Citi Conference Slides - Final · Credit Conference Richard Palmer November 15, 2012. 1...

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Chrysler Update Citi 2012 North American Credit Conference Richard Palmer November 15, 2012

Transcript of Citi Conference Slides - Final · Credit Conference Richard Palmer November 15, 2012. 1...

Chrysler Update

Citi 2012 North AmericanCredit Conference

Richard PalmerNovember 15, 2012

1

Forward-Looking Statement

This document contains forward-

looking statements that reflect

management's current views with

respect to future events. The words

“ant ic ipate,” “assume, ” “bel ieve, ”

“est imate,” “expect,” “intend, ”

“may,” “plan,” “project ,” “should”

and similar expressions ident i fy

forward-looking statements. Such

statements are subject to risk s and

uncertaint ies, inc luding, but not

l imited to: the effect ive

implementat ion of the Chrys ler

Group LLC 2010 – 2014 Busine ss Plan

outl ined on November 4, 2009,

inc luding success ful veh ic le launches;

industry SAAR levels; cont inued

economic weakne ss, especial ly in

North America, inc luding continued

high unemployment levels and

limited avai labi l ity of a ffordably

priced financing for our deale rs and

consumers; introduct ion of

competing products and competit ive

pressures which may limit our abil ity

to reduce sales incent ives; supply

disrupt ions result ing from natural

disasters and othe r events impact ing

our supply chain; and our abil ity to

real ize bene fits f rom our industrial

al l iance with Fiat , part icularly in l ight

of the economic crisi s current ly

affect ing seve ral European countrie s.

If any of the se or other risk s and

uncertaint ies occur, or if the

assumptions underlying any of these

statements prove incorrect , then

actual results may be material ly

dif ferent from those expre ssed or

implied by such statements. We do

not intend or assume any obligat ion

to update any forward-looking

statement, which speaks only as of

the date on which it is made . Further

detai ls of potent ial risk s that may

affect Chry sler Group are desc ribed

in Chry sler Group’s Annual Report on

Form 10-K, and its subsequent

periodic reports fi led with the U.S.

Securit ies and Exchange Commission.

2

Agenda

Product Update

Fiat Group Alliance

Fiat Group Business Plan Update - EMEA

Chrysler Group Financial Results

3

Q3 YTD 2012 Financial HighlightsChrysler Group

Net Income ($Mils)

Net Industrial Debt ($Bils)2.9

0.7

Cash ($Bils)11.9

9.6

Net Revenue ($Bils)

Modified Operating Profit ($Mils)

Modified EBITDA ($Mils)

• Growth primarily driven byincreased volumes and positivepricing, partially offset byunfavorable mix

• Worldwide shipments up 22% to1,796k units (1,809k shipmentsadjusted for GDP units)

• Modified Operating Profitincreased 50% versus prior year

• Improved performance primarilyattributable to increasedshipments and positive pricing,partially offset by unfavorable mix,increased ER&D and advertisingcosts and content enhancementcosts on new vehicles

39.9

48.6

1.5

2.2

3.64.1

• Net income increased $1,332versus the prior year loss of $42

• YTD 2012 net income increased153% versus the prior year’sAdjusted Net Income of $509(which excludes a loss onextinguishment of debt of $551 inQ2 2011)Q3 YTD ‘11 Q3 YTD ‘12 Q3 YTD ‘11 Q3 YTD ‘12

Q3 YTD ‘11 Q3 YTD ‘12

Q3 YTD ‘11 Q3 YTD ‘12 Dec 31, ‘11 Sept 30, ‘12

Dec 31, ‘11 Sept 30, ‘12

• An increase of 15% versus prioryear primarily driven by highervolumes and positive pricing

• Margin reduced due tounfavorable mix, increased ER&Dand advertising costs and contentenhancement costs on newvehicles

+22%

4.5% ofRevenue

• Net Industrial Debt decreased to$0.7 primarily due to positive freecash flow for the first nine monthsof 2012

3.7% ofRevenue

8.5% ofRevenue9.0% of

Revenue

Sept 30, ‘11

Sept 30, ‘11

9.5

2.9

• Free Cash Flow of $2.5 in first ninemonths of 2012

• Total liquidity was $13.2, including$1.3 available under a revolvingcredit facility

1,290

509

(42)

(U.S. GAAP)

4

Key Financial Metric Trends – Steady ImprovementChrysler Group

1. Excludes loss on extinguishment of debt of $551 million in Q2 2011

(197) (172)(84)

(199)

116 181 212 225

473 436381143

(1.5%)

183(1.7%)

239(2.2%)

198(1.8%)

477(3.6%)

507(3.7%)

483(3.7%)

508(3.4%)

740(4.5%)

755(4.5%)

706(4.6%)

9.7 10.511.0 10.8

13.113.7

13.1

15.1

16.4 16.8

15.5

Q1 '10 Q2 '10 Q3 '10 Q4 '10 Q1 '11 Q2 '11 Q3 '11 Q4 '11 Q1 '12 Q2 '12 Q3'12

Net Revenue($Bils)

Modified Op Profit(% of Net Revenue)

($Mils)

Adjusted NetIncome (Loss) 1

($Mils)

WorldwideShipments (000’s) 380 433 407 382 485 514 469 543 607 630 559

(U.S. GAAP)

5

Cash and Gross / Net Industrial Debt TrendsChrysler Group

7,3677,841 8,260

7,347

9,87710,175

9,454 9,601

11,256

12,075 11,947

Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012

3,825 3,385

3,7665,773

3,3772,112

11,192 11,226

12,026

13,120 13,254

12,287

Addition of Mexico

Development Banks

Loan

Addition of Canada

Health Care Notes Refinancing of Gov’t

debt plus equity

proceeds from FiatGROSS

INDUSTRIALDEBT

CASH

NETINDUSTRIAL

DEBT

2,868

12,322

Note – Financial results based on U.S. GAAP – see Non-U.S. GAAP Financial Information and Other Items

2,932

12,533

1,336

12,592

432

12,507

693

12,640

(U.S. GAAP; $ Mils)

6

2012 Chrysler Group Cash WalkDecember 31, 2011 to September 30, 2012

Note: Numbers may not add due to rounding

Dec 31,2011

ModifiedEBITDA

Working Capital& Other

CapitalExpenditures

Pension /OPEB

Taxes &Interest

Net PrincipalPayments & FX

Sept 30,2012

Change in Cash$2.3

(0.4)

2.8

11.9

(1.0)9.6

4.1

(3.1)

• Free Cash Flow drivenby strong operatingperformance andworking capital effects,partially offset by capitalexpenditures and VEBAinterest payment

Free Cash Flow$2.5

(0.2)

(U.S. GAAP; $ Bils)

7

Chrysler Group Financial Liabilities Maturity ScheduleTreasury functions separate from Fiat

•• Chrysler Group and Fiat continue toseparately manage their own financialmatters, including treasury services

No guarantee, support or similar obligations inrelation to other’s financing obligations; noobligation or commitment to provide funding tothe other

Financial segregation also supported by legallybinding obligations

Chrysler’s May 2011 credit agreement limitsfinancial support to Fiat (inter alia cumulativelimit on dividend payments of $500mnpayable only if specified minimum liquidity ismet)

Fiat’s 3-year RCF also limits financial supportto Chrysler (including limits on guaranteesand loans)

Chrysler’s financing agreements and its LLCOperating Agreement contain additionalrestrictions limiting related-party transactions,including approval process for materialcommercial or financial transactions between thecompanies

• These restrictions apply, while theseinstruments are in place, regardless of thepercentage of Fiat’s ownership in Chrysler

Note: Excluding accrued and accreted interest

2012 2013 2014 2015 2016 2017+Sept 30, ‘12(Carrying Value)

12.6

0.4 0.5 0.5

10.7

0.40.1

Annual MaturitiesGross

IndustrialDebt

0.1 0.4 0.5 0.5 0.5 11.4Face Value

13.4

(U.S. GAAP; $ Bils)

8

8.5

8.0 8.1

9.19.4

9.6

8.89.2

10.6

11.4

10.811.2 11.2 11.3

8.6

11.311.6

13.7

12.9 12.812.6

14.714.9

14.5

12.9

15.0

14.514.3

Chrysler Group Sales Performance (U.S. /Canada)YTD Q3 2012

QUARTERLY MARKET SHARE

(%)

2009

FY share

11.0%

8.8%

Q2 Q3 Q4 Q3Q1 Q2 Q4 Q2Q1 Q3 Q4

2010

FY share

13.0%

9.2%

2011

FY share

14.3%

10.5%

Q1 Q2

2012

YTD share

14.6%

11.2%

Q3

Vehicles (000s)

SALES GROWTH

(U.S. & CANADA)

1,192

+48(+75%)

Fiat500Jeep

GrandCherokee

Chrysler200

RamPickup

Q3’ 11 Q3’ 12

+33(+131%)

+27(+29%)

+22(+119)

+40(+18%)

+36(+18%)

47

ChryslerT&C /Dodge

Caravan

1,445

+24%

+6%

CGSALES

Other

+253(+21%)

Chrysler300

INDUSTRY

SALES

+15%

+7%

9

14.0%

11.6%

19.9%35.8%

18.7% 16.8%

13.4%

20.8%

31.9%

17.1%

Chrysler Group U.S. Sales by Vehicle SegmentMore competitive entries in the car segments

SUV

Chrysler Group’s car mix increased from 26% to 30% due to the continuing process ofintroducing more competitive car offerings

Pickups & VansSmall & Mid-Size

Cars

YTD Q3 2011(Total U.S. Sales = 1,009,000)

Large &Specialty Cars

Minivan &Crossovers SUV

Pickups & VansSmall & Mid-Size

CarsLarge &

Specialty Cars

Minivan &Crossovers

Total Car = 25.6% Total Car = 30.2%

YTD Q3 2012(Total U.S. Sales = 1,251,000)

10

Chrysler Group 2012 Product IntroductionsNAFTA

Q1 Q2 Q3 Q4

2012 Fiat 500 Abarth2012 Fiat 500 Abarth 2013 Dodge Dart2013 Dodge Dart 2013 Ram 15002013 Ram 1500 2013 Viper SRT10 & GTS2013 Viper SRT10 & GTS

• Aggressive, functionalstyling

• Lightweight, track-tunedhandling and purpose-builtdesign

• 0-60 mph in 7.5 seconds

• 160 Hp 1.4L MultiAir Turboengine

• 3 mode electronic stabilitycontrol with full-offcapability for the track

• First C-segment sedan since2005

• Executing a staged launchintegrating various powertraincombinations

• All-new Aero model (41highway mpg) startedproduction in September,arriving in dealershipsshortly

• Production ramp-up and salesrates on track with plan

• 28k units produced in Q3

• Q3 sales exceeded 10k

• October dealer ordersexceeded production by8,000 vehicles

• Class exclusive infotainmentand connectivity technologies –attracting youngerdemographics

• “Top Safety Pick” by IIHS and“5-Star Safety Rating” fromNHTSA

• Best-in-class:

• Fuel economy – 17 city /20 comb / 25 hwy mpgwith Pentastar 3.6L V64x2 and segment-exclusive TorqueFlite 8-speed transmission

• Aerodynamics

• Outstanding premiumengine fuel economy withthe 5.7L V8 Hemi coupledwith the all-new TorqueFlite8-speed transmission

• Segment-leading technologyand improved telematics

• Upgraded exterior andinterior

• Two all-new models:

• SRT Viper and SRT Viper GTS

• 8.4L V-10 engine

• 640 hp and 600 lb.-ft. torque

• Carbon-fiber and aluminum skin– lower drag coefficient

11

Chrysler Group 2013 Key Product IntroductionsNAFTA

Jeep D-SUVJeep D-SUV

Ram LargeCommercial Van

Ram LargeCommercial Van

FiatFiat

Ram 2500-3500 PickupMajor Refresh

Ram 2500-3500 PickupMajor Refresh

Jeep Grand CherokeeMajor Refresh

Jeep Grand CherokeeMajor Refresh

12

New Powertrains Leading to Improved Performance and Fuel Economy

• First NAFTA OEM implementation of 8-speed transmissiontechnology (to be followed by 9-speed transmission in 2013)

• Provides 8-12% increase in EPA Combined Fuel Economy forChrysler’s RWD V6, V8 and small Turbo Diesel applications (vs.5-speed transmission); and reduces CO2 emissions

• Delivers improved performance and shift quality overconventional 5- and 6-speed transmissions

• Will be available across Chrysler Group’s RWD productportfolio; first application with the 3.6L V-6 Pentastar DodgeCharger and Chrysler 300 vehicles; also in Ram 1500 pickup

8-Speed RWD Transmission

Fuel Economy Improvement forChrysler 300 and Dodge Charger

+ 10-12%

2011 MY 2012 MY

• Extensive manufacturing base for FIRE engine: US-Michigan, Brazil, India andItaly

• MultiAir add-on package on base engine; shot-by-shot control of air / fastresponse continuously variable valve lift

• Up to 10% fuel economy improvement

• Highly fuel-efficient V6 engine family; first launched in 2011 Jeep GrandCherokee

• Fuel efficiency improvement up to 10%

• Flexible family architecture for downsized displacement, Direct Injection,Turbo Charging and MultiAir

• Produced in two state-of-the-art manufacturing facilities in Trenton (US-Michigan) and Saltillo (Mexico)

V6 Pentastar Engine Family

FIRE MultiAir Engine

2.8L & 3.0L Diesel Engines

• Applied to Chrysler Grand Voyager, Jeep Wrangler, Chrysler300, Lancia Thema and Jeep Grand Cherokee in Europe

• 24% (Grand Voyager) and 27% (Thema) improved fuelconsumption vs. 3.6L gas engine

• Meets Euro 5b emissions; Biodiesel capable

13

Chrysler Group World Class Manufacturing Update

Achieving consistent dimensional results drives improvedvehicle fit and finish

Injury reduction accelerating despite higher capacityutilization

Productivity improvements leads to lower per unit costs

73%

92%

>100%

49%

60%

>70%

0%

20%

40%

60%

80%

100%

120%

2010A 2011A 2012E

Harbour = Two 8-hour shifts for 235 working daysTechnical = 3 shifts in all plants (except Saltillo) @ 285 days)

% Utilization

Assembly Capacity Utilization

CG Production 1.6M 2.0M ~2.4M(excludes Purchased vehicles)

Harbour

Technical

• Three “Bronze” level plants – Dundee Engine, Windsor Assemblyand Toledo complex

• Flexible body-in-white lines, increased jobs per hour, 3-crew and4-day working patterns contribute to manufacturing efficiencies,including improved capacity, utilization, productivity and quality

14

Chrysler Group FY 2012 Guidance ConfirmedRevised NAFTA Industry sales forecast

GuidanceQ3 YTDActual

Worldwide VehicleShipments

2.3 – 2.4 M 1.7 M

Net Revenues ~ $65 B $49 B

Modified Operating Profit ≥ $3.0 B $2.2 B

Net Income ~ $1.5 B $1.3 B

Free Cash Flow > $1 B $2.5 B

13.5

15.2

16.4 16.6

17.1

14.2

15.6

~1717.7 17.7 18.2

18.3

2010 2011 2012E 2013E 2014E 2015E 2016E

Chrysler plan @ 2009 Investor Day

Actual / Revised forecast

NAFTA(passenger cars,SUV, pick-uptrucks & LCVs)

Revised Industry SAAR Estimates

15

Fiat GroupUpdate

16

Cer t a in in f o rma t io n in c lu ded in th i sp res en ta t io n , in c lu d ing , w i t h ou tl im i t a t io n , any f o rec as t s in c lu dedhere in , i s f o rwa rd lo ok ing a nd iss ub jec t to impo r t a n t r i s k s andun ce r t a in t ie s th a t c ou ld c a use a c tua lr es u l t s t o d i f f e r ma te r ia l l y . TheG roup ’ s bu s in ess es in c lu de i t sa u tomo t ive , a u tomot ive - r e la t ed a ndo the r s ec t o r s , a nd i t s ou t lo ok i sp redom ina n t ly ba s ed on i t sin t e rp re t a t io n o f wha t i t c ons ide r s t obe the key econom ic f ac t o r s a f f e c t in gthes e bus in es s es . F o rwa rd - lo ok ings t a t emen t s w i t h rega rd to th e G roup ' sbu s in es s es in vo lve a number o fimpo r t a n t f ac t o r s th a t a re sub jec t t oc ha nge , in c lu d ing , bu t no t l im i t ed to :th e ma ny in t e r re la t ed f a c t o r s th a ta f f e c t con sumer con f iden c e andwo r l dw ide dema nd f o r au tomo t ive anda u tomo t ive - re la t ed p rodu c t s andcha nges in con sumer p re f e ren c es tha tc ou ld redu ce re la t ive dema nd f o r t h eG roup ’ s p rodu c t s ; gove rnmen ta lp rog ra ms ; genera l ec onom icc ond i t io n s in ea ch o f t h e G roup ' sma rke t s ; leg i s la t io n , pa r t i c u la r ly t h a tre la t in g to a u tomo t ive - re la t ed i s s ues ,t h e env i r onmen t , t r a de and commerc ea nd in f r as t ru c tu re deve lopmen t ;a c t io n s o f c ompet i t o r s in th e va r io u sin du s t r ie s in wh ic h the G roupcompetes ; p rodu c t io n d i f f i c u l t i e s ,in c lu d ing c a pac i t y a nd supp lyc on s t ra in t s , exc es s in ven to ry leve l s ,a nd the impa c t o f veh ic le de f ec t sa nd/o r p rodu c t rec a l l s ; la bo r

re la t io n s ; in t e res t ra t es a nd cu r ren c yexcha nge ra t es ; ou r a b i l i t y t o rea l i z ebene f i t s a nd s ynerg ies f r om ou r g loba la l l i a n c e a mong the G roup ’ s members ;s ubs ta nt ia l deb t a nd l im i t s on l iqu id i t yth a t ma y l im i t ou r a b i l i t y t o execu teth e G roup ’ s c omb ined bu s in es s p la n s ;po l i t i c a l a nd c iv i l u n res t ; ea r thqua kesa nd o the r r i s k s a nd unce r t a in t ie s . A nyo f t h e as sumpt ion s under ly in g th i sp res en ta t io n o r a ny o f t h ec i r c ums ta n c es o r da ta men t io ned inth i s p res en ta t io n ma y cha nge . A nyf o rwa rd - lo ok ing s t a t emen t s con ta in edin th i s p res en ta t io n spea k on ly as o ft h e da te o f t h i s p res en ta t io n . W eexpres s ly d i s c la im a du ty to p rov ideupda tes t o a ny f o rwa rd - lo ok ings t a t emen t s . F ia t does no t as sume andexpres s ly d i s c la ims a ny l ia b i l i t y inc onnec t io n w i t h a ny in a ccu ra c ie s ina ny o f th es e f o rwa rd - lo ok ings t a t emen t s o r in connec t io n w i t h a nyu se by a ny th i rd pa r t y o f su chf o rwa rd - lo ok ing s t a t emen t s . Th i sp res en ta t io n does no t rep res en tin ves tmen t a dv ic e o r arec ommenda t io n f o r th e pu rc ha s e o rs a le o f f in a nc ia l p rodu c t s and/o r o fa ny k ind o f f in a n c ia l s e rv i c es . F in a l l y ,t h i s p res en ta t io n does no t rep res en ta n in ves tmen t s o l i c i t a t io n in I t a ly ,pu r s ua n t t o S ec t io n 1 , le t t e r ( t ) o fL eg i s la t i ve Dec re e no . 58 of F eb rua ry24 , 1998 , as a mended , no r does i tr ep r es en t a s im i la r s o l i c i t a t io n a sc on temp la t ed by the la ws in a ny o the rc oun t ry o r s t a t e .

Safe Harbor Statement

17

Fiat Group At-a-Glance

18

Unique brands covering the entire automobile landscape

GLOBAL VEHICLE BRANDS Jeep and Alfa Romeo strongly

recognized internationally

Ferrari and Maserati as Luxury& Performance brands

The Italian way of high-tech,sportiness, performance and

racing for Fiat’s small andcompact cars

Italian design expressed in itsmost everyday, functional and

simplest form

A premium Italian brand with clearfocus on advanced technology

performance and design, set to deliverpure-spirited products, Italian design,dynamic and active driving experience

engaging senses

An American icon brand for SUV’srepresenting unique, freedom,

adventure, authenticity, passion values

Over 7 million vehicles on roadworldwide – our most global brand

with sales in 120+ countries

Chrysler is a leader for design andinnovation, innovator of minivans and

creator of the 300 offering ultimateversatility vehicles for families and

bridging exclusivity to masses

Lancia represents 105 years of carmaking history and offering ultimatefusion of engineering and elegance of

Italian cars

A “quintessentiallyAmerican” brand; embodies

capability, style, and anageless enthusiasm for fun

and performance

Products known for value,power, safety and style

Street & Racing Technology hasfive hallmarks: awe-inspiringpowertrain; outstanding ride

and handling; aggressiveexterior; race inspired interior;

for discerning performancedriving enthusiast

The most up-to-date andcomplete commercial

vehicle offerings of any EUproducer with strong

position in Europe and LatinAmerica

Established its own brand identity in2009, Ram Trucks & Commercial

Vehicles deliver on customer prioritieswith best-in-class capabilities and class

exclusive features

Luxury brandcombining high-

performance,highly refinedcraftsmanship

and a high degreeof personalization

Unique iconicasset, a legendarybrand since 1947

with strongrelationship

between road &racing cars

Authentic original parts,accessories & services with

unique personalizationopportunities

Sales of Mopar parts provide lesscyclical revenue stream, profit

and cash flow generation

MASS VEHICLE BRANDS WITHREGIONAL FOCUS Fiat brand to play in Europe, Latin

America and APAC regions withiconic intros in North America

Chrysler fully integrated into Lanciain Europe (RHD markets excepted)

Dodge and RAM being mostlymaintained as American brandswith select products beingintegrated into Fiat brand overtime

High-performance versions byAbarth and SRT

Customization leadership and globalservice & parts footprint

19

Update on Integration Activities & Synergies

• New Chrysler formed out of “363” sale June 2009 with Fiat at 20%

• Government loans repaid in May 2011, 6 years early; Fiat ownershipup to 58.5% current

• GEC formed to drive single management organization with 4 regionalhubs Sept 2011

• Chrysler sales activities integrated into Fiat in EMEA & LATAM

• Fiat brand successfully launched in NAFTA with Fiat 500 early 2011

• Converged to 3 key architectures and launched first vehicle with NewPanda (Mini), 500L (Small), Dart (Compact)

• Maserati brand relaunch accelerating, 2 new sedans launching H12013

• Integrating Fiat LCV vehicles into RAM brand to complete full-rangecommercial vehicle brand

• Completing worldwide powertrain offering with Fire 1.4 in NAFTA,Pentastar downsize for APAC, 8-speed/9-speed planetary transmission

• APAC business developing driven by Jeep SUV success, localizationstarted with launch of Viaggio in China

• Purchasing & WCM progressing with significant savings, efficiency &capacity improvement

• No longer a marginal player in global ranking

20

Fiat Group’s View on EMEA

21

EXTERNAL MARKET FACTORS

• Slump in European market demand, with 2012 beingthe 5th consecutive year of decline

Expected 2012 volume of ~12.5mn passenger cars is thelowest level since 2007 and down 20+% from 16mn peak

Italian market at <1.4mn units and down 40+% from 2.5mnpeak in 2007

European LCV volumes expected at ~1.6 million units anddown 30+% from 2.4mn peak in 2007

• Pricing pressure, especially for mass market segments

• Further pressure from Korean and potential Japaneseand Indian FTA’s

• Market becoming bi-polar with profitability limited topremium

• Low-end brands increasingly relevant in mass market

• Lack of visibility for recovery to pre-crisis level

• Structural overcapacity of European manufacturerswill delay any pricing recovery

• Industry heavily regulated and no moves to simplify

88%

80%

~69%

56%52%

~45%

2010 2011 2012E

Harbour definition Technical definition

GROUP CAPACITY UTILIZATION IN EMEA(passenger cars & LCVs; including JVs; percent)

235 days p.a. / 16 hours per day 280 days p.a. / 3 shifts per day

MARKET EXPECTED TO BE FLAT IN 2013 AND THEN

GRADUAL RECOVERY TO ~15MN IN 2015/2016(PASSENGER CARS & LCVS)

Current State and Industry Forecast in EMEA

13.9

15.4

16.5

17.4

18.2

14.4

15.3

14.1 13.9 14.1

14.9

15.6

2010 2011 2012E 2013E 2014E 2015E 2016E

Fiat forecast @ 2010 Investor Day

Revised forecast

EU27+EFTA(passenger cars & LCVs)

22

We have chosen the second option because:

• We have installed up-to-date available capacity in EMEA and have little capacity leftelsewhere

• We have at least 3 brands that are capable of competing in the higher margin business

• Fiat-Chrysler has developed over the last 3 years the relevant architectures and baselinepowertrains to enter the premium end of the business and

• Fiat-Chrysler has access to the NAFTA and APAC markets

OR

REMAIN FOCUSED ON NON-PREMIUM MASS-MARKET AND

RATIONALIZE CAPACITY BY CLOSING 1 OR MORE PLANTS1

LEVERAGE HISTORICAL PREMIUM BRAND HERITAGE (ALFA ROMEO &MASERATI), RE-ALIGN PRODUCT PORTFOLIO AND REPOSITION THE

BUSINESS FOR THE FUTURE

2

BOTTOM LINE, WE NEED TO STOP CHASING OUR OWN TAIL IN EMEA

Solving the EMEA Quandary

23

1. Focus Fiat brand on 500 and Panda as pillar vehicles (brands within a brand) and derive allfuture products therefrom

2. Reduce/curtail Lancia exposure, preserving uniqueness of Ypsilon and rely on Chrysler’sNAFTA development to feed European brand, if economically viable

3. Focus on Alfa Romeo and Maserati to access higher-end of bi-polar market

4. Fully flesh out Jeep brand by developing appropriate products for European and internationalmarkets

5. Continue to develop and maintain leading position in LCVs

OVERRIDING OBJECTIVES ARE:

1. TO UTILIZE EMEA PRODUCTION BASE TO DEVELOP OUR GLOBAL BRANDS

(ALFA ROMEO, MASERATI, JEEP AND THE FIAT 500 “FAMILY”)

2. TO SHIFT A SIGNIFICANT PORTION OF PRODUCT PORTFOLIO TOWARDS

HIGHER MARGIN OPPORTUNITIES

Fiat Group Strategy Going Forward in EMEA

24

2013 20142012 2015 2016

NOT CURRENTLY IN PRODUCTIONANYWHERE

only for EMEA

for EMEA and export

for EMEAVEHICLES

PRODUCED IN

EMEA

for EMEA and export

only for EMEAOUTSIDE ITALY

IN ITALY

for EMEA and export

New modelIMPORTED

VEHICLESRefresh

MODEL

REFRESHOUTSIDE ITALY

IN ITALY

Major new model launches in EMEA(Start of Production within each year indicated)

25

• Products needed for competitive offeringin Europe are complementary to thoseproduced in NAFTA and LATAM whereproduction capacity is or will soon besaturated as Chrysler product offeringcontinues to be renewed through 2015

• Target to utilize up to 15% of capacity forexport, especially for Jeep smaller SUV(not currently in production anywhere),Alfa Romeo and Maserati brands

• Architecture allocation

• Italian footprint for higher value-addedproduction

• Focus ex-Italy on smaller segments

• Working with Italian Government onactions to improve competitiveness forexport

• New Union agreement in place whichaddresses labor flexibility issue but need fulladherence

Synergies and TargetsUtilize European manufacturing base for worldwide volume growth

Our new EMEA Targets

• 2012 confirmed Trading Loss of ~€700million

• 2013 European market expected to beflat and EMEA loss expected at similar orslightly lower level

• Actions on product plan and commitmentof capital to Italian manufacturing sites

• are dependent on respect and compliancewith new labor agreements;

• will require 24-36 months forimplementation and

• will allow Fiat-Chrysler in EMEA to recoversome market share in a more rationalmarket and to act as export base for salesby other regions

• Break-even achievable in 2015-16

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GROUP INVESTOR RELATIONS TEAM

Marco Auriemma +39-011-006-3290

Vice President

Alexandra Deschner +39-011-006-2308

Timothy Krause +1-248-512-2923

Paolo Mosole +39-011-006-1064

Sara Nicola +39-011-006-2572

Maristella Borotto +39-011-006-2709

email: [email protected]

[email protected]

websites: www.fiatspa.com

www.chryslergroupllc.com

Contacts