Despite a continued fall in sales for 2003, Fiat is showing signs of improvement. With some new initiatives from its restructuring plan, and the possibility of an agreement with US giant GM, Fiat is confident that it will hit break-even in 2004. Restructuring costs are now out of the way, and a stable management is in place - 2004 should be a year of transition for the Italian manufacturer.

In 2003 Fiat continued to struggle in Europe with sales for the year falling by 11.3%. The Turin based carmaker did however show signs of an upturn in Q4 2003, thanks to sales of its new models. Fiat's efforts to speed its recovery in 2004 should be helped by the launch of its new flat backed Panda and Lancia Ypsilon.

Last year's results bore the burden of restructuring costs and Fiat could now be on the way to meeting the objectives of its re-launch plan. Last June chief executive Guiseppe Morchio announced Fiat's long awaited restructuring plan, which aimed to see the group break even by 2004 (2005 for its Fiat Auto unit), with a return to profitability by 2006.

The plan calls for all sectors of the Fiat Group to introduce several new product lines, with many featuring new engines. To increase customer satisfaction the group is to strengthen its marketing operations and provide a more effective distribution network of about 8,000 dealers throughout the world.

Fiat is also hoping to reach a deal with General Motors before next year, when an option allowing Fiat to sell the rest of its car arm to its US partner will come to term. Fiat sold a 20% stake in Fiat Auto to GM in 2000, with an agreement allowing it to sell the rest to GM from 2004. However, as Fiat sales continued to fall and debts mounted, the deadline was pushed back a year. The deal with GM, which is itself currently struggling to restructure its European loss-making Opel brand, should save Fiat an additional €450 million by 2006. The stability that finally seems have been found in the top management ranks at Fiat will also serve to help the company on its road to recovery.