Research, innovation and sustainable mobility

Fiat Group is committed to meeting the mobility needs of its customers, while reducing the environmental and social impact of
vehicles over their entire life cycle. As part of that commitment, the Group’s research and innovation activities are focused on
developing solutions for increasingly sustainable mobility, by reducing fuel consumption and emissions, as well as improving
recyclability and safety. Continuous innovation is essential to the development of environmentally and socially sustainable products that are also affordable.

Global Innovation

As part of the collaboration between Fiat and Chrysler, activities have expanded from development of common models and platforms to also include plans for shared research and innovation. In 2012, the Group launched the Global Innovation Process (GIP), which establishes a single framework for the coordination of all innovation activities worldwide. Developed by representatives from each of the Group’s Regions and coordinated by Fiat’s research center (CRF), the GIP covers all phases of the innovation process, from idea generation to pre-competitive development. On the basis of that framework, targets and guidelines were established at the global level and formalized in two strategic agendas:

  • the Strategic Innovation Agenda, which sets short- and medium-term objectives for product innovation and identifies related objectives and technological challenges
  • the Strategic Research Agenda, which sets long-term innovation objectives and priorities for collaborative research

At year-end 2012, the Group’s Research and Innovation activities involved some 17,900 individuals worldwide at 77 centers located across the four Regions (EMEA, NAFTA, LATAM and APAC).

During the year, the Group invested approximately €3.3 billion in R&D5, equivalent to around 4% of net revenues from Industrial Activities.

Testimony to the significant results achieved over the years is the Group’s intellectual property portfolio, which at year-end 2012 included more than 8,000 active patents.

Patents – Fiat Group worldwide

Patents registered at 31 December 2012
8,299
of which: registered in 2012 427
Patents pending at 31 December 2012
2,622
of which: new patent applications filed in 2012 444

5 Includes capitalized R&D and R&D charged directly to the income statement.

Fiat’s research center, CRF

CRF – established in 1978 with headquarters in Orbassano (Turin) as a focal point for research and innovation – is a recognized
center of excellence at the international level. Its mission is to improve the Group’s competitiveness through the development
of innovative products, processes and methodologies. All research activities are carried out in coordination with the Group’s
technical areas and operating regions. CRF draws on a broad array of technical skills, covering all automotive engineering
disciplines, together with state-of-the-art laboratories for testing powertrain systems, analyzing materials and electromagnetic
compatibility, conducting noise and vibration analyses and driving simulations.

CRF in numbers
 2012
Employees at year end
927
Co-funded research programs, approved under the EU’s 7th Framework Program (*) (2007-2013)
151
of which: approved in 2012 18
(*) The Framework Programs are funding instruments established by the European Union to support and encourage research and development. Each program is put forward by the European Commission and adopted by the European Council and Parliament. The 7th Framework Program runs from 2007 to 2013.

Innovative Products for Ecological Mobility

Fiat’s product strategy is driven by the objective of achieving sustainable mobility by reducing the environmental impact of vehicles over their entire life cycle. Innovation activities in support of that objective include improving the efficiency of conventional engines, increasing the use of alternative fuels, developing alternative propulsion systems and encouraging drivers to play an active role in reducing emissions.

Strategy to Minimize Emissions

The results achieved in terms of reduced fuel consumption and CO2 emissions provide a concrete demonstration of the Group’s level of commitment to increasingly sustainable mobility, particularly in EMEA and NAFTA where, in 2012, the Group generated more than 70% of global revenues.

In Europe, Fiat Group Automobiles (FGA) has reduced average CO2 emissions of Fiat, Alfa Romeo, Lancia and Abarth brand vehicles by 21% over the past 10 years. Approximately 71% of FGA brand cars registered in Europe in 2012 had CO2 emissions at or below 120 g/km – and 81% at or below 130 g/km6.

New registrations by CO2 emissions level (g/km)

Up to 110
26%
From 111 to 120
45%
From 121 to 130
10%
Above 130
19%

In the United States – where miles per gallon (mpg) is the standard measure of vehicle efficiency – the average weighted mpg for Chrysler Group vehicles sold in the U.S. market improved 4% over the prior year, corresponding to an 8% reduction in CO2 emissions.

This trend of decreasing CO2 emissions for Group vehicles is the result of strategic choices based on a process of continuous innovation.

Following are some of the main technological innovations introduced on Group vehicles during 2012.

CO2 data based on New European Driving Cycle (NEDC) measurement standard.

Innovative Powertrains

In Europe, the Group launched a 65 hp naturally-aspirated version and a 105 hp turbo version of the TwinAir engine family. Now available on the new Fiat 500L, the 105 hp has CO2 emissions of just 112 g/km, the lowest in its class. Both engines use second generation MultiAir technology (MultiAir II) which, due to its advanced air intake valve and combustion management systems, offers further reductions in CO2 emissions without compromising performance or drivability.

In the United States, Chrysler Group launched the new Dodge Dart, its first vehicle based on a Fiat-derived architecture. In addition to the Tigershark engine family, the Dart is also available with a 160 hp 1.4L MultiAir turbo gasoline engine, which delivers 41 mpg on the highway.

Chrysler Group also expanded the availability of the highly-efficient Pentastar V-6 engine to the Ram 1500 pickup, resulting in a 20% improvement in fuel economy over the V-6 engine it replaced. With its exceptionally low fuel consumption, reduced emissions and optimum performance, the engine (currently available on 13 vehicles) was named one of Ward’s “10 Best Engines” for the third consecutive year. The Pentastar V-6 combined with an all-new 8-speed automatic transmission helped the Ram 1500 achieve best-in-class fuel economy in its segment.

Over the medium-to-long term, Group research in gasoline engine technology will continue to focus on downsizing displacement in parallel with further development of MultiAir and other technologies that optimize consumption and performance, while reducing emissions. Integration of direct injection technologies is one example of how that objective can be achieved.

For diesel engines, the MultiJet II’s Injection Rate Shaping (IRS) technology, which proved highly successful on the Fiat Punto and Alfa Romeo MiTo, is now also available on the Fiat 500L with the new 85 hp 1.3-liter MultiJet II equipped with eco-Turbo. The principal advantage of MultiJet II engines is that they offer reductions in fuel consumption (up to 3%) and polluting emissions (up to 20% NOX7), while maintaining performance through the use of advanced combustion control strategies.

Research in diesel engine technology is primarily focused on achieving further reductions in polluting emissions, NOX in particular, surpassing the minimum Euro6 emissions requirements through the optimization of engine control strategies for injection and combustion processes.

In the area of transmissions, the Dual Dry Clutch Transmission (DDCT) already available on the Alfa Romeo MiTo and Giulietta was adapted for application on the Dodge Dart and Fiat Viaggio launched, respectively, in the North American and Asian markets during 2012.

Research activities in this area are focused on optimizing dual clutch transmission systems through the development of integrated engine, transmission and vehicle control strategies that will bring benefits in terms of drivability and fuel economy.

7 Nitrogen Oxides.

Alternative Fuels and Propulsion Systems

A key element in the Group’s strategy to reduce emissions is to increase the use of alternative fuels.

Fiat believes natural gas is the most effective and affordable solution currently available for reducing CO2 emissions and vehicle-related air pollution in urban areas. A car running on natural gas produces 23% less CO2 emissions than with gasoline.

In addition, natural gas has the potential to become a renewable fuel source in the form of biomethane.

With 10 natural gas/gasoline models now available, Fiat Group is the first and only automaker to offer a complete range of bi-fuel passenger cars and commercial vehicles. During 2012, versions of the Fiat Panda and Lancia Ypsilon were launched with the new 80 hp TwinAir Turbo Natural Power engine, which has CO2 emissions of just 86 g/km.

In 2012, Fiat reconfirmed its undisputed leadership in this market sector in Europe with over 54,000 natural gas vehicles sold (+30% versus 2011).

Building on Fiat’s considerable experience in natural gas technology, in 2012 Chrysler Group launched the Ram 2500 Heavy Duty CNG, making it the first automaker in North America to produce a natural gas pickup.

The Group also continued development of innovative solutions to transfer gasoline engine technologies to natural gas engines. This will yield further reductions in CO2 emissions. Other areas of activity will include development of new architectures and technologies for on-board storage of natural gas, as well as promoting development of a biomethane distribution network so that it can become a widely available fuel alternative.

Fiat maintained its long-standing leadership in biofuel vehicles in Brazil with more than 798,000 Flexfuel and TetraFuel vehicles sold in 2012, accounting for approximately 96% of total vehicles sold. Flexfuel technology enables use of varying blends of gasoline and bioethanol, while the TetraFuel engine is the first in the world capable of running on four different fuels: bioethanol, Brazilian gasoline (refined crude oil and 22% anhydrous ethanol), standard gasoline and natural gas.

The Group is also working on development of alternative propulsion systems, particularly for vehicles that are primarily driven in urban areas. During 2012, the Group began production of the Fiat 500e in the U.S., its first zero-emission electric vehicle for the mass market. The U.S. Environmental Protection Agency (EPA) has given the vehicle a “miles-per-gallon-equivalent” rating of 108 MPGe8 highway – the best highway rating ever recorded by the agency. The EPA testing also determined that, fully charged, the car has a range of around 87 miles (about 140 km). That range is higher than any other electric vehicle produced by a major automaker for the U.S. market.

As the center of expertise for hybrid and electric propulsion technologies within the Group, Chrysler’s research is focused on overcoming the technological and cost barriers that still limit the mass-market potential of electric vehicles. CRF supports Chrysler Group in specific areas related to the principal systems and components for electrification (e.g., electric motors and accumulator systems), as well as safety applications for those systems.

8 MPGe is the EPA-devised measure for determining how many miles an electric vehicle can travel on a quantity of battery-generated electricity that has the same energy content as a gallon of gasoline.

Innovative Vehicle Architectures

Solutions to achieve an optimal balance between vehicle safety, comfort and emissions levels are focused on minimizing vehicle weight, aerodynamic drag, rolling resistance and the energy demands of auxiliary systems.

In 2012, the Group introduced the most advanced architectural solutions on the new Fiat 500L and Dodge Dart. The use of High-Strength Steels (HSS) – which account for over 73% of the weight of the 500L and approximately 68% of the weight of the Dart – enabled minimization of vehicle weight, while at the same time ensuring a strong, rigid structure. In addition, optimization of the 500L’s aerodynamic profile enabled an 8% reduction in the drag coefficient compared with the Lancia Musa. Similarly, a 6% improvement in the drag coefficient of the 2013 Ram 1500 Regular Cab 4x2 over its predecessor was achieved through the use of features like active grille shutters in the engine’s air cooling system.

Promoting Eco-Sustainable Driving

Driving behavior is a significant contributing factor in the environmental impact of vehicles. Aware of the real difference drivers can make, Fiat Group has continued to invest in the eco:Drive system, which provides personalized tips to help drivers improve their driving style and, as a consequence, reduce fuel consumption and vehicle emissions. The eco:Drive system is now available on the majority of Fiat and Fiat Professional models sold in Europe, Brazil, the U.S. and Canada. An analysis of driver results revealed that the system can contribute to reducing fuel consumption by as much as 16%. By the end of 2012, eco:Drive had been used by more than 85,000 customers yielding savings of some 4,900 tons of CO2 emissions in 2012.

On the Fiat 500L, eco:Drive Live, the latest version of this application, enables drivers to view all tips and suggestions on-screen with the new Uconnect multimedia system. Real-time feedback on driving style enables immediate reductions in fuel consumption and emissions.

Sustainable Materials

Research and innovation for materials used in Group vehicles are concentrated in three areas:

  • research on new materials and structures to reduce vehicle weight (e.g., plastic glazing for rear windows, new high-strength steels, composite materials)
  • analysis of biomaterials suitable for automotive applications (e.g., recycled polypropylene reinforced with wood fibers for use in vehicle interiors)
  • identification of alternative uses for materials recovered at end of vehicle life (e.g., use of scrap tires to produce rubberized asphalt)

Mobility and Safety

Improving safety for drivers, passengers and other road users is a key ingredient in Fiat Group’s approach to sustainable mobility. Identifying new solutions that improve both active and passive vehicle safety and promoting initiatives that encourage responsible driving behavior are fundamental to a philosophy that, over the years, has produced significant results.

In 2012, for example, the new Fiat 500L, designed to meet the latest international standards and ensure customers the maximum level of safety, was awarded the prestigious Euro NCAP 5-star safety rating. The vehicle achieved an overall rating of 83/100, with a score of 94% for adult protection, 78% for child protection, 65% for pedestrian protection and 71% for safety assist systems.

In the U.S., the Insurance Institute for Highway Safety (IIHS) included 12 Chrysler Group models on its “Top Safety Pick 2013” list, including the new Dodge Dart. To be selected as Top Safety Pick, vehicles must receive the highest possible ratings in front, side, rear and rollover tests conducted by the Institute. They also have to be equipped with Electronic Stability Control (ESC) as standard, which Chrysler Group began introducing on its models in 2003.

In its “Best-in-Class Cars of 2012”, Euro NCAP named the Fiat 500L as one of the two safest cars in the Small MPV category. The ranking is based on the test results for 36 vehicles available in the European market.

The Dodge Dart also achieved 5 stars in the NCAP tests conducted by the National Highway Traffic Safety Administration (NHTSA) in the U.S. The Fiat Viaggio was also recently awarded 5 stars in the C-NCAP crash tests using the new 2012 standards. These results are further evidence of the level of attention given to safety by the Group, irrespective of local market requirements.

Among the safety challenges to be addressed in the near term are reducing driver distraction and improving the ability of vehicles to recognize potentially dangerous situations. Through Vehicle-to-Vehicle (V2V) and Vehicle-to-Infrastructure (V2I) communication that depend on wireless technologies, safety can be enhanced by assisting drivers at critical moments.

A Customer-focused Approach

Customer satisfaction is a key focus around which the Group centers a variety of activities and processes: from the concept and design phase of new models, to the experience at the dealer and the quality of aftersales service and support.

Product Quality
Continuous improvements in product quality to meet the increasing expectations of the market are essential to ensuring the satisfaction of customers. Through direct interaction with customers – including tools for customer feedback and research into evolving market trends – the Group strives to ensure its product offering meets the expectations of even the most demanding customer. The Group constantly monitors the quality of its products to ensure they are competitive.

All aspects of a vehicle’s performance are analyzed from the customer viewpoint and engineered to achieve benchmarks of excellence in various markets.

For each product line, there is a team of specialized personnel, operating on a cross-functional basis, that monitors processes during the production phase and defines areas for improvement and related action plans.

Interaction with Customers
To ensure continuous improvement in customer satisfaction and loyalty, the Group has oriented its activities – including marketing, sales and technical support – around the needs of the customer. As part of that process, dedicated Customer Care organizations have been established in each of the four Regions (NAFTA, LATAM, APAC and EMEA).

Together with dealers, the Customer Contact Centers (CCC) represent an essential channel of communication with customers. The 25 Contact Centers and around 1,000 customer care professionals located around the world manage some 10 million contacts a year. They offer a variety of services ranging from information, to complaint management and coordination of roadside assistance, where offered.

To measure the level of satisfaction of customers using the Customer Contact Centers and improve the quality of service, the Group monitors and analyzes a number of indicators, such as total number of contacts managed, satisfaction indexes for information and complaints, average response times and vehicle downtimes.

Innovation and experimentation with new customer contact channels continue to be an important part of the Customer Care process. During 2012, the Group further developed the mobile channel with applications for all brands now also available for Android and Google Play (iPhone application launched in 2011). Several pilot projects were also launched on the leading social network sites and, on the basis of the results, those projects will be further developed.

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