Stellantis NV (STLA) 2011 Q3 法說會逐字稿

Good afternoon, ladies and gentlemen, and welcome to today's Fiat S.p.A. 2011 Third Quarter Results Conference Call. For your information, today's conference is being recorded.

At this time, I would like to hand the conference over to Marco Auriemma, Head of Fiat S.p.A. Investor Relations. Mr. Auriemma, please, go ahead.

Thank you, Marion. Good afternoon to you all, and welcome to Fiat 2011 third quarter results Webcast and conference call. As usual, today's call will be hosted by the Chief Executive, Sergio Marchionne, and by Richard Palmer, the recently appointed Chief Financial Officer for the Group. They will use the material you should have downloaded from our Website, Fiatspa.com. And, after the introductory remarks, we will be available to answer the questions you may have.

Before moving ahead, let me just remind you that any forward-looking statements we might be making during today's call are subject to the risks and uncertainties mentioned in the safe harbor statement language contained in the presentation material.

So, now I will turn the call over to Sergio Marchionne.

Thank you, Marco. Good morning, and good afternoon.

We just finished our conference call for Chrysler, and I think that we're going to be repetitive in some aspects.

When you look at the performance of Fiat for the quarter, there are two things that certainly come to mind. The first one is that we continue to perform on plan on Chrysler. Our prospects for the remainder of 2011 continue to be quite strong. We are -- Although we're not making any official confirmation for 2012, I don't know of a reason as to why we would change our views today about next year. So we feel relatively comfortable that at least one large part of the new Fiat is in good shape and is executing well.

The other part of it, which relates strictly to Fiat, is a tale of two cities. We've got a Latin America market which continues to perform strongly, notwithstanding, as expected, sort of a slowdown in the second half of 2011 but, certainly, overall, better than 2010.

And we've got a European market which continues to be an incredibly unrewarding market, where the Italian market itself is going to see volumes which we have not seen since 1996. We had somehow lost as a result of the -- of a convergence of a number of factors, we have lost 15 years' worth of market growth, and we're looking at an overall market which is going to hover around a 1.7-billion-vehicle market. And, because of the relevance of Italy in our European presence, this is going to have a significant impact, I think, in terms of operating performance.

It's totally consistent with the way in which we called the market back in 2010 when we laid out the plan. It confirms the fact that we need to continue incredibly hard at eliminating the inefficiencies of the European industrial system. That remains the primary operating objective of the [SAS] for the next four years as we continue to build on the strengths of the Americas, both North and South America.

We have put together, effective September 1, a management team, which you see on page 2 of the presentation, which is designed to deal with this new sort of global car company, and that's reflected in the title of the presentation. We have now identified the leadership that would effectively guide this organization forward for the next -- certainly, for the next four years. And, with the assignment of operating responsibility by regions and by the integration of the industrial backbone of the SAS, both in terms of manufacturing and in terms of research and development, we have now laid out the elements that we consider to be sort of the final structure at operating level of Fiat-Chrysler going forward.

There's not a single doubt in my mind that, at some point in time between now and the conclusion of our 2014 plan, that we need to find not only a convergence of operating realities between Fiat and Chrysler but, ultimately, a corporate convergence. How that effectively plays out and when has absolutely -- has been discussed in very general terms, but it is not -- there's no preordained answer. We don't have a view which is cast in stone. We have -- We're totally open as to what that ultimate solution is going to yield, subject to two issues, which I think are going to be the dominant factors in the resolution of the alternatives.

The first one is that we need to find a way to accommodate the exit of [Viva] going forward, who was one of the founders, together with Fiat, of the Chrysler that we used to know back in June of 2009, before the refinancing of the government loans and before the capital injections that happened at the same time.

And the other thing is that we need to find a home whereby the financing opportunities for the combined Fiat-Chrysler are adequate to provide the required funding for the organization going forward.

So these are going to be the only two things that will govern our choice. It is an issue that we have ample time to deal with. I don't think there's an immediate need to deal with these issues as we move forward. But it continues to be one of the underlying themes of the integration that is going on today. And it will ultimately determine the shape of Fiat-Chrysler as an organization going forward.

I want to take you to page 4, and then I'm going to try and pass it to Richard. Actually, I think I'm going to be successful in doing it. I'll pass it to Richard to deal with most of the presentation. I'll come back on and deal with the issue of the simplification of the share structure.

If you look at slide 4, which talks about what Fiat looks like today compared to what it looked like in 2010, before we attempt to consolidate Chrysler into our reality, there's a striking thing when you look at the right-hand side of the slide, which is the revenue base for 2011 compared to 2010, pre-consolidation of Chrysler. And this is an organization that, today, if you add the two together in terms of the two American exposures, North and South America, we end up with roughly two-thirds of this business being outside of Europe.

And this is something which obviously is phenomenally different from the way in which we used to look like back in 2010. And it's an indication of the dominance and the relevance, I think, of these markets in the new Fiat. Europe has become-- represents less than a third today of our activities. It is a number which, by definition, as a result of a number of things-- one, the strengthening of our position in North America, which we expect to continue unabated between now and 2014, and, secondly, the development of our Asian project, which now has Mike Manley as responsible for development as the Chief Operating Officer. These two areas will continue to dominate the shift in revenue away from Europe into other parts of the world.

So we're watching a metamorphosis of Fiat going forward. It's something that has been wanted, that we wanted to do for a long time. We never had the opportunity to do it, unless-- in the absence of an opportunity such as Chrysler, which was offered to us back in 2009.

So it is not insignificant. It is going to be also reflective, in my view, I think, of the earnings generation of the combined entity going forward. It is fundamentally going to change the way in which Fiat needs to be looked at because it is now truly, as the title of the presentation says, a global car company in the making. We've got three-quarters of the world covered. We know we're deficient in Asia and south Asian markets. We need to fix this. And we are going to, from a strategic standpoint, devote a lot of resources to the completion of the puzzle so that we can be, as I'd hoped we would be, one of the five or six surviving entities in the car business going forward as a result of the consolidation that we expect to happen over the next few years.

So, on that note, I'll pass it on to Richard, and he'll take you through the entrails of the third quarter performance and give you whatever other information he deems appropriate.

Good afternoon to everyone, or good morning, depending on where you are.

Going to page 5, revenues were EUR17.6 billion, with Chrysler contributing EUR9.3 billion, up 19% with 469,000 units in the quarter. Fiat ex Chrysler revenues were EUR8.8 billion, up 4%.

Trading profit for the quarter was EUR851 million, with Chrysler contributing two-thirds of that, as it was consolidated for the first full quarter. Fiat ex Chrysler trading profit was EUR295 million, a 15% year-on-year improvement.

Net profit of EUR112 million included a EUR138-million loss on mark-to-market of equity swaps and EUR57 million of restructuring accruals. And prior to these two items, our net profit was around EUR300 million, and Fiat ex Chrysler was substantially breakeven.

Our net industrial debt increased to EUR5.8 billion due to seasonal working capital absorption. Shutdown periods were observed in US and Europe, and model year changeover in US was also made. And payments were made for EUR0.5 billion for the UST and Canada shares in Chrysler in the quarter.

Available liquidity increased to EUR20.8 billion at September.

Turn to page 6. Continued to have a firm grip on costs and our production levels. And, in the quarter, our global dealer inventory was down 3% at Fiat Group Automobiles and down 12% in Chrysler in the US, in part, in Chrysler in the US, due to some minor supply issues, which have now been resolved.

World-class manufacturing savings were EUR120 million for the combined entity, and savings to date are in excess of EUR350 million, on line with targets for the full year.

And our full leverage of purchasing power continues with Fiat ex Chrysler. Net savings in sight for EUR80 million for the full year, and Chrysler in the quarter substantially breakeven in terms of commodity costs being offset by savings.

In October, on October 26, the new four-year international labor contract was ratified by the UAW.

And, during the quarter, we also successfully refinanced Fiat bank and capital market maturities due in 2011 and 2012 with bond issuances for EUR1.5 billion and the closing of a syndication of a revolving credit facility for EUR1.75 billion at the end of the quarter, rising to EUR1.95 billion at the end of the syndication.

Syndication of our capital structure we'll be talking about later.

And, in terms of full-year guidance, the Group trading profit firmed up to more than EUR2.1 billion. All remaining targets are confirmed.

Moving on to page 7, a bit more detail around revenues and trading profit by business. As was mentioned before, revenues for Chrysler were EUR17.6 billion (sic - see Slide Presentation), up 19% in dollar terms, with shipments of 469,000, up 15%. Total Q3 shipments for FGA plus Chrysler were 929,000 units in the quarter, up 5% over prior year.

In other businesses, Ferrari revenues were up18%, while components and systems contributed positively with Magneti Marelli up 7%, Comau up 46%, and Teksid up 16%.

Trading profit was EUR851 million, with Chrysler contributing two-thirds, as said before. This represents an increase of over 16% versus IFRS pro forma for last year, driven by volume and positive pricing mix, offsetting increased industrial costs and advertising spend, particularly in the US. Fiat ex Chrysler trading profit was EUR295 million, an improvement of 15%.

As has been noted widely, the margins at Chrysler were 6% under IFRS, which compares to a US GAAP margin of 3.7%. This is mainly driven by the capitalization of [R&D] expenses as per IFRS, which exceeded amortization charges by around EUR150 million. And then there were other reclassifications for accounting differences under IFRS for [OPEB] interest and non-operating charges on pension assets of around EUR50 million. The R&D amortization is expected to ramp up over the next five to six years as we get through one product lifecycle and then therefore be similar to the R&D capitalization effect.

Fiat ex Chrysler margins were improved to 3.3% compared to 3% a year earlier, with FGA flat and improvements in components in particular. And the FX impact for the quarter was not significant, around EUR20 million negative.

Page 8 shows below trading profit. We had unusual items quarter on quarter, with EUR57 million in the quarter, and these included restructuring charges related to FGA.

Financial charges stood at EUR543 million. Excluding Chrysler, the net financial expense was EUR334 million, compared to EUR27 million last year. This is net of about a EUR200-million swing on the mark-to-market of the two stock option plans, where the loss in Q3 2011 was EUR138 million, I mentioned before, and a gain of EUR58 million in Q3 2010. The financial charges in the third quarter net of these effects reflected lower debt levels and cost of carry and a nonrecurring gain in Q3 2010.

Income taxes of EUR170 million. Excluding Chrysler, these taxes relate primarily to the taxable income of companies outside Italy and employment-related taxes in Italy.

Net profit, as mentioned before, was EUR112 million. And, excluding the EUR138-million loss on the mark-to-market of the stock option related equity swaps and the EUR57 million in unusuals, the Group achieved around EUR300 million of net income.

Moving to page 9 for the year to date numbers, Group trading profit came in to EUR1.6 billion and included EUR700 million trading profit for Chrysler. Excluding Chrysler, trading profit increased 16%, or EUR128 million, mainly driven by positive performance of components and luxury brands. And trading margin was 3.3% also for the year to date.

Operating profit for the first nine months was EUR2.6 billion, including positive net unusuals of EUR1 billion. Unusual income totaled EUR2 billion, entirely related to the fair value re-measurement of the 30% interest held in Chrysler prior to the acquisition of control and of the right to receive the additional 5% related to the last class B event, which is expected in Q4 of this year. These were all booked in the second quarter, as you know.

Unusual expense totaled about EUR1 billion, also booked in the second quarter, was about EUR800 million ex Chrysler, largely attributed to impact on Fiat businesses of the realignment with Chrysler's manufacturing and commercial activities.

Chrysler's June to September 2011 operating profit of EUR486 million includes EUR220 million in unusual expenses recognized in relation to the upward revaluation of its inventories associated with the recognition of assets acquired and (inaudible) assumed at fair value on the acquisition date. Due to a rapid inventory turnover, this amount was fully written off in June, so it did not affect Q3.

Net financial expense was EUR911 million, including net financial expense for Chrysler of EUR279 million. And, excluding Chrysler, net financial expense was EUR632 million, including EUR115 million year to date loss on the marking-to-market of the equity-related swaps. Net of that item, financial expense increased EUR136 million over the prior year, reflecting higher debt levels and cost of carry and the nonrecurring gain in 2010 mentioned earlier.

Net profit was EUR1.4 billion for the first nine months. For Fiat ex Chrysler, before unusuals and the mark-to-market, net profit was EUR78 million, substantially in line with a comparable EUR68 million for the first nine months of 2010.

Moving to slide 10 looking at cash flow for the quarter, the increase in net industrial debt from EUR3.4 billion to EUR5.8 billion includes payments in the quarter of about EUR0.5 billion to the US Treasury and Canada for the purchase of the interests in Chrysler.

Cash absorption in working capital for the period, typically the worst quarter in the year due to seasonality, was EUR1.4 billion and mainly reflects trade payable reduction due to the seasonal low production levels.

Chrysler shipments, adjusted for GDP, were down 21,000 units in the quarter compared to Q2 2011, and Fiat's were down 108,000 units. This lower shipment level has resulted in days supply at Chrysler dealerships in the US being reduced to 54 days at quarter end, compared to 68 days at Q2 end. This was a result of the absolute reduction in dealer stock from 314,000 to 277,000 units. Lower levels in the third quarter compared to both Q2 and Q3 2010 reflected the strong sales performance in September and some part shortages at the end of the quarter, which has now been resolved.

For Fiat, inventories at dealers declined by 6,000 units in the quarter. There was also a slight increase in Company inventories due to increase in stocks in transit between Argentina and Brazil due to customs issues.

As levels of dealer stock are brought back up moving into the strong yearend sales season, shipment levels are expected to improve in Q4, and the working capital effect will be positive in Q4.

CapEx in the quarter was EUR1.6 billion, progressing broadly in line with full-year guidance and 1.5 times the D&A charge in the quarter, showing that the Group continues to invest in product.

Finally, the quarter also had negative noncash impact of EUR0.3 billion for derivatives and FX translation.

Page 11 talks about the refinancing of 2011 and 2012 maturities. Fiat arranged a EUR1.75-billion revolving credit facility in the quarter, which was eventually closed in October for a total amount of EUR1.95 billion. This facility intended for general corporate purposes was fully undrawn at the end of the quarter. The new RCF size is equal to about 100% of our bank maturities outstanding at September 30, 2011 and due through the end of 2012.

This recent achievement came after Fiat was able to issue two bonds with an aggregate value of EUR1.5 billion in July. Thanks to the bonds issued during 2011, Fiat now has a more well balanced profile, with maturities extending to longer terms.

This can be seen on slide 12, where, in the bank debt line, Fiat ended the quarter with total outstanding debt of EUR17 billion, and total available liquidity was EUR12.8 billion, be it standalone, which includes EUR1.8 billion of available committed credit facilities fully undrawn at quarter end.

At the end of September, Chrysler had a total debt of EUR9.9 billion and total available liquidity of EUR8 billion, including available committed credit lines for EUR1 billion. It is also worth noting the long runway that Chrysler has, with no significant maturities due until 2017.

To repeat what we've already said, Fiat and Chrysler will continue to manage financial matters, including funding and cash management separately.

Page 13 talks about the simplification of the share capital structure, the proposed transaction announced yesterday. The mechanics for conversion are preference shares and savings shares into ordinary shares at a ratio of 0.85 and 0.875, respectively. The transaction will be subject to the approval of the two special classes at special EGMs to be held in the March/April timeframe in 2012, along with the timing of Fiat's usual AGM.

There is a withdrawal right for absent, abstaining, or dissenting shareholders, which consists of an option to put the shares to the Company for cash at a price equal to the six-month average price prior to the notice calling the AGM, which is expected in February 2012. Within the proposal, there is a maximum withdrawal rights condition that has been set at a maximum payout level for the Company of EUR56 million for preference and EUR44 million for savings shares.

This transaction, when approved, will simplify governance, give the special class shareholders a premium at around 30% compared to pre-announcement, historic price discounts, and will be EPS accretive.

And just let me make sort of a couple of comments about this issue. The first one is that, obviously, this is a move that was, technically, overdo. We've discussed this with most of you since I arrived here back in 2004. I think the conditions, for a variety of reasons, were not right until now to get this done. I think we're now in a position to execute on something which has been a thorn on our collective side, which is this incredibly archaic and somewhat unexplainable capital structure of savings and preferred shares.

What I'm not going to do today, and I won't do it at all, is have a discussion as to the method that we used to arrive at the exchange ratio between these shares and the ordinaries. We spent an inordinate amount of time looking at this. We looked at precedents. We have looked at -- and there haven't been very many, certainly not in the recent past.

But we tried to strike a balance between two things, and I think we have found-- we found that balance -- one, the objective of ensuring that we're not diluting ordinary share value in that process by, effectively, gifting shares to the other two classes and, secondly, that we have found that, in so doing, we have provided a more than adequate premium to the preference and to the savings shares.

The deal is the deal that we announced today. There is no other deal. So, if anybody is out there thinking that we're going to come back and try and visit or renegotiate the numbers, I suggest that we use our time collectively doing better things than that because it's going to be pretty much of a waste of time. It's going to go to the shareholders on this basis.

I think that people have a right to express their views by either supporting the transaction or not supporting the transaction. That is why I think, under the corporate rules that are in place here, you need a minimum of a 20% quorum and a simple majority at the meeting. Those people who may think that this offer may be inadequate may either abstain and use other rights they have within the system, which I think are more than adequate to deal with discontent, if there is any.

But I think that we have done all we can to provide an equitable distribution of value here. And, as you can see from the fact that the Fiat Industrial side has used the different exchange ratio, it is also reflective of the different trading patterns that these shares have had, certainly over the last ten months.

So I'm not sure, if any questions are going to pop up as to later on in the question and answer period about this particular issue, whether I can be helpful. Certainly, I can provide you with technical answers to the way in which this is going to get executed. But the execution itself and the terms of the execution are not going to be changed between now and the AGM.

Thank you. Moving to page 14, to the timetable, which basically repeats what I said before. So, there will be a publication of the notice of the call of EGMs during February 2012. And then those EGMs will be held together with the AGM of the Fiat Group in March/April timeframe. And then the shareholders will have the opportunity to exercise any withdrawal rights. And, if the max withdrawal condition is met, then the conversion will proceed.

Moving to page 15, this deals with the quarterly and full-year industry outlook for the key regions where the Group operates.

In North America, specifically, in the US, industry volumes were up 7% in the quarter with truck segments up 13% and which are now back to representing 55% of the total industry. For the full year, the industry is expected to grow by around 9% to a [SAS] of about 12.8 million units.

In Canada, the industry posted another solid quarter, substantially flat versus prior year. Full-year demand is expected to end slightly up versus 2010.

The passenger car market in Europe suffered from the persisting difficult trading conditions. And, notwithstanding the strong performance in Germany, this was offset by declines in the other major markets. The European market was down 1.7% in the quarter. Italy continued its weakness and was down 6% to 355,000 units.

Our outlook for the full year, unchanged versus prior forecast, calls for an industry of 13.6 million units, down 1.5% for the year. The demand for a weakening Italian market is now seen down 10% to 12% from 2010 to a level similar to 1996.

In Europe, LCVs had sustained growth in the quarter across all European countries, with the exception of Italy and France. And full-year demand is expected to increase by around 8%.

And, in Brazil, the Brazilian market held up well in Q3, this year being up 1.8%, notwithstanding a particularly strong quarter a year ago. And LCVs continued a strong growth pattern, recording an increase of about 15%.

In the light of the performance of the nine months of the year, the overall market is projected to be around 3.5 million units for the full year, which implies the passenger car segment up 2% and growth of 13% for LCVs.

Moving to our performance, slide 16 shows market share in Canada and the US. Chrysler again outpaced the industry in Q3 in both the US and Canada with sales increasing 26% and 13%, respectively. The month of September represented the 18th month of consecutive year-on-year sales increase in the US and the 22nd in Canada.

In the US, Chrysler market share was 11.4% in Q3, an increase of 180 basis points versus prior year. The performance was driven by higher retail sales, which increased by 41%, resulting in a gain of 250 basis points in the retail of retail market share, now at 10.2%. Compared to a low in Q4 2009 of less than 6%, retail of retail market share has increased by over 85% over the last seven quarters.

Fleet mix was reduced to 26% in Q3 2011 from 34% in the prior year, as we continue to focus on growing retail share with the 16 new products launched at the beginning of the year.

Penetration of Chrysler Group products in the Canadian market was 170 basis points higher than a year ago, driving market share to 14.5%. Chrysler Canada's 14.7% year-to-date market share is just 30 basis points behind GM and challenging them for second place in the market.

Page 17 talks about some of the key contributors to the growth in the two markets we just discussed. Key performing products in the US during the quarter included the Jeep Compass, with sales more than three times higher than a year ago. Jeep Wrangler was up over 50%, and Grand Cherokee continued to perform strongly with sales up 38%. The Chrysler 300 is gaining momentum, with sales up 18% in the quarter. And sales of the Chrysler 200 are 26,000 units, and Dodge Durango was 16,000.

Moving on to page 18, you can see the European and EFTA markets. FGA's overall European market share was 6.5% for the quarter, down 60 basis points year over year, primarily reflecting a less favorable market mix resulting from the reduced weight of the Italian passenger car market and also due to the lower weight of the combined A and B segments in Europe, which were down 310 basis points from 33.6% in Q3 2010, which resulted in almost 40 basis points of loss in FGA share.

In Italy, market share increased to 29.9%, a 50 basis points growth versus Q3 2010, reversing the course of the year-over-year market share trend, mainly on the back of the strong performance of Jeep and the initial contribution of the Lancia Ypsilon and Fiat Freemont.

Turning to page 19 to illustrate the FGA performance by brand in Europe, the Fiat brand was the most heavily impacted by market conditions with overall share in Europe down from 5.5% to 4.6%, although the Fiat Freemont has already secured orders covering more than 90% of the target for 2011 of 20,000-plus units.

Sales for Lancia were up to approximately 23,000 units, driving a slight increase in market share, and more than 25,000 orders were received to date for the new Ypsilon.

Alfa Romeo's market share was substantially unchanged at 0.9%, with a significant increase in sales in the UK, driven by Giulietta. And, across Europe, Giulietta has 64,000 shipments year to date and is on track to achieve the 90,000 to 100,000 target for the year.

Although starting from a low base, Jeep sales more than doubled in the quarter versus a year ago, with all products, Wrangler, Compass, and Grand Cherokee, contributing significant gains. Jeep represented 20 basis points of FGA's overall share in the quarter.

On slide 20, take a look at the new Panda, which was unveiled at Frankfurt auto show last September. At the beginning of December, Fiat will launch the car, continuing a 30-year history of success in the European A segment. The car, produced in the newly modernized Pomigliano plant will be delivered to dealers at the start of 2012 and will be available in more than 40 countries during first quarter 2012. The new Panda represents an evolution in terms of design, safety, technology, and performance, as well as unique improvements in versatility and functionality.

Moving on to page 21, we show the recent evolution of the Fiat Professional brand in Q3 2011, which outperformed the market, recording a 30 basis points improvement in LCV share in Europe, reaching a 14.4% share. Italy had a 100 basis point share gain. But also, excluding Italy, the European share improved by 50 basis points to 8.9% on the back of a strong performance from the new Ducato and Doblo. Brand sales in Europe were up 8.4% to approximately 48,000 units, with volume gains in almost all markets and, particularly, Germany, Spain, and the Netherlands. The newly launched Doblo Work Up further rounds out the Fiat Professional product offering, the most up to date and complete of any European producer. This is the first OEM-produced, drop-side vehicle, ensuring higher quality and reliability to customers.

Slide 22 talks about labor relations, both in the US and in Italy. On the left-hand side, we have a summary of the ratified UAW four-year contract, which is valid through 2015. Key points are the tier wage rates. Essentially, tier one wage rates are essentially flat, with increases for our tier two workers to up to $19.28 an hour through the life of the contract. There are no additional pension or benefit costs in the contract. And we will maintain labor rate competitiveness through 2015 while giving the workforce the opportunity to benefit from improving Company financial performance and product quality and world-class manufacturing improvements through the variable piece of the compensation.

On the Italian side, the new investments were confirmed at Mirafiori and the power train plant in Pratola Serra for an Alfa Romeo engine. The exit from Confindustria occurred, allowing more direct negotiation with our union counterparties. And we confirm the termination of production at the end of 2011 at the Termini Imerese plant.

Page 23. We can see how Fiat continues to be the market leader in Brazil for the 39th consecutive quarter, with 21.9% of market share, a 140 basis point lead over the nearest competitor. With continued strong performance in the A and B segment, the Novo Uno was up about 40 basis points over last year. Notwithstanding an increasing competitive market, Fiat continues to be very disciplined in its commercial policy and regarding price levels. In September, Fiat launched the new Fiat 500 and the Freemont, which were imported from Mexico, a tax-exempted country under the Free Trade Agreement. Both models experienced very good initial reception. Now the Fiat 500 is benefiting from the more competitive cost base vis-a-vis the model previously imported from Europe.

In Argentina, the market continued its robust growth over the prior year, with Fiat gaining significant share, to 11.9%, an increase of 190 basis points. And the Novo Palio, a key model in A and B segment, will be commercially available from December-- sorry-- from November.

Slide number 24 talks about the new tax regime being implemented in Brazil. In September, the Brazilian government announced a new tax regime for federal VAT. It's called IPI. Vehicles produced locally and those imported from Mercosul or Mexico are not subject to these new tax measures, provided certain local content conditions are met. The IPI tax will increase by 30 percentage points for all other imports from December 2011, and this will remain in force through the end of 2012.

Moving on to page 25, shows the global nature of the Fiat 500 sales, which is expanding its international reach. Since its launch in mid 2007, the Fiat is one of the top performers in the European A segment with nearly 800,000 units sold in Europe. In Brazil, the Fiat 500 is on track to reach its target of about 8,000 units for 2011. And the car is now distributed across the US through more than 120 dealers and recorded about 30,000 shipments since launch in the early part of 2011. The Fiat 500 has been named as a candidate for the 2012 North American car of the year. In China, the 500 is available since September and imported from the Toluca plant in Mexico. We're targeting about 8,000 units annually at run rate.

Page 26, moving on to Ferrari. The brand reported a revenue increase of about 18%, driven by higher volumes for 12-cylinder models in particular. A total of 1,588 cars were shipped during the quarter, up 13.6% over Q3 2010. And the increase related, particularly, to strong sales performance for the new FF model. North America maintains its position as Ferrari's number-one market, with 497 vehicles shipped during the period. Performance was particularly positive for China, Hong Kong, and Taiwan, where 164 vehicles were shipped, representing a nearly 50% increase over Q3 2010. Ferrari closed the quarter with a trading profit of EUR77 million, in line with the prior year, despite higher R&D spending for new products. The quarterly trading margin is sequentially improving through the year.

Page 27. Maserati experienced in the quarter a healthy 6% revenue growth and 1,500 shipments. North America grew by 16%, with US now representing around 40% of total Maserati vehicle sales. Trading profit was EUR8 million for the year, double that of last year. And, at the Frankfurt motor show in September, Maserati unveiled the brand-new SUV concept, the first-ever SUV in Maserati's history. This concept vehicle paves the way for Maserati's future product range.

Page 28 relates to our components business. Magneti Marelli reported revenues of about EUR1.4 billion in the quarter, up 7% over Q3 2010. Revenues for lighting totaled over EUR400 million, an increase of 14% over the same period. And engine controls were up -- revenues were over EUR200 million, substantially in line with 2010. Q3 trading profit came in at EUR43 million versus EUR24 million for Q3 2010. The improvement was driven by the volumes and manufacturing efficiencies, which more than compensated for cost pressures from higher materials prices.

Fiat Powertrain, on page 29, a top line of EUR1 billion for the quarter. It experienced a reduction of approximately 1% over the prior year, driven by FGA volumes. Total engine unit sales were down, and transmissions were in line with 2010. Third quarter closed with a trading profit of EUR29 million, down, primarily due to the volumes effect and some increase raw material costs.

Moving to slide 30 for the full-year guidance, revenues are confirmed in excess of EUR58 billion with year to date revenues at nearly EUR40 billion. And trading profit guidance is firmed up to over EUR2.1 billion for the year. Net income confirmed at EUR1.7 billion. Our CapEx confirmed at around EUR5.5 billion. And net industrial debt confirmed at EUR5 billion to EUR5.5 billion. And available liquidity will be in excess of EUR18 billion.

Thank you. And now I'll turn the call back to Mr. Marchionne for any final comments before Q&A.

Okay. Thank you, Richard. Now we are ready to start the Q&A session. Marion, please, retrieve the first question.

(Operator instructions). Laura Pennino, Kepler Capital Markets.

I have just a few questions. One is on Brazil. We saw many announcements that many players have started to invest more in Brazil. And it starts to be more competitive. Can you give an indication of what you expect for Brazil -- if you think profitability will decline? And what opportunities do you see for Chrysler?

A second question is on the guidance of debt, the EUR5.8 billion guidance. Can you give indication of what you expect for CapEx for Fiat ex Chrysler, as we saw that, also for Chrysler, you've reduced the CapEx guidance, and if you believe the optimization is going to come from net working capital optimization?

And then the third question is on -- after the new management team for the integration with Chrysler, what is the next step we should expect for greater integration? Thank you.

I'm going to take your first and your third question. I think I was clear in my opening remarks. I'll start backwards in answering the question.

From an operational standpoint, I think we've done all we can now to put the structure in place for a full integration of the two companies. What remains unsolved as an issue is the issue of the integration of our governance systems from a shareholding standpoint. And I also mentioned we don't have any preconceived notions as to what that solution ultimately is going to yield, but we do see these two entities as ultimately coming together. We have time, obviously -- a lot of time to try and determine what the optimal solution for the combined entity is going to be going forward. Don't look for more, other than a delivery, I think, of the results that we set for ourselves as objectives back in 2010.

The first issue that you raised about Brazil -- we remain as convinced today as we have been for a long period of time about the fact that Brazil is going to be the repository of significant growth going forward. Our forecast sees, by 2014, volumes growing in excess of 4.4 million vehicles. There's a view that the number is going to be closer to 5 million as the expansion program continues in Brazil. We are effectively now, at least in terms of Brazilian sites, at capacity out of our Belo Horizonte plant. We have made up for the production shortfall out of Brazil by fully utilizing, at least in the short term -- by utilizing what was available out of our Cordoba plant in Argentina. But there continues to be a need to invest in Brazil to deal with the additional volumes that we expect to be coming forward to Fiat, regardless of the introduction of additional competitors.

I think you can see from the chart that Richard showed about the way in which we've managed share that we have allowed other people to occupy some space in order to preserve operating performance and, certainly, the profit generation, which has been at the heart of Fiat's very modest success as an entity going -- certainly, in the past. I don't expect to see any deterioration in margin performance out of Brazil, certainly, in the planned period that we've put forward. I think we're going to watch this very, very carefully as we build capacity up in Pernambuco and we bring the additional capacity on stream by 2013.

I think it's crucial that we preserve the profitability of these entities. I think that there's certainly a bias to protect domestic producers, as you can see from the introduction of the tax regime and the imposition of additional VAT taxes on imported vehicles. This is totally consistent with the industrial policy that was introduced by the government of Brazil even at the time of President Lula's presidency. And we see this continuing today under the current regime, and we see nothing that would come to disturb that view going forward.

We need to be mindful of the fact that this is an attractive market for a lot of players. There are a lot of people, including ourselves, who have benefited from this -- from the buoyancy of the Latin American market. I think it's in our collective interest not to disturb that profitability profile as all of us try and deal with a less than rewarding European market. So I see nothing on the horizon today to suggest that we will see a deterioration of performance.

So, would you be prepared maybe -- as you said, you allowed people to occupy some space. You would be prepared also in the future to lose some market share eventually?

By definition, I'm never ready to lose any market share at all. What I'm interested in doing is maintaining peace (inaudible) to allow for an orderly run of the market. We will do whatever is required, that, what you suggested, being an item of last resort as a means of maintaining peace.

If the market goes up to 4.4 million cars, then I'll have to tell you that, at 23% market share, that number is significantly over 1 million vehicles for Fiat. That's a significant position, which would be enviable in any circumstance.

But I think we need to see the market develop as -- I think we need to see the market developments over the next couple of years. The forecast that we put together and the indication of volumes that were built into the 2014 plan effectively entailed a deterioration of market share and the allowance for other market participants to take more. We'll see if we have to go that far. Certainly, there's no indication today that there's going to be a permanent decline of Fiat market share going forward.

Richard, maybe you can answer the question of [cash flow].

The guidance on the net industrial debt is between EUR5 billion and EUR5.5 billion. I think you said EUR5.8 billion. It's up to EUR5.5 billion. So it hasn't changed compared to prior guidance. That would imply a slight generation of cash in the fourth quarter, which we expect to achieve, given that we expect to have higher shipments in Q4 in both Fiat and in Chrysler compared to Q3.

On the CapEx questions, the CapEx guidance regarding Fiat is confirmed for the year at around EUR4 billion.

Okay. Thank you.

Thierry Huon, Exane.

Just a quick question. Could you tell us what was the R&D spending of Chrysler during the third quarter?

Basically, we're capitalizing about 60% of the spend, so it's around EUR250 million -- EUR250 million to EUR270 million of spending.

Of spending. Okay. Under IFRS, we are seeing how much of this -- probably --

Capitalizing about EUR150 million.

(Inaudible). Okay.

The net effect of capitalization of amortization is EUR150 million.

Okay. (Inaudible). Thank you.

Thierry, just to finish off the question, because I understand you're trying to reconcile. You reconciled everything [else hopefully].

That's correct.

And that's why, I think, we've been incredibly transparent. We released the Chrysler numbers pre IFRS treatment earlier today so that you'd have a chance to compare the two. And we have also been very clear on what the adjustment process is. This is an adjustment process that will continue pretty well at some rate between now and the next three or four years because of the difference in starting bases between the two organizations, issue number one.

But, even if -- I want to make one comment which I forgot to make in my opening remarks. For those of you who have followed Fiat back from 2004, even if I were to adjust for this difference in accounting treatment for R&D between Chrysler under US GAAP and Chrysler under IFRS -- you might remember that, in 2008, we reported the highest trading profit of this Company since it was founded back in 1899, and that was about EUR3.3 billion. This year, subject to -- to nothing, I guess -- we're just about ready to close 2011 anyway. Even if I were to make this adjustment, the combined operating profit or trading profit of Fiat and Fiat Industrial is in excess of that number. So we're actually -- we're going to establish another record again, which is the highest trading profit in the history of Fiat from its inception back in 1899. It's the highest trading profit in 112 years.

Okay.

Kristina Church, Barclays Capital.

I just wondered if you could give an update on your dividend policy for the Company and if there would be any change in that policy now with the adjustment to the shares.

Let's deal with the issue of the share, and then I'll go back to the dividend policy in a moment. It is clear that we're going to be respecting the dividend priorities associated with the two separate classes of shares, the preference and the savings shares, for 2011. Post conversions, these shares will be earning dividends no more and no less than the same rate at which the ordinary shares will earn dividends. It is impossible for me today to give you an indication on dividend policy. This issue is going to be looked at by the board January of 2012.

Given the fact that we have-- part of our earnings now have been generated by Chrysler, whose cash and cash management is effectively shielded away from Fiat. So we need to be totally consistent with our commitment to maintain the firewall up at Chrysler and then the ability to generate distributions out of Fiat itself. So we'll come back to this issue in January of 2012. I don't have a better view today. But, certainly, there's going to be a dividend distribution for 2011 to respect the priority scheme for the preference and for the savings.

Massimo Vecchio, Mediobanca.

My first question is on the financial charges for the Group. Even stripping out the mark-to-market, it's roughly EUR350 million, which, annualized, it's something like EUR1.4 billion. So I'm looking at 2012. Is it a reasonable assumption for next year in terms of financial charges? And is it -- with that, is it sustainable? Are you trying to do something to reduce that, probably reducing your cost of carry? That's the first question.

The second one is always on Brazil. Considering the IPI tax on imports, the probable uptake in volumes on the Siena and the launch of the Palio -- do you expect to gain market share next year in Brazil? Thanks.

Let's wait until January 2012 to give you an update on what we consider as doable in Brazil. But, as a general, directional move, I share your conviction that we should see an improvement in positioning in 2012.

So, in terms of financial charges for the year, as we mentioned, the number for the quarter included the equity swap of EUR138 million of loss. And, basically, we strip out that unusual. We would project, I think, around EUR800 million for an annual charge, probably slightly less. But, at the moment, I don't have a better number to give you. But it's nowhere near the number you're giving me.

Okay. All right. Thank you very much.

Martino De Ambroggi, Equita SIM.

I have a question on net working capital. Since this is the first time we see the new animal, the new entity all together, what should be your expectation in the last quarter of the year for net working capital, which, typically, has a positive reaction in the last quarter of the year?

And the last -- the other question is just a general question because, during your initial speech, you said no reason to change the business spend targets. I understand you don't want to talk about precise figures for next year, but if I look at Fiat S.p.A. standalone, for sure, the Italian market is worse than expected at the beginning of when we presented the business plan. So what are the main drivers for Fiat standalone that you see will be able to offset the negative impact of the Italian market, in general terms, without talking about the specific figures?

We have a number of product launches in 2012, which, I think, are going to certainly soften the impact of a declining or a flat market in 2012, which is probably the worst of all possible assumptions for next year going forward out of a base of roughly 1.7 billion vehicles. The continuous introduction of products that are generated outside of Fiat and come out of Chrysler is going to help, certainly in terms of maintaining share and repositioning these brands. And the ultimate weapon, which we have used consistently here in times of need, is a cost-containment process that effectively maintains the highest level of operating flexibility at the lowest possible cost. I don't have any -- without getting involved in forecasts for 2012, I do not know of a thing today that would suggest that we would have to revise the Fiat side down. We need to complete the year. We need to be able to lead the markets in a better fashion than we've done so far and, effectively, look at 2012 with a fresh set of eyes once we've had the last couple of months of the year under our belt here.

Richard, you wanted to go back to the question of the financing charges for the Group?

I was talking about Fiat standalone. So, just to be clear, the Group financial charges for next year will be about EUR1.4 million.

Of which EUR800 million is coming out of Fiat S.p.A., and roughly --

Yes. Basically, 50/50, assuming there's no negative impact for the equity swaps.

And for the net working capital?

The question regarding net working capital for next year? For the fourth quarter, the impact is basically higher shipments for the quarter. So we expect it to be positive.

Are there any projections for the magnitude?

It's reflected in the net indebtedness number. If you run the numbers -- we tell you what CapEx is. You can just back off into the net working capital number, number one. And, number two, we've also indicated in the previous conference call, which you attended, that the cash flow number for Chrysler is, at the low end of estimations, at $1.2 billion. Sooner or later, the machine is going to have to -- The only way you can get to the yearend target is by assuming that we're going to generate cash. If we generate cash, it's going to come out of working capital (inaudible). So we'll see the final number by December of this year, but I think there's room for improvement in the forecast that we gave you.

Okay. Thank you.

Jochen Gehrke, Deutsche Bank.

Three quick questions, if I may. First of all, on page 45 of your presentation, you're showing the shipments and the production. Are these two like-for-like numbers, because, if so, it would yield roughly 74,000 units higher production this year than units shipped at Fiat. Or is this not a like-for-like definition? That's my first one.

Secondly, you're showing EUR2.7 billion of maturities within the next 12 months at Fiat S.p.A. out of capital markets. Obviously, in the last two months, your bond market condition, at least indicated by CDS, have become more tough. How should we expect to proceed when these EUR2.7 billion come due? Is this the time, then, to reduce your gross liquidity?

And then, finally, could you just say a word on Fabbrica Italia, where we stand there and what the Italian discussion currently about labor law (inaudible) and so on and so forth might actually be able to help you in that regard? Thank you.

We issued a press release last night in answering a request made by the Italian stock exchange regulators about our objectives and our intent vis-a-vis Fabbrica Italia. I made on behalf of the Group in the press release a commitment never to speak about Fabbrica Italia again, so I'm not going to now, because it has been a huge area of consternation, debate, misinterpretation, and misuse by a number of people.

We remain -- ignoring for a moment the project that was announced back in 2010 because it is no longer relevant in terms of discussion by Fiat with anybody, whether through public discussions or through other means. But we remain as committed as we've always been to remedying the inadequate manufacturing infrastructure that we have in this country. I think we have initiated a number of investment cycles that impact at least three of our plants here. We've got two plants that remain -- which we're working on and which are in good shape today vis-a-vis product utilization and which will be complemented as we go forward as we complete the assignment of products from the product portfolio plan that we have announced and that we continue to work on as we go forward.

So Fabbrica Italia out. We confirm our commitment to make these viable operations as part of an integrated manufacturing structure with the rest of Chrysler and the rest of European operations.

The comment that you made about the progress that we've made with the unions -- I think it's fair to say that a majority of the workers inside Fiat -- the majority of the unions have been totally supportive of the initiatives that we've put in place. We have a fringe of the unionized workforce, which represents slightly more than one out of ten workers at Fiat in the Italian system, which has expressed discontent with the way in which Fiat has approached this matter or the manner in which -- the manner and the terms that we've asked in terms of the labor agreements governing the functioning of the plants going forward. We have been as proactive as we can in terms of dealing with their requests. We have done all we can, and we cannot do more. And so I think we have now determined and established a set of rules that give us the required level of comfort to manage these plants. But I think it's fair to say that we will continue to see public expressions of discontent with the arrangement that's been reached. But it is not reflective, in my view, of what the majority of our workforce thinks or the way in which they're going to respond to the startup of production. So I remain confident that we have found a way out of our impasse, and I think it's a basis on which we can build the implementation of the manufacturing strategy going forward.

The questions that you've asked about bonds, and I'm going to take my finance colleagues over this to avoid getting into intricate discussions about how and when we refinance Fiat. We have been intentionally raising capital now in anticipation of a dislocation of the debt markets. We've done this because, certainly, based on my own experience, I do not believe that we have the requisite elements of a steady market to be able to rely on that market as being a good source of funding for the organization going forward. So we have effectively accessed -- as the market opened up, we've corrected enough liquidity to try and deal with all the requirements going forward of Fiat, including the amount that you made reference to in excess of EUR2 billion out of current, available liquidity, without going back into the debt markets to try and deal with our requirements.

We will continue to monitor these markets as we have done up to now. We will access them as we see opportunity arise. These conditions obviously cannot continue forever because they're indicative of a dysfunctional market. And so our expectation is that we're going to see normality come back in some fashion. But we have enough runway and enough liquidity to try and deal with a certain period of uncertainty going forward.

I'm sorry. And the production versus shipments data?

The difference is basically driven by higher in transit inventories between Argentina and Brazil, where we're building cars in one jurisdiction and shipping them to another. We've had some logistics issues. That's increased owned inventories. And then there are company cars, which we make and register, obviously, without making a shipment as such in terms of our metrics and demo vehicles, as well, that fall into the same category. That would explain the difference between manufactured and shipped.

Okay. Thank you.

Philippe Houchois, UBS.

Two questions, please. The first one is -- If I look at your working capital structure, the old Fiat was highly negative working capital requirement auto business and, I believe, a less heavily negative working capital structure for the industrial side. You've now replaced that industrial exposure with Chrysler, which itself has a highly negative working capital structure. But, to me, going forward, we have -- we should be ready for a much more marked seasonality than we even had before with the Fiat (inaudible) combined and therefore more cash burned in Q3 and Q1 and more cash generation in Q2 and Q4. That's my first question.

The second question is on Ferrari. I get questions or read stuff, different sources, about how Ferrari makes money. Could you clarify whichever way you choose where the money comes from -- where your earnings come from at Ferrari? Is the majority of earnings coming from actually making and selling cars, or do the car business have a better margin that average, whatever it is, as opposed to all kinds of noise I hear about money being made from merchandising and other sources. If you could just clarify in broad terms where the money is made at Ferrari, that would be helpful.

This last thing that you raise about merchandising I find absolutely astounding. If you think that we can actually make enough money -- that the kind of operating margins that we make at our Ferrari out of selling jumpers for babies and baby shoes, I've got news for you.

That's my point. So can you give us some indication of where the margin or distribution of earnings is coming from?

100%, plus of the margins are being made out of making and selling cars.

Right. That's great.

-- which, when you take your (inaudible) interpretation of what that racing organization costs, which is not inconsequential. So, anyway, that's one issue aside.

But the question about seasonality. A couple of things. One, as you well know, because of the fact that we are a global company, your reference of third quarter and fourth quarter are not necessarily reflective of the same way in which the world calendarizes months. So the question is which offsets which.

Right.

The European phenomenon in terms of third quarter and plants shutting down for the month of August is very much of a European problem. The US shuts down in July. Brazil has got a different shutdown schedule because of a difference in seasons.

Having said all this, your first question which I thought was relevant, which is whether the removal of Fiat Industrial and the replacement of Fiat Industrial with Chrysler is going to lead to a more pronounced movement in the working capital, the answer is absolutely yes, because, certainly, the North American and the European side will be moving somewhat in tandem and, certainly, within the same quarter.

But the great thing about (inaudible) working on negative working capital is, as long as volumes increase, everybody's happy. I think we see great benefits coming through the cash flow statement. While we're living through the period of adjustment that we're living through in Europe, we're paying the price on the other side of what that looks like. And it's not pleasant. It's built into our forecast, and it's built into the cash flow projections that we've put forward.

And, if I can add something, in the old days of Daimler Chrysler, my sources are telling me that the working capital swing throughout the year at Chrysler was in the range of $5 billion. Is that still a relevant measure?

That's a number I can't even spell.

Would Richard have a better grasp on the working capital?

If I can't spell it, Richard doesn't even know where it lives.

Fair enough. All right. Thank you very much.

Stephen Reitman, Societe Generale.

A couple of questions. Could you comment on the sales cadence or production cadence of the Chrysler 300? I was just looking at some of the quarterly production data that comes from third parties, like AutoData, which, basically, shows that it seems that production levels in Q3 were lower. I know that, seasonally, the third quarter is a lower quarter. But, on quite a few other products, like Ram and even in the Jeep Grand Cherokee, production was higher sequentially Q3 versus Q2.

And, secondly, just a question about the debt figure again, the guidance on the debt. At the Q2 stage, when you gave initial guidance of EUR5 billion to EUR5.5 billion for the full year, at the time, we were looking at a debt figure for the half year of EUR3.4 billion. And, Mr. Marchionne, I think you actually came in and said, actually, you'd be very surprised if it were anything close to the EUR5 billion to EUR5.5 billion, in other words, implying it could be considerably lower. Do you still hold with that today? Thank you.

I still hold the view that I gave you then on the fourth quarter on the debt position. We'll have to wait. And I stick to guidance as indicated. We'll wait until the end of the year to give you a better figure. But my views have not changed.

Vis-a-vis the 300, I think you need to be careful. There's a fundamental difference between the Ram products and the Chrysler 300. The 2012 models that were launched for Chrysler implied -- or had with them a substantial uplift in the powertrain offering that is now part of the product range for the Chrysler 300. Richard made reference to this in his presentation about the fact that we've installed -- for the first time, we've installed an [HP] transmission in a North American-built car with a 3.6-liter Pentastar engine. That came into production in the third quarter of this year. And, therefore, it was, by definition, part of a product revamp, which would have slowed down production.

In all honesty, it effectively re-launched the vehicle as a 2012 model with the kind of [mileage plan] that we were making. So do not read anything into this -- any nefarious stuff into the Chrysler 300 issue -- not to mention the fact that there have been issues both in terms of components on the Pentastar engines and also components -- other component shortages, which have caused that side of Chrysler vis-a-vis their run rate of production out of our Brampton plant.

Thank you. And, Mr. Marchionne, could I just ask you another question? Just on your comment -- I think you were quoted in the press maybe three weeks ago saying -- when you were commenting about the state of the European market. And you said that, potentially, you might delay certain product launches again. I think this was the strategy you basically employed in 2008 to protect the results of the Fiat -- of Fiat (inaudible) at that time, which was quite successful, I suppose, at that time in terms of having you have results which were certainly better than those of your peers in that period. But maybe we're seeing a little bit of the fallout from that in terms of Fiat's current performance in the European market, [where the lack] of some products. Do you think it's still a good policy to delay products in difficult situations or to (inaudible) invest ahead and go forward?

The overall answer to your question, no. I think the time has run out on that strategy, and I think that we would have to change tact anyway. You're going to tire yourself out of a market if you don't keep the portfolio alive. And I think that what you see in terms of the product introductions that are planned for 2012 -- it is a relatively heavy year for Fiat ex Chrysler, if you consider the fact that we've now launched the Ypsilon here in 2011. We're going to launch the Panda, and it will be commercialized in January of 2012. We're issuing the first [CUV] for Fiat out of the production that we have in Serbia. All those markets will be -- All those products will be available and launched in Europe in 2012. And so it's going to be a busy year. Busy here, and it's going to be even busier, I think, in some senses in the US.

But let me make a general comment. I don't mean this to be a defensive argumentation as to why we took that tact in 2008. One of the things that we said and that we very clearly identified as a potential risk, given what was going on in Europe, is that, if two things happen -- one, if the eco-incentive schemes that were put in place were to be withdrawn by the European Union, and if that had as a result, which, in fact, did happen, a significant drop in demand, the products that will be heavily impacted by that withdrawal were going to be cars that were in the A and B segment, which has been, historically, the strength of Fiat and which would have been negatively impacted and very heavily impacted, notwithstanding any product launches that Fiat may have carried out.

And so we made that decision on the basis that it would take some time for the markets to readjust, which we have now allowed to happen. We have lived through a very weak 2010, even a weaker 2011, at least on the Italian side. And, when you look at European (inaudible), you will see there has been a shift or a skewing of the distribution away from the A and B segment into the highest segments, especially with the German market being the only one that's really shown any type of significant growth year over year. The German market is a market which has been historically difficult for us because of the strength of the German automakers and which, by definition, favors cars which are of a larger size and have never, ever been within the realm of the [possible for Fiat]. These things have favored a decision to, effectively, restrict capital and launch at a later cycle, when normal so-called trading conditions would be present.

We are beginning to see a restoration, at least on the distribution of volumes, which restores the relevance of A and B segments as being viable elements of the market. It has not been so for 2010 and certainly has not been for 2011.

So, hopefully, as we launch these products in 2012, we will see better market reception, not just because of the viability of the products but because the market itself is there.

What also helps the argument going forward is that we're in the process now of completing the product offering, together with price range, which is also going to allow us to effectively cover the Cs and Ds and the SUV markets that we have never been able to do on our own at Fiat.

So the combination of all these are good indications of decent performance going forward. But it would have been an impossible argument to put on the table back in 2008 when the markets collapsed. So I think we're on our way back. I think the product launches that we've got -- that we did this year and the ones that are planning for 2012 will restore some sense in the product cadence. But, in my view, I think it's going to -- it's a multiyear effort to try and get these markets back up to a level of normality.

Having said this, I think our strategy has paid off. I've seen pricing today in some European markets for some of the A and B segments which I find appalling. I think some of our competitors are, in all likelihood, either making zero margins on a variable basis or negative margins, just to move inventory. And that's not a healthy situation. So I think, in hindsight, we were probably right. Time will tell. But, based on what I know today, I think we were right.

Thank you.

Max Warburton, Bernstein.

Just one question. I imagine you need a break before we do Fiat Industrial. On the decision to simplify the share capital structure, should we interpret this as a change in potential structure of Fiat and Chrysler coming together? You gave a very clear answer on the Q2 call about what the labor trust wanted in terms of monetizing its stake in Chrysler. Are we at the point where, basically, the trust is saying it really does want an IPO rather than a cash sale to Fiat? Or is this still the old status quo? Thanks.

Well, [it's helpful] the trust has been silent. So I could only impute things into them. I think it's fair, without even asking them, that they're interested in monetizing the position at some point in time. I think that there is a view, which I find eminently reasonable, Max, that says that any simplification of the share structure is something which is helpful for the future of Fiat, whatever that future holds. The multiple classes of shares for Fiat has always been a structural impediment to a variety of things happening, which -- and I think that we needed -- this is, apart from being the right thing to do from a governance standpoint. It also is a facilitating mechanism whereby the world can be approached in an open and relatively easy fashion.

If you want to read it as a means of preparing for a potential merger with Chrysler, I think you're probably reading it properly. I made the comment in my opening remarks today that I think we do need to bring the governance systems together, not just operationally, as we have done, but also from a corporate standpoint. And the way in which this happens is totally open, but we need to make sure that all the instruments are in place for that to happen relatively quickly.

Put it another way. Do you have a preference? I interpreted your previous comments to be that you would prefer to buy it for cash rather than go through the whole process of an IPO and a common-listing merger. Are you actually pretty open-minded about which way this goes?

I'm relatively open-minded. I think that there are two issues that would govern our position. The first one is, obviously, we do have a significant shareholder, and he does have a very keen interest in maintaining -- to the best of my knowledge -- I don't want to speak on their behalf. But they appear to be having a keen interest, as they indicated last night in their press release about the fact that they intend to hold levels of about 30% after the simplification of the shares. We need to be mindful of their interests, and I think that we will do everything to try and accommodate their intent.

But the real issue is -- what is re-doable in this market? At the end of the day, everything that we may have planned has got -- is subject to execution risk. A full cash takeout of the Viva position today -- in the absence of other corporate transactions that will give rise to liquidity is something which I think is a bit of a push. And so, we'll put at risk the ratings that we've got in place, which are already not phenomenal, I think unjustifiably so -- but the ratings are not what I would call stellar. And I think we need to be careful that we don't abuse that process to the point where we end up looking structurally weak.

And so that's why I keep on saying that all options are on the table. We will look at whatever makes most sense for the shareholders of Fiat, given the objectives that Viva has very clearly stated of attempting to monetize and exit the position.

Okay. Thanks very much.

That will conclude the question and answer session. I would now like to turn the call back over to Marco Auriemma for any additional closing remarks.

Thank you, Marion. We would like to thank everyone for joining the call today. We'll be communicating shortly. Bye.

That will conclude this conference call. Thank you for your participation. Ladies and gentlemen, you may now disconnect.