increase in total shareholder value,

compared to a sector increase of 63%.

Appendix Acclaim for the Group’s Work168

Acclaim for the Group’s Work

Appendix Acclaim for the Group’s Work 169


Company Best 2006 International jury of 14 Fiat Group Automobiles The award was assigned for the extraordinary results

automotive journalists from achieved during the year, credited to a long-term

European markets strategy bolstered by the introduction of new products

and a stringent cost containment policy. The Group has

thus readied itself for future challenges with renewed

commitment and determination.

Case New Holland

■ Quality Leadership ■ Quality Magazine ■ CNH ranks fifth among the top US companies f

■ Best producer of 2006 ■ Burlington Chamber rom the standpoint of quality management,

■ Best Innovation Award of Commerce according to the annual classification of the authoritative

■ SDA Bocconi Production US Quality Magazine.

and Technology Unit ■ The CNH plant in Burlington, Iowa eceived

the prize for Best Producer of 2006.

■ The award was conferred for the following reason:

“CNH Global NV’s Agricultural Equipment Division

demonstrated absolute consistency between its innovation

strategy, which aims to combine its current sales

leadership with a reputation for product innovation,

and the action which has been taken to implement this

strategy in terms of organizational structure, investments

in technology, and methods for managing the product

development and innovation process.”

Leadership in Bilateral Invest in France Agency Iveco Iveco received the annual award conferred by the business

Relations (AFII) and Embassy of community on companies who contribute to boosting

France in Italy, as part of the commercial and industrial relations between Italy

2006 Franco-Italian and France. The motivations stated for the award include:

Business Forum Iveco’s participation as a founding partner in the Lyon

Urban Truck & Bus competitive cluster, its consolidated

industrial presence in France, and its broad-based ongoing

growth strategy hinging on investments in manufacturing,

as exemplified most recently by the Bourbon-Lancy plant.


International Van of the Year 2006 International jury of specialist Fiat Doblò Cargo The award is in recognition of the latest Fiat light

LCV journalists from 19 commercial vehicles many major new features:

European countries from the original styling to the increased payload

and cargo volume, new long-wheelbase Maxi versions,

and Multijet diesel engines offering excellent fuel economy

together with S.p.A.rkling performance, as well as

the special Natural Power natural-gas version which makes

minimum environmental impact. The two turbocharged

diesel engine options made a particularly strong

impression on the jury: the powerful 105 HP 1.9-liter

Multijet, and the revolutionary 75 HP 1.3-liter 16-valve.

The latter, a jewel of Fiat Auto engineering, won over

the jury with extraordinary performance that belies

its small size.

European Car 2006 Italian Association of Fiat Grande Punto This is the most important award assigned

Automotive Journalists (UIGA) by Italy’s automotive press, and is given in recognition

of the car built and sold in Europe that provides

the best mix of technology, value for money and styling.

Alfa Spider

■ Cabrio of the Year 2006 ■ Comité Cabriolet, a panel ■ The model won the 'Cabrio of the Year 2006'

■ Most Beautiful Car on the Web of 23 journalist and industry title at the Geneva Motor Show.

experts from 12 countries ■ Between September 1 and December 31, 2006,

■ Readers of the online over 100,000 readers of the online car magazine cast

review www.infomotori.com their ballots for the Most Beautiful Car on the Web,

with the Alfa Romeo roadster coming out on top both in

the overall rankings and in two out of the ten

sub-categories: Women’s Choice and Convertibles.

Best looking supercar of the year Jury consisting of celebrities Alfa 8C Competizione This prize is further recognition of Alfa Romeo’s

drawn from the worlds of French flair for creating dream cars.

culture and entertainment at the

Festival Automobile International

European Car of The Year 2007 JAHFA (Japan Automotive Alfa Brera In Japan, the Alfa Brera won first prize for its styling,

Hall of Fame) jury, whose 21 performance/cost ratio, and well-designed interior.

members represent Japanese

academia, industry, culture,

politics and media



Maserati Quattroporte

■ Best of the Best 2006 ■ Robb Report ■ The American luxury lifestyle magazine chose

■ Best Car 2006 ■ Auto Motor und Sport the Quattroporte Sport GT as the winner of its prestigious

■ The Cars I Like Best in 2006 ■ Quattroruote Best of the Best competition for sedans, declaring it a

■ Best Car ■ Automobile Magazine styling masterpiece whose concours-winning looks are

■ Best Car 2006 ■ Auto Illustrierte underpinned by outstanding performance and world-class

fit and finish.

■ Germany’s best-known motoring magazine judged

the Quattroporte to be the best import car of the year

in the Luxury Sedan category, where it won 36%

of all votes. The car’s typically Italian styling, its elegance

and refined ‘made to measure’ finish were highlighted

as reasons for the choice.

■ In Italy, readers of the top-ranked auto magazine assign

an award to the cars they like best in each category.

The Maserati Quattroporte claimed the coveted prize

in the ‘Flagship’ class for the third year in a row, attracting

42% of votes cast.

■ France’s respected Automobile Magazine pronounced

the Quattroporte to be the best luxury sedan of the year.

■ The Swiss magazine Auto Illustrierte put the

Quattroporte at the top of the 'Luxury' class.

Environmental responsibility

Magneti Marelli: Awards conferred:

■ PACE (Premier Automotive ■ Automotive News ■ SFS Software ■ In the PACE ‘Products’ category, for the revolutionary

suppliers’ Contribution to ■ FINEP award promoted Flexfuel Sensor bi-fuel electronic technology that manages an ordinary

Excellence) Award 2006 by the Brazilian Ministry ■ Tetrafuel system engine so that it can run efficiently on any combination

■ FINEP (Brazilian National of Science and Technology ■ Multi-fuel technologies of gasoline and ethanol, and the stunning flexibility

Financing Agency for ■ VI International Datagro ■ SFS Software with which this system can manage a true Flexfuel

Studies and Projects) Conference on Sugar Flexfuel Sensor situation – that is, any combination and ratio of fuels –

■ International Datagro and Alcohol and Tetrafuel system – without the need for a physical fuel ratio sensor.

Conference on Sugar ■ Michelin Challenge ■ For the innovative Tetrafuel system, which increases

and Alcohol Bibendum 2006 the automotive engine’s flexibility by combining

■ Michelin Challenge the ability to meter gasoline, ethanol and natural gas

Bibendum 2006 gas in a single electronic control unit.

■ To Magneti Marelli for pioneering the spread

of multi-fuel automotive technologies, and the leadership

it has shown in promoting the impressive progress

that bi-fuel systems have made as a viable alternative

to petroleum products.

■ For the Technological Innovation and Systems category,

and the first prize for product performance, commercial

vehicles category.

Appendix Acclaim for the Group’s Work 171


Green Sponsor of the Torino 2006 Organizational Committee Fiat Auto In recognition of its firm commitment to environmentally

Winter Olympic Games Torino 2006 Winter friendly products and processes, Fiat Auto was named

Olympic Games Green Sponsor of the Torino 2006 Winter Olympic Games,

earning the right to use the ‘Environment 2006’ logo.

Social responsibility

China Awards 2006 Milano Finanza in Fiat Group In the course of the ceremony, special awards were given

cooperation with the to the ‘Pioneers’, including Fiat, as a pioneering force

Italy-China Foundation in China’s industrial development.

Great Place to Work 2006 Great Place to Work Institute Italia Ferrari SpA Every year, Great Place to Work Institute Italia draws up a

list of the best places to work in Italy. In 2006, Ferrari

ranked first, as the company offering the best working

conditions, the highest level of trust and confidence,

and best relationships between workers and management,

according to an employee poll. Sevel, a joint venture

between Fiat and PSA, ranked fifth on the list.

Sponsorship Grand Prix StageUp Fiat and Lancia Fiat and Lancia garnered two prizes in the third

‘Sponsorship Grand Prix’, organized by StageUp

to showcase the best work by Italian corporate sponsors

of athletes and sports events. Thus, Fiat earned recognition

in the ‘Effectiveness’ category for its efforts during

the Torino 2006 Winter Olympic Games, while Lancia won

in the ‘Sports Endorsement’ category for its TV commercial

starring skater Carolina Kostner and the Lancia Ypsilon,

created by the Armando Testa Agency.


ACEA

The European Automobile Manufacturers Association (ACEA),founded in 1991, whose key objective is to promote, publicizeand defend the interests of its member manufacturers for allmatters pertaining to the automobile industry and transport ingeneral.

Active Safety

All the mechanical characteristics that contribute to thedynamic performance of the vehicle on the road: road holding,prompt and effective brake application, drivability and ease ofhandling; responsive and performing power units.

ANFIA

National association of the Automobile Industry; established inTurin on March 20, 1912 (one of the first Italian tradeassociations) to help the newborn Italian motor industry toliaise more effectively with the public administration on allmatters arising from the spread of the motor vehicle.

Audit of the Environmental Management System

It is a process of assessment and monitoring, on a regularbasis, of the environmental management system. It is one ofthe instruments used for environmental certification.

Car sharing

Shared utilization of a vehicle fleet by several people. Thisservice supplements collective transport and is gearedto the improvement of mobility and the environment.

CNG

Acronym for Compressed Natural Gas, i.e. natural gascompressed to 220 bar, different from LPG – liquefiedpetroleum, gas. It is used as an environmentally “clean”alternative to other more polluting fuels for automobiles.

COD (Chemical Oxygen Demand)

It is the measurement of the oxygen demand, i.e. the amountof oxygen required to oxidize organic and inorganic substancespresent in a water sample. This parameter is used primarily toestimate the organic content of water, and thus the potentiallevel of pollution due to oxidisable substances.

Code of Conduct

It defines the commitments and the conduct principles adoptedby a Company in its relations with businesses, employees,environment and external communities. For the Fiat Group, itis an integral and substantial part of the work contract.

Combustion

Reaction of organic substances with oxygen present in theatmosphere: it produces carbon oxides, water vapourand thermal energy.

Compliance Officer

Within each Sector of the Fiat Group there are specificfunctions responsible for the monitoring of the internal controlsystem, the improvement of the risk management system andthe management of the Group’s whistleblowings procedure.

Corporate governance

Set of rules for the management of an organization aimed atthe creation of social and economic value for all entitiesinvolved.

Corporate social responsibility (CSR)

Companies’ voluntary inclusion of social and environmentalcommitments in their commercial initiatives and relations withstakeholders (Green Paper of the European Commission).

Appendix Glossary 173

Glossary

COSO

Committee of Sponsoring Organizations of the TreadwayCommission; a voluntary private sector organization,established by professional accounting and auditingassociations, dedicated to improving the quality of financialreporting through business ethics, effective internal controlsand corporate governance. See: www.coso.org

CRM

The concept of Customer Relationship Management isconnected to the concept of customer loyalty. CRM introducesa new market approach that puts the customer, and not theproduct, at the centre of the business.

Defined Contribution Retirement Plans

Plans where the Retirement Fund guarantees the payment of adetermined contribution in each working period (weekly,fortnightly, monthly). In this case, there is no guarantee aboutthe life annuity, which will be calculated at the moment ofretirement. The financial risk rests on the employee.

Defined Retirement Benefit Plans

Plans where the Retirement Fund guarantees a life annuity,which usually corresponds to a percentage of the last salary orto an average salary calculated over a certain number ofworking years. In this case, the Company’s contribution variesover the years so as to ensure the existence of a capital(liability) sufficient to pay the promised annuities. The financialrisk rests on the Fund.

Energy Recovery

Use of the thermal energy released by waste combustionprocesses.

Enterprise Risk Management (ERM)

A process, effected by the management, for the self-evaluationof corporate risks. It enables the company to manage riskswhile performing its daily activities and pursue improvementactions.

Environmental Certification of Production Processes

Certification procedure of a production site, performed by anaccredited Organization, on the basis of the main internationalstandards: certification attests to the good environmentalmanagement of the site.

Environmental Indicators

Reference parameters that allow measurement of the impact ofactivities or products on the environment.

Environmental Management System (EMS)

The creation of a specific Company function that deals withenvironmentally related problems, risks and opportunities.

Environmental Policy

Set of principles and objectives relating to the environmentalresponsibility adopted by an organization while performingbusiness.

E85

It is a type of fuel made up of 85% ethanol and 15% fossil-derived fuel.

Fuel Cell

A fuel cell is an electro-chemical device that generates electricenergy. Hydrogen and oxygen are recombined in a cell (or“stack”) in the presence of catalysts and a polymericelectrolyte (P.E.M. - Proton Exchange Membrane) and produceelectric energy with an extremely high degree of efficiency,with water vapor being the only by-product of this reaction. Avehicle can use the energy generated in this manner fortraction and auxiliary functions.

GARP

Growth At a Reasonable Price; this investment style envisagesinvestment in shares that offer an interesting relationshipbetween growth potentials and value. The main objective is toidentify “underestimated” stock on the market and select thosesecurities whose potentials are not yet completely reflected intheir prices.

Global Reporting Initiative (GRI)

Independent international organization that develops anddisseminates guidelines for reporting on the economic,environmental, and social dimensions of companies.

Impact on the Environment

Favorable or adverse, total or partial changes to theenvironment caused by activities carried out by people.

Appendix Glossary174

Internal Audit

The corporate function that monitors the internal controlsystem. Within the Fiat Group, this function is performed by aconsortium company in which the main Sectors participate.

Internal Control System

A set of rules of conduct of a company. These rules contributeto achieving the company’s set objectives.

Internal Dealing

Transactions on financial instruments of a listed company or itssubsidiaries carried out by individuals who have decision-making power within the company or have a significantknowledge of company strategies.

ISO 9001

International Standard ensuring quality in design,development, manufacturing, installation and assistance,issued by the International Organization for Standardization(ISO).

ISO 14001

International Standard ensuring quality in environmentalmanagement issued by the International Organization forStandardization (ISO).

Legislative Decree 231/2001

Legislative Decree of June 8, 2001 that introduced a regime ofadministrative (but de facto criminal) liability of Companies forcrimes against public agencies (bribery, extortion, etc.) andwhite collar crimes (false accounting, etc.) committed bycompany directors or senior managers or other employees inthe 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 thestandpoints of energy and the environment. Life cycle coversthe entire history of a product, from raw material extraction tosemi-finished and finished product processing, use, reuse (ifapplicable) or recycling/scrapping.

London Benchmarking Group

Institution whose methodology identifies and classifies allinitiatives undertaken by Companies in support of the localcommunities where they operate. The codified model identifies

four categories of corporate community expenses andinvestments: charitable gifts, community investments,commercial initiatives with social impact, socially sustainablebusiness initiatives.

Natural gas/hydrogen blends

Even greener than natural gas on its own, naturalgas/hydrogen blends have been successfully tested on trucks,buses and public transportation. The presence of hydrogen inthe combustion chamber enables the gas to burn more quicklyand uniformly, drastically reducing pollutant emissions. Inparticular, emissions of oxides of nitrogen are cut by 50%.

NVH

NVH stands for Noise, Vibration and Harshness, a measure of avehicle’s perceived comfort level which is widely used in theautomotive industry. As the name implies, it is a combinationof three parameters: ■ Noise: the noise level produced by the vehicle duringoperation■ Vibration: the vibrations felt by the vehicle’s occupants■ Harshness: the aspect of a vehicle’s ride roughnesscharacterized by small, sharp jolts, as when the tire hits apothole.

NYSE

The New York Stock Exchange (NYSE), one of the mostimportant stock exchanges where securities of companieslisted on it are traded.

Particulate Trap

A trap (or filter) downstream of a vehicle exhaust system towithhold particulates. This technology is a major step forwardtowards full eco-compatibility of diesel engines.

Appendix Glossary 175

Passive Safety

Structural and product features that contribute to ensure fulloccupant protection in case of crash: stiff cockpits,programmed warping body with high energy absorptioncapacity, effective restraint systems (belts, airbags, headrestand seat configuration); interior components designed toattenuate the risk of injuries in a collision and fire-proofcomponents.

Rating

Assessment of a debtor’s, company’s or public agency’s abilityto meet debt obligations.

Recycling

Processing of waste and scrap material through their use in anew productive cycle.

Sarbanes-Oxley Act

This is the United States statute enacted in July 2002following several financial scandals in the United States(Enron, Worldcom, and others). The purpose of this statute isto improve the corporate governance of companies listed inthe United States, ensure the truthfulness of disclosures madein financial reports, and thereby enhance their reliability andcreate transparency on the stock market. The law requiresthe management of a listed company to issue an annualreport certifying the effectiveness of internal control overfinancial reporting and obtain certification by anindependent auditor.

Significant Transactions

Those transactions that in and of themselves require thecompany to inform the market thereof, by furnishing anaccounting statement prepared ad-hoc in accordance with therules established by market supervisory and regulatoryauthorities.

Stakeholder

An individual, community or organization that influences theoperations of an organization or directly or indirectly suffersthe repercussions. In the broadest meaning of the term,stakeholders can be internal (management and employees) orexternal (suppliers, customers, investors, business partners,local communities, the public agencies, future generations,environmental interests, etc.).

Sustainable Development

Development that, by providing economic, environmental andsocial services to all members of a community, improvesquality of life, and meets the needs of the present generationwithout jeopardizing those of future generations.

TOE

Ton of oil equivalent: a conventional unit of energy,corresponding to 10 million kcal, which is used to express thecalorific power of any energy source.

Transactions with Related Parties

Those transactions that, due to the characteristics of thecounterparty, are subject to special criteria of substantial andprocedural fairness.

Triple Bottom Line

An integrated approach to assess, in a definite period of time,the corporate social responsibility, i.e. the economic,environmental and social performance of the company(literally, “bottom line” indicates the last line of the financialstatements, where the profit is displayed).

UPA (Associated Advertising Union)

An association set up by the main industrial, trade and servicecompanies that invest in advertising, for the protection of theinterests of these companies in the field of advertising.

Value Added

Wealth produced by a company during its fiscal year, i.e. thedifference between the gross production and the consumptionof goods and services.

VOC

Volatile Organic Compounds from natural or manmadeemission sources released into the air as vapour or gas. Majorsources include transport, manufacturing and industrialprocesses, use and production of solvents, and heatingsystems. They play an important role in the formation ofphotochemical smog through a complex process in whichnitrogen oxides react with sunlight to produce highly reactiveorganic peroxides and ozone. The most important VOCs arearomatic hydrocarbons, including benzene – a knowncarcinogen – and polycyclic aromatic hydrocarbons (PAHs),many of which are carcinogenic.

Appendix Glossary176

Appendix Assessment Questionnaire 177

AssessmentQuestionnaireWe invite you to present us, by filling out this questionnaire,with your suggestions and remarks, which will contribute tothe identification of critical areas and the improvement of thefollowing editions.

Quality of Information

How exhaustive is the information?(1 = very little; 5 = very much)■ Commitments for the Future 1 2 3 4 5■ Fiat Identity 1 2 3 4 5■ Economic Responsibility 1 2 3 4 5■ Environmental Responsibility 1 2 3 4 5■ Social Responsibility 1 2 3 4 5

Language

How clear is the communication?(1 = very little; 5 = very much)■ Commitments for the Future 1 2 3 4 5■ Fiat Identity 1 2 3 4 5■ Economic Responsibility 1 2 3 4 5■ Environmental Responsibility 1 2 3 4 5■ Social Responsibility 1 2 3 4 5

Monitoring of Group results

How do you judge the actions undertaken and the objectivesstated? (1 = very negatively; 5 = very positively)■ Commitments for the Future 1 2 3 4 5■ Fiat Identity 1 2 3 4 5 ■ Economic Responsibility 1 2 3 4 5■ Environmental Responsibility 1 2 3 4 5■ Social Responsibility 1 2 3 4 5

The questionnaire can be sent by mail to the following address:

Fiat S.p.A. - CommunicationsVia Nizza, 25010126 Torino - Italia

or filled out online at the Company websitewww.fiatgroup.com

Stakeholder

To which of the following categories do you belong?■ Stockholder■ Financial institution■ Employee■ Supplier■ Customer■ Non-profit association■ Public agency■ Environmental system ■ Public offices and institutions ■ Public opinion■ Trade unions■ Local community■ Other _______________________________________________

In your opinion, are there subjects that were not exhaustivelydescribed and that should be dealt with in more detail infuture editions?___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Remarks and suggestions

_____________________________________________________________________________________________________________________________________________________________________

Graphic design

Atelier Roger Pfund, Communication visuelle sa

Genève, Switzerland

Editorial Coordination

Micrograf

Turin, Italy

Photographs

Photo archives - Original photos by Filippo Gallino

Turin, Italy

Print

Arti Grafiche Giacone

Turin, Italy

Printed in ItalyApril 2007

Printed on Satimat paper of Cartiere Arjowiggins

Fiat S.p.A.

Corporate Headquarters

Via Nizza 250

10126 Turin – Italy

Corporate Press Department Contacts:

Tel. +39 011 00.63088

Fax +39 011 00.63798

[email protected]

www.fiatgroup.com

Economic, Environmental and Social Responsibility

2006 SustainabilityReport

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2006 Sustainability Report

Documents

Transcript of 2006 Sustainability Report