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6-K FCA NV Q1 2018 Earnings Shell

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

OF THE SECURITIES EXCHANGE ACT OF 1934

For the month of April 2018

Commission File No. 001-36675

Fiat Chrysler Automobiles N.V.

(Translation of Registrant’s Name Into English)

25 St. James's Street

London SW1A 1HA

United Kingdom

Tel. No.: +44 (0) 20 7766 0311

(Address of Principal Executive Offices)

(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)

Form 20-F x Form 40-F ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule101(b) (1): ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule101(b) (7): ¨

Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing

the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes ¨ No x

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): N/A

The following exhibit shall be deemed to be incorporated by reference into the Registrant’s Registration Statement on Form F-3 (File No. 333-217806) and to be a part thereof from the date on which this report is furnished, to the extent not superseded by documents or reports subsequently filed or furnished:



Exhibit 99.1	Fiat Chrysler Automobiles N.V. Interim Report as of and for the three months ended March 31, 2018

The following exhibits are furnished herewith:



Exhibit 99.2	Fiat Chrysler Automobiles N.V. Supplemental information as of and for the three months ended March 31, 2018
Exhibit 99.3	Fiat Chrysler Automobiles N.V. Supplemental information as of and for the three months ended March 31, 2018

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



Date: April 27, 2018	FIAT CHRYSLER AUTOMOBILES N.V.


	By:	/s/ Richard K. Palmer
		Name: Richard K. Palmer
		Title: Chief Financial Officer

Index of Exhibits



Exhibit Number	Description of Exhibit
99.1	Fiat Chrysler Automobiles N.V. Interim Report as of and for the three months ended March 31, 2018
99.2	Fiat Chrysler Automobiles N.V. Supplemental information as of and for the three months ended March 31, 2018
99.3	Fiat Chrysler Automobiles N.V. Supplemental information as of and for the three months ended March 31, 2018

Exhibit 99.1 FCA NV 2018.03.31 Interim Report

Exhibit 99.1

https://cdn.kscope.io/62eecfa366f28322184b6d7ad6c2d681-fcalogohigha03.jpg

Interim Report

As of and for the three months ended March 31, 2018

TABLE OF CONTENTS



		Page

	CERTAIN DEFINED TERMS	3
	MANAGEMENT DISCUSSION AND ANALYSIS	5
	Highlights	5
	Non-GAAP Financial Measures	6
	Group Results	8
	Results by Segment	13
	Liquidity and Capital Resources	20
	Risks and Uncertainties	23
	Outlook	24
	INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND NOTES AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 2018	25
	Interim Condensed Consolidated Income Statement	26
	Interim Condensed Consolidated Statement of Comprehensive Income	27
	Interim Condensed Consolidated Statement of Financial Position	28
	Interim Condensed Consolidated Statement of Cash Flows	29
	Interim Condensed Consolidated Statement of Changes in Equity	30
	Notes to the Interim Condensed Consolidated Financial Statements	31
	1. Basis of preparation	31
	2. Scope of consolidation	41
	3. Net revenues	42
	4. Net financial expenses	43
	5. Tax expense	43
	6. Goodwill and intangible assets with indefinite useful lives	43
	7. Trade and other receivables	44
	8. Inventories	45
	9. Share-based compensation	46
	10. Employee benefits liabilities	47
	11. Provisions	47
	12. Debt	48
	13. Other liabilities	48
	14. Fair value measurement	49
	15. Related party transactions	52
	16. Guarantees granted, commitments and contingent liabilities	53
	17. Equity	54
	18. Earnings per share	55
	19. Segment reporting	56
	20. Subsequent events	58

CERTAIN DEFINED TERMS

In this Interim Report, unless otherwise specified, the terms “we”, “our”, “us”, the “Company”, the “Group”, and “FCA” refer to Fiat Chrysler Automobiles N.V., together with its subsidiaries, or any one or more of them, as the context may require.

All references in this Interim Report to “Euro” and “€” refer to the currency issued by the European Central Bank. The Group’s financial information is presented in Euro. All references to “U.S. Dollars”, “U.S. Dollar”, “U.S.$” and “$” refer to the currency of the United States of America (or “U.S.”).

Forward-Looking Statements

Statements contained in this Interim Report, particularly those regarding possible or assumed future performance, competitive strengths, costs, dividends, reserves and growth of FCA, industry growth and other trends and projections and estimated company earnings are “forward-looking statements” that contain risks and uncertainties. In some cases, words such as “may”, “will”, “expect”, “could”, “should”, “intend”, “estimate”, “anticipate”, “believe”, “outlook”, “continue”, “remain”, “on track”, “target”, “objective”, “goal”, “plan”, “design”, “forecast”, “projection”, “prospects”, or similar terms are used to identify forward-looking statements. These forward-looking statements reflect the respective current views of the Group with respect to future events and involve significant risks and uncertainties that could cause actual results to differ materially.

These factors include, without limitation:


•	our ability to maintain vehicle shipment volumes;


•	changes in the global financial markets, general economic environment and changes in demand for automotive products, which is subject to cyclicality;


•	changes in local economic and political conditions, including with regard to trade policy, the enactment of tax reforms or other changes in tax laws and regulations;


•	our ability to expand certain of our brands globally;


•	our ability to offer innovative, attractive products;


•	various types of claims, lawsuits, governmental investigations and other contingent obligations against us, including product liability and warranty claims and environmental claims, governmental investigations and lawsuits;


•	material operating expenditures in relation to compliance with environmental, health and safety regulations;


•	the high level of competition in the automotive industry, which may increase due to consolidation;


•	exposure to shortfalls in our defined benefit pension plans;


•	the ability to provide or arrange for access to adequate financing for the Group's dealers and retail customers, and associated risks related to financial services companies;


•	our ability to access funding to execute our business plan and improve our business, financial condition and results of operations;


•	a significant malfunction, disruption or security breach compromising our information technology systems or the electronic control systems contained in our vehicles;


•	our ability to realize anticipated benefits from joint venture arrangements;


•	disruptions arising from political, social and economic instability;


•	risks associated with our relationships with employees, dealers and suppliers;


•	increases in costs, disruptions of supply or shortages of raw materials;


•	developments in labor and industrial relations and developments in applicable labor laws;


•	exchange rate fluctuations, interest rate changes, credit risk and other market risks;


•	political and civil unrest;


•	earthquakes or other disasters; and


•	other factors discussed elsewhere in this Interim Report.

Furthermore, in light of the inherent difficulty in forecasting future results, any estimates or forecasts of particular periods that are provided in this report are uncertain. We expressly disclaim and do not assume any liability in connection with any inaccuracies in any of the forward-looking statements in this report or in connection with any use by any third party of such forward-looking statements. Actual results could differ materially from those anticipated in such forward-looking statements. We do not undertake an obligation to update or revise publicly any forward-looking statements.

Additional factors which could cause actual results and developments to differ from those expressed or implied by the forward-looking statements are included in the section — Risks and Uncertainties of this Interim Report.

Further information concerning the Group and its businesses, including factors that could materially affect the Company's financial results, is included in the Company's reports and filings with the U.S. Securities and Exchange Commission (“SEC”), the Netherlands Authority for the Financial Markets (stichting Autoriteit Financiële Markten, (the “AFM”), Borsa Italiana S.p.A. and Consob (collectively, the “CONSOB”).

MANAGEMENT DISCUSSION AND ANALYSIS

Highlights



	Three months ended March 31
(€ million, except shipments, which are in thousands of units, and per share amounts)	2018	2017
Combined shipments⁽¹⁾	1,204	1,145
Consolidated shipments⁽²⁾	1,151	1,078
Net revenues	27,027	27,719
Adjusted EBIT⁽³⁾	1,611	1,535
Net profit	1,021	641
Adjusted net profit⁽⁴⁾	1,038	671
Earnings per share⁽⁵⁾
Basic earnings per share (€)	0.66	0.42
Diluted earnings per share (€)	0.65	0.41



(€ million)	At March 31, 2018		At December 31, 2017
Net debt⁽⁶⁾	(3,903	)	(4,666	)
Of which: Net industrial debt⁽⁶⁾	(1,313	)	(2,390	)
Total Equity	21,704		20,987
Equity attributable to owners of the parent	21,523		20,819
Available liquidity⁽⁷⁾	19,394		20,377

______________________________________________________________________________________________________________________________

(1) Combined shipments include shipments by the Group's consolidated subsidiaries and unconsolidated joint ventures.

(2) Consolidated shipments only include shipments by the Group's consolidated subsidiaries.

(3) Refer to sections —Non-GAAP measures, Group Results and Results by Segment in this Interim Report for further discussion.

(4) Refer to sections —Non-GAAP measures and Group Results in this Interim Report for further discussion.

(5) Refer to Note 18, Earnings per share, in the Interim Condensed Consolidated Financial Statements included elsewhere in this Interim Report.

(6) Refer to sections —Non-GAAP measures and Liquidity and Capital Resources in this Interim Report for further discussion.

(7) Refer to section —Liquidity and Capital Resources in this Interim Report for further discussion.

Non-GAAP Financial Measures

We monitor our operations through the use of several non-generally accepted accounting principles (“non-GAAP”) financial measures: Net debt, Net industrial debt, Adjusted Earnings Before Interest and Taxes (“Adjusted EBIT”), Adjusted net profit and certain information provided on a constant exchange rate (“CER”) basis. We believe that these non-GAAP financial measures provide useful and relevant information regarding our operating results and enhance the overall ability to assess our financial performance and financial position. They provide us with comparable measures which facilitate management’s ability to identify operational trends, as well as make decisions regarding future spending, resource allocations and other operational decisions. These and similar measures are widely used in the industry in which we operate, however, these financial measures may not be comparable to other similarly titled measures of other companies and are not intended to be substitutes for measures of financial performance and financial position as prepared in accordance with both International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”) as well as IFRS as adopted by the European Union.

Net debt and Net industrial debt. We believe Net debt is useful in providing a measure of the Group’s total indebtedness after consideration of cash and cash equivalents and current securities.

Due to different sources of cash flows used for the repayment of the financial debt between industrial activities and financial services (by cash from operations for industrial activities and by collection of financial receivables for financial services) and the different business structure and leverage implications, we provide a separate analysis of Net debt between industrial activities and financial services.

The division between industrial activities and financial services represents a sub-consolidation based on the core business activities (industrial or financial services) of each Group company. The sub-consolidation for industrial activities also includes companies that perform centralized treasury activities, such as raising funding in the market and financing Group companies, but do not, however, provide financing to third parties. Financial services includes companies that provide retail and dealer financing as well as leasing and rental services in support of the mass-market vehicle brands in certain geographical segments and for the Maserati luxury brand. In addition, activities of financial services include providing factoring services to industrial activities, as an alternative to factoring from third parties. Operating results of such financial services activities are included within the respective segment in which they operate.

Net industrial debt (i.e., Net debt of industrial activities) is management’s primary measure for analyzing our financial leverage and capital structure and is one of the key targets used to measure our performance. Net industrial debt is computed as: debt plus derivative financial liabilities related to industrial activities less (i) cash and cash equivalents, (ii) certain current debt securities, (iii) current financial receivables from Group or jointly controlled financial services entities and (iv) derivative financial assets and collateral deposits; therefore, debt, cash and cash equivalents and other financial assets/liabilities pertaining to financial services entities are excluded from the computation of Net industrial debt. Net industrial debt should not be considered as a substitute for cash flows or other financial measures under IFRS; in addition, Net industrial debt depends on the amount of cash and cash equivalents at each balance sheet date, which may be affected by the timing of monetization of receivables and the payment of accounts payable, as well as changes in other components of working capital, which can vary from period to period due to, among other things, cash management initiatives and other factors, some of which may be outside of the Group’s control. Net industrial debt should therefore be evaluated alongside these other measures as reported under IFRS for a complete view of the Company’s capital structure and liquidity. Refer to the section —Liquidity and Capital Resources for further information and the reconciliation of these non-GAAP measures to Debt, which is the most directly comparable measure included in our Consolidated Statement of Financial Position.

Adjusted EBIT: excludes certain adjustments from Net profit including gains/(losses) on the disposal of investments, restructuring, impairments, asset write-offs and unusual income/(expenses) that are considered rare or discrete events that are infrequent in nature, and also excludes Net financial expenses and Tax expense/(benefit).

Adjusted EBIT is used for internal reporting to assess performance and as part of the Group's forecasting, budgeting and decision making processes as it provides additional transparency to the Group's core operations. We believe this non- GAAP measure is useful because it excludes items that we do not believe are indicative of the Group’s ongoing operating performance and allows management to view operating trends, perform analytical comparisons and benchmark performance between periods and among our segments. We also believe that Adjusted EBIT is useful for analysts and investors to understand how management assesses the Group’s ongoing operating performance on a consistent basis. In addition, Adjusted EBIT is one of the metrics used in the determination of the annual performance bonus for the Chief Executive Officer of the Group and other eligible employees, including members of the Group Executive Council.

Refer to the section — Group Results and — Results by Segment below for further discussion and for a reconciliation of this non-GAAP measure to Net profit from continuing operations, which is the most directly comparable measure included in our Consolidated Income Statement. Adjusted EBIT should not be considered as a substitute for Net profit, cash flow or other methods of analyzing our results as reported under IFRS.

Adjusted net profit: is calculated as Net profit/(loss) excluding post-tax impacts of the same items excluded from Adjusted EBIT, as well as financial income/(expenses) and tax income/(expenses) considered rare or discrete events that are infrequent in nature.

We believe this non-GAAP measure is useful because it also excludes items that we do not believe are indicative of the Group’s ongoing operating performance and provides investors with a more meaningful comparison of the Group's ongoing operating performance. In addition, Adjusted net profit is one of the metrics used in the determination of the annual performance bonus and the achievement of certain performance objectives established under the terms of the equity incentive plan for the Chief Executive Officer of the Group and other eligible employees, including members of the Group Executive Council.

Refer to the section — Group Results below for further discussion and for a reconciliation of this non-GAAP measure to Net profit, which is the most directly comparable measure included in our Consolidated Income Statement. Adjusted net profit should not be considered as a substitute for Net profit, cash flow or other methods of analyzing our results as reported under IFRS.

Constant Currency Information: The discussions within the sections — Group Results and — Results by Segment below includes information about our results at constant exchange rates (“CER”), which is calculated by applying the prior-year average exchange rates to translate current financial data expressed in local currency in which the relevant financial statements are denominated (refer to Note 1, Basis of Preparation in the Interim Condensed Consolidated Financial Statements included elsewhere in this Interim Report for the exchange rates applied). Although we do not believe that this non-GAAP measure is a substitute for GAAP measures, we believe that results excluding the effect of currency fluctuations provide additional useful information to investors regarding the operating performance and trends in our business on a local currency basis.

Group Results

The following is a discussion of the Group's results of operations for the three months ended March 31, 2018 compared to the three months ended March 31, 2017.



	Three months ended March 31
(€ million)	2018		2017
Net revenues	€	27,027	€	27,719
Cost of revenues	23,057		23,588
Selling, general and other costs	1,624		1,841
Research and development costs	874		846
Result from investments	87		96
Restructuring costs	3		35
Net financial expenses	309		436
Profit before taxes	1,247		1,069
Tax expense	226		428
Net profit	€	1,021	€	641
Net profit attributable to:
Owners of the parent	€	1,016	€	637
Non-controlling interests	€	5	€	4

Net revenues



					Increase/(Decrease)
	Three months ended March 31				2018 vs. 2017
(€ million)	2018		2017		% Actual		% CER
Net revenues	€	27,027	€	27,719	(2.5	)%	8.6	%

See — Results by Segment below for a discussion of Net revenues for each of our six reportable segments (NAFTA, LATAM, APAC, EMEA, Maserati and Components).

Cost of revenues



							Increase/(Decrease)
	Three months ended March 31						2018 vs. 2017
(€ million)	2018			2017			% Actual		% CER
Cost of revenues	€	23,057		€	23,588		(2.3	)%	8.8	%
Cost of revenues as % of Net revenues	85.3		%	85.1		%

The decrease in Cost of revenues for the three months ended March 31, 2018 compared to the corresponding period in 2017 was primarily related to (i) foreign currency translation effects and (ii) vehicle mix, which were partially offset by (iii) higher volumes, (iv) higher product costs for content enhancements and (v) higher manufacturing costs.

The decrease in Costs of revenues was primarily attributable to decreases in NAFTA, APAC and Maserati, which were partially offset by an increase in LATAM. EMEA Cost of revenues for the three months ended March 31, 2018 was substantially in line compared to the corresponding period in 2017.

The decrease in Cost of revenues in NAFTA was primarily attributable to foreign currency translation effects and vehicle mix, which were partially offset by higher volumes, higher manufacturing and launch costs and higher product costs for content enhancements. The decrease in Cost of revenues in APAC was primarily attributable to foreign currency translation effects and vehicle mix, which were partially offset by higher volumes. The decrease in Cost of revenues in Maserati was primarily attributable to lower volumes and foreign currency translation effects.

The increase in Cost of revenues in LATAM was primarily attributable to higher volumes and vehicle mix, which were partially offset by foreign currency translation effects.

Selling, general and other costs



							Increase/(Decrease)
	Three months ended March 31						2018 vs. 2017
(€ million)	2018			2017			% Actual		% CER
Selling, general and other costs	€	1,624		€	1,841		(11.8	)%	(2.7	)%
Selling, general and other costs as % of Net revenues	6.0		%	6.6		%

Selling, general and other costs include advertising, personnel and other costs. Advertising costs accounted for 46.3 percent and 44.7 percent of total Selling, general and other costs for the three months ended March 31, 2018 and 2017, respectively.

The decrease in Selling, general and other costs for the three months ended March 31, 2018 compared to the corresponding period in 2017 was primarily due to foreign currency translation effects and lower advertising and administrative costs in NAFTA.

Research and development costs



					Increase/(Decrease)
	Three months ended March 31				2018 vs. 2017
(€ million)	2018		2017		% Actual		% CER
Research and development expenditures expensed	€	462	€	429	7.7	%	19.3	%
Amortization of capitalized development expenditures	412		414		(0.5	)%	8.0	%
Impairment and write-off of capitalized development expenditures	—		3		n.m.		n.m.
Total Research and development costs	€	874	€	846	3.3	%	13.4	%

______________________________________________________________________________________________________________________________

n.m. - number is not meaningful



	Three months ended March 31
	2018		2017
Research and development expenditures expensed as % of Net revenues	1.7	%	1.6	%
Amortization of capitalized development expenditures as % of Net revenues	1.5	%	1.5	%
Impairment and write-off of capitalized development expenditures as % of Net revenues	—	%	—	%
Total Research and development cost as % of Net revenues	3.2	%	3.1	%

The amortization of capitalized development expenditures during the three months ended March 31, 2018 was substantially in line with the corresponding period in 2017, with higher amortization in NAFTA due to new models largely offset by foreign exchange translation effects.

Total research and development expenditures during the three months ended March 31, 2018 and 2017 were as follows:



	Three months ended March 31						Increase/(Decrease)
(€ million)	2018			2017			2018 vs. 2017
Capitalized development expenditures	€	460		€	674		(31.8	)%
Research and development expenditures expensed	462			429			7.7	%
Total Research and development expenditures	€	922		€	1,103		(16.4	)%
Capitalized development expenditures as % of Total Research and development expenditures	49.9		%	61.1		%
Total Research and development expenditures as % of Net revenues	3.4		%	4.0		%

The decrease in capitalized development expenditures during the three months ended March 31, 2018 compared to the corresponding period in 2017 mainly related to operations in NAFTA due to program timing.

Net financial expenses



	Three months ended March 31				Increase/(Decrease)
(€ million)	2018		2017		2018 vs. 2017
Net financial expenses	€	309	€	436	(29.1	)%

The decrease in Net financial expenses during the three months ended March 31, 2018 compared to the corresponding period in 2017 was primarily due to year-over-year reduction in gross debt.

Tax expense



	Three months ended March 31						Increase/(Decrease)
(€ million)	2018			2017			2018 vs. 2017
Tax expense	€	226		€	428		(47.2	)%
Effective tax rate	18		%	40		%

The decrease in the effective tax rate was primarily due to the impact of the December 2017 U.S. tax reform.

Net profit



	Three months ended March 31				Increase/(Decrease)
(€ million)	2018		2017		2018 vs. 2017
Net profit	€	1,021	€	641	59.3	%

The increase in Net profit during the three months ended March 31, 2018 compared to the corresponding period in 2017 was primarily due to lower net financial charges and lower tax expense, as well as improved operating performance (excluding negative foreign exchange translation effects) in the NAFTA, LATAM and EMEA segments, partially offset by decreases in APAC and Maserati.

Adjusted EBIT



							Increase/(Decrease)
	Three months ended March 31						2018 vs. 2017
(€ million)	2018			2017			% Actual		% CER
Adjusted EBIT	€	1,611		€	1,535		5.0	%	19.5	%
Adjusted EBIT margin (%)	6.0		%	5.5		%	+50 bps

The following chart presents the change in Adjusted EBIT by segment for the three months ended March 31, 2018 compared to the corresponding period in 2017.

https://cdn.kscope.io/62eecfa366f28322184b6d7ad6c2d681-fcagroupq12018ebit.jpg

Refer to — Results by Segment below for a discussion of Adjusted EBIT for each of our six reportable segments (NAFTA, LATAM, APAC, EMEA, Maserati and Components).

The following table is the reconciliation of Net profit, which is the most directly comparable measure included in the Consolidated Income Statement, to Adjusted EBIT:



	Three months ended March 31
(€ million)	2018			2017
Net profit	€	1,021		€	641
Tax expense	226			428
Net financial expenses	309			436
Adjustments:
U.S. special bonus payment	115			—
Restructuring costs	3			35
Recovery of costs for recall - contested with supplier	(63		)	—
Other	—			(5		)
Total Adjustments	55			30
Adjusted EBIT	€	1,611		€	1,535

During the three months ended March 31, 2018 Adjusted EBIT excluded adjustments primarily related to:


•	€115 million charge in relation to a special bonus payment, announced on January 11, 2018, to approximately 60,000 hourly and salaried employees in the United States, excluding senior management, as a result of the Tax Cuts and Jobs Act; and


•	€63 million gain from the partial recovery of amounts accrued in 2016 in relation to costs for a recall which were contested with a supplier.

During the three months ended March 31, 2017 Adjusted EBIT excluded adjustments primarily related to:


•	€35 million restructuring costs, which included €32 million of workforce restructuring costs in LATAM.

Adjusted net profit



	Three months ended March 31				Increase/(Decrease)
(€ million)	2018		2017		2018 vs. 2017
Adjusted net profit	€	1,038	€	671	54.7	%

The increase in Adjusted net profit during the three months ended March 31, 2018 compared to the corresponding period in 2017 was primarily due to lower net financial charges and lower tax expense, as described above.

The following table summarizes the reconciliation of Net profit, which is the most directly comparable measure included in the Consolidated Income Statement, to Adjusted net profit:



	Three months ended March 31
(€ million)	2018			2017
Net profit	€	1,021		€	641
Adjustments (as above)	55			30
Tax impact on adjustments	(38		)	—
Total adjustments, net of taxes	17			30
Adjusted net profit	€	1,038		€	671

During the three months ended March 31, 2018, Adjusted net profit excluded adjustments primarily related to:


•	€38 million benefit reflecting the tax impact on the items excluded from Adjusted EBIT above, which includes a €26 million reduction in the impact from the December 2017 U.S. tax reform.

During the three months ended March 31, 2017, there was no tax impact on the items excluded from Adjusted EBIT.

Results by Segment



	Net revenues						Adjusted EBIT						Consolidated Shipments
	Three months ended March 31
(€ million, except shipments which are in thousands of units)	2018			2017			2018			2017			2018	2017
NAFTA	€	16,413		€	17,100		€	1,216		€	1,241		646	609
LATAM	1,890			1,672			74			(20		)	132	101
APAC	619			666			10			21			19	16
EMEA	5,640			5,630			182			178			345	340
Maserati	754			949			86			107			9	12
Components	2,482			2,532			118			118			—	—
Other activities	154			185			(50		)	(55		)	—	—
Unallocated items & eliminations⁽¹⁾	(925		)	(1,015		)	(25		)	(55		)	—	—
Total	€	27,027		€	27,719		€	1,611		€	1,535		1,151	1,078

______________________________________________________________________________________________________________________________

(1) Primarily includes intercompany transactions which are eliminated in consolidation

The following is a discussion of Net revenues, Adjusted EBIT and shipments for each of our six reportable segments for the three months ended March 31, 2018 as compared to the three months ended March 31, 2017. We review changes in our results of operations with the following operational drivers:


•	Volume: reflects changes in products sold to our customers, primarily dealers and fleet customers. Change in volume is driven by industry volume, market share and changes in dealer stock levels. Vehicles manufactured and distributed by our unconsolidated joint ventures are not included within volume;


•	Mix: generally reflects the changes in product mix, including mix among vehicle brands and models, as well as changes in regional market and distribution channel mix, including mix between retail and fleet customers;


•	Net price: primarily reflects changes in prices to our customers including higher pricing related to content enhancement, net of discounts, price rebates and other sales incentive programs, as well as related foreign currency transaction effects;


•	Industrial costs: primarily include cost changes to manufacturing and purchasing of materials that are associated with content and enhancement of vehicle features, as well as industrial efficiencies and inefficiencies, recall campaign and warranty costs, depreciation and amortization, research and development costs and related foreign currency transaction effects;


•	Selling, general and administrative costs (“SG&A”): primarily include costs for advertising and promotional activities, purchased services, information technology costs and other costs not directly related to the development and manufacturing of our products; and


•	Other: includes other items not mentioned above, such as foreign currency exchange translation and results from joint ventures and associates.

NAFTA



							Increase/(Decrease)
	Three months ended March 31						2018 vs. 2017
	2018			2017			% Actual		% CER
Shipments (thousands of units)	646			609			6.1	%
Net revenues (€ million)	€	16,413		€	17,100		(4.0	)%	10.3	%
Adjusted EBIT (€ million)	€	1,216		€	1,241		(2.0	)%	13.8	%
Adjusted EBIT margin (%)	7.4		%	7.3		%	+10 bps

The Group's market share⁽¹⁾ in NAFTA of 11.9 percent in the three months ended March 31, 2018 reflected a decrease of 30 bps from 12.2 percent for the same period in 2017. The U.S. market share⁽¹⁾ of 12.3 percent reflected a decrease of 20 bps from 12.5 percent in the same period in 2017, with retail share increasing to 12.0 percent, up 30 bps, with U.S. fleet mix reducing to 23 percent of total sales, down from 26 percent.

Shipments

The increase in NAFTA shipments in the three months ended March 31, 2018 compared to the same period in 2017 was mainly due to increased shipments of the all-new Jeep Wrangler and Compass, as well as the Chrysler Pacifica, which were partially offset by lower fleet volumes.

Net revenues

NAFTA Net revenues in the three months ended March 31, 2018 decreased compared to the same period in 2017, primarily due to €2.5 billion from negative foreign currency translation effects. This was partially offset by €1.4 billion from higher volumes and vehicle mix and €0.3 billion from positive net pricing on existing vehicles and new launches.

Adjusted EBIT

The following chart reflects the change in NAFTA Adjusted EBIT by operational driver for the three months ended March 31, 2018 compared to the same period in 2017.

https://cdn.kscope.io/62eecfa366f28322184b6d7ad6c2d681-naftaq12018ebit.jpg

The decrease in NAFTA Adjusted EBIT for the three months ended March 31, 2018 compared to the same period in 2017 was mainly attributable to:


•	higher industrial costs, which mainly related to launch costs of €0.3 billion and increased product content, as well as depreciation and amortization related to new vehicles; and


•	negative foreign currency translation effects.

These were partially offset by:


•	higher shipments and favorable vehicle and market mix, as described above;


•	positive net pricing; and


•	lower selling, general and administrative expenses due to efficiencies and the timing of advertising.

_______________________________________________________________________________________________________________________________

(1) Our estimated market share data presented are based on management’s estimates of industry sales data, which use certain data provided by third-party sources, including IHS Markit and Ward’s Automotive.

LATAM



							Increase/(Decrease)
	Three months ended March 31						2018 vs. 2017
	2018			2017			% Actual		% CER
Shipments (thousands of units)	132			101			30.7	%	—
Net revenues (€ million)	€	1,890		€	1,672		13.0	%	34.7	%
Adjusted EBIT (€ million)	€	74		€	(20	)	n.m.		n.m.
Adjusted EBIT margin (%)	3.9		%	(1.2		)%	n.m.		—

_______________________________________________________________________________________________________________________________

n.m. = number not meaningful

The Group's market share⁽¹⁾ in LATAM decreased to 11.9 percent in the three months ended March 31, 2018 from 12.2 percent in the same period in 2017. The Group's market share in Brazil and Argentina in the three months ended March 31, 2018 decreased to 16.3 percent from 17.8 percent and increased to 12.6 percent from 11.1 percent respectively compared to the corresponding period in 2017.

Shipments

The increase in LATAM shipments in three months ended March 31, 2018 compared to the same period in 2017 was mainly due to the all-new Fiat Argo and Cronos and Fiat Strada and Pernambuco-built vehicles, partially offset by discontinued vehicles.

Net revenues

The increase in LATAM Net revenues in the three months ended March 31, 2018 compared to the same period in 2017 was primarily attributable to €0.5 billion from higher shipments and favorable vehicle mix driven by new models, which was partially offset by €0.4 billion from negative foreign currency translation effects.

Adjusted EBIT

The following chart reflects the change in LATAM Adjusted EBIT by operational driver for the three months ended March 31, 2018 compared to the same period in 2017.

https://cdn.kscope.io/62eecfa366f28322184b6d7ad6c2d681-latamq12018ebit.jpg

_______________________________________________________________________________________________________________________________

The increase in LATAM Adjusted EBIT for the three months ended March 31, 2018 compared to the same period in 2017 was mainly attributable to:


•	higher volumes and favorable mix, as described above; and


•	positive net pricing, including the impact of lower indirect taxes in Brazil.

These were partially offset by:


•	higher advertising costs relating to new vehicles; and


•	unfavorable foreign currency translation effects.

APAC



							Increase/(Decrease)
	Three months ended March 31						2018 vs. 2017
	2018			2017			% Actual		% CER
Combined shipments (thousands of units)	56			66			(15.2	)%	—
Consolidated shipments (thousands of units)	19			16			18.8	%	—
Net revenues (€ million)	€	619		€	666		(7.1	)%	3.0	%
Adjusted EBIT (€ million)	€	10		€	21		(52.4	)%	(55.8	)%
Adjusted EBIT margin (%)	1.6		%	3.2		%	-160 bps		—

_______________________________________________________________________________________________________________________________

n.m. = number not meaningful

We locally produce and distribute the Jeep Cherokee, Jeep Renegade, all-new Jeep Compass through the 50% owned GAC Fiat Chrysler Automobiles Co (“GAC FCA JV”). The results of the GAC FCA JV are accounted for using the equity method, with recognition of our share of the net income of the joint venture in the line item “Result from investment” within the Consolidated Income Statement. We also produce the all-new Jeep Compass through our joint operation with Fiat India Automobiles Private Limited (“FIAPL”) and we recognize our related interest in the joint operation on a line by line basis.

Shipments of our consolidated subsidiaries, which includes vehicles produced by FIAPL, are reported in both consolidated and combined shipments. Shipments of the GAC FCA JV joint venture are not included in consolidated shipments and are only in combined shipments.

Shipments

For the three months ended March 31, 2018, consolidated shipments increased mainly due to the all-new Jeep Compass.

For the three months ended March 31, 2018, combined shipments decreased as a result of lower shipments from the GAC FCA JV.

Net revenues

The decrease in APAC Net revenues in the three months ended March 31, 2018 compared to the same period in 2017 was primarily due to €0.1 billion from unfavorable vehicle mix and foreign exchange effects, which were partially offset by higher consolidated shipments, driven by the all-new Jeep Compass.

Adjusted EBIT

The following chart reflects the change in APAC Adjusted EBIT by operational driver for the three months ended March 31, 2018 compared to the same period in 2017.

https://cdn.kscope.io/62eecfa366f28322184b6d7ad6c2d681-apacq12018ebit.jpg

APAC Adjusted EBIT in the three months ended March 31, 2018 decreased compared to the same period in 2017 primarily due to:


•	higher marketing costs, related to Alfa Romeo commercial launch activities; and


•	unfavorable results from the GAC FCA JV (included in Other above).

These were partially offset by:


•	higher consolidated vehicle shipments, as described above; and


•	lower industrial costs.

EMEA



							Increase/(Decrease)
	Three months ended March 31						2018 vs. 2017
	2018			2017			% Actual		% CER
Shipments (thousands of units)	345			340			1.5	%	—
Net revenues (€ million)	€	5,640		€	5,630		0.2	%	0.9	%
Adjusted EBIT (€ million)	€	182		€	178		2.2	%	1.0	%
Adjusted EBIT margin (%)	3.2		%	3.2		%	—		—

During the three months ended March 31, 2018, the Group's market share⁽¹⁾ in the European Union for passenger cars decreased 30 bps to 6.7 percent from 7.0 percent in the same period in 2017, while the Group's market share for light commercial vehicles increased by 50 bps to 11.3 percent from 10.8 percent.

Shipments

EMEA shipments in the three months ended March 31, 2018 were substantially in line with shipments in the three months ended March 31, 2017.

Net revenues

EMEA Net revenues in the three months ended March 31, 2018 were substantially in line with Net revenues in the same period in 2017.

Adjusted EBIT

The following chart reflects the change in EMEA Adjusted EBIT by operational driver for the three months ended March 31, 2018 compared to the same period in 2017.

https://cdn.kscope.io/62eecfa366f28322184b6d7ad6c2d681-emeaq12018ebit.jpg

The increase in EMEA Adjusted EBIT in the three months ended March 31, 2018 compared to the same period in 2017 was primarily attributable to:


•	lower industrial costs, primarily due to purchasing and manufacturing efficiencies, including positive foreign currency transaction effects; and


•	lower selling, general and administrative expenses due to efficiencies.

These were partially offset by:


•	negative net pricing, primarily due to higher incentives in certain markets.

______________________________________________________________________________________________________________________________

(1) Our estimated market share data is presented based on the European Automobile Manufacturers Association (ACEA) Registration Databases and national Registration Offices databases.

Maserati



							Increase/(Decrease)
	Three months ended March 31						2018 vs. 2017
	2018			2017			% Actual		% CER
Shipments (thousands of units)	9.4			11.9			(21.0	)%	—
Net revenues (€ million)	€	754		€	949		(20.5	)%	(15.4	)%
Adjusted EBIT (€ million)	€	86		€	107		(19.6	)%	(18.8	)%
Adjusted EBIT margin (%)	11.4		%	11.3		%	+10 bps		—

Shipments

The decrease in Maserati shipments in the three months ended March 31, 2018 compared to the same period in 2017 was primarily attributable to lower Levante volumes, partially offset by higher GranTurismo and GranCabrio shipments.

Net revenues

The decrease in Maserati Net revenues in the three months ended March 31, 2018 compared to the same period in 2017 was primarily due to lower shipments and negative foreign currency translation effects, partially offset by positive market mix and net pricing.

Adjusted EBIT

The decrease in Maserati Adjusted EBIT in the three months ended March 31, 2018 compared to the same period in 2017 was primarily due to:


•	negative foreign exchange effects; and


•	lower shipments.

These were partially offset by:


•	industrial and SG&A cost efficiencies; and


•	favorable market mix.

Components



							Increase/(Decrease)
	Three months ended March 31						2018 vs. 2017
	2017			2016			% Actual		% CER
Net revenues (€ million)	€	2,482		€	2,532		(2.0	)%	4.0	%
Adjusted EBIT (€ million)	€	118		€	118		—	%	8.1	%
Adjusted EBIT margin (%)	4.8		%	4.7		%	+10 bps		—

Net revenues

Net revenues in the three months ended March 31, 2018 were largely in line with the same period in 2017, with higher volumes across all three businesses partially offset by unfavorable foreign exchange effects.

Adjusted EBIT

Adjusted EBIT in the three months ended March 31, 2018 was largely in line with the same period in 2017.

Liquidity and Capital Resources

Available Liquidity

The following table summarizes our total available liquidity:



(€ million)	At March 31, 2018		At December 31, 2017
Cash, cash equivalents and current debt securities⁽¹⁾	€	11,751	€	12,814
Undrawn committed credit lines⁽²⁾	7,643		7,563
Available liquidity⁽³⁾	€	19,394	€	20,377

______________________________________________________________________________________________________________________________

(1) Current debt securities are comprised of short term or marketable securities which represent temporary investments that do not satisfy all the requirements to be classified as cash equivalents as they may not be readily convertible to cash, or they are subject to significant risk of change in value (even if they are short-term in nature or marketable).

(2) Excludes the undrawn €0.1 billion long-term dedicated credit lines available to fund scheduled investments at March 31, 2018 (€0.1 billion was undrawn at December 31, 2017).

(3) The majority of our liquidity is available to our treasury operations in Europe and U.S; however, liquidity is also available to certain subsidiaries which operate in other areas. Cash held in such countries may be subject to restrictions on transfer depending on the foreign jurisdictions in which these subsidiaries operate. Based on our review of such transfer restrictions in the countries in which we operate and maintain material cash balances, we do not believe such transfer restrictions had an adverse effect on the Group’s ability to meet its liquidity requirements at the dates above.

Available liquidity at March 31, 2018 decreased €1.0 billion from December 31, 2017, primarily as a result of the repayment of a note at maturity with a principal amount of €1,250 million, negative foreign exchange translation effects of €0.2 billion, partially offset by €0.6 billion positive cash flows from operating activities net of cash used in investing activities. Our available liquidity is subject to intra-month and seasonal fluctuations resulting from business and collection-payment cycles as well as to changes in foreign exchange conversion rates. Refer to the section — Cash Flows below for additional information regarding the change in cash and cash equivalents.

Our liquidity is principally denominated in U.S. Dollar and in Euro, with the remainder being distributed in various countries and denominated in the relevant local currencies. Out of the total cash, cash equivalents and current debt securities available at March 31, 2018, €7.4 billion, or 63.0 percent, were denominated in U.S. Dollar (€7.0 billion, or 54.7 percent, at December 31, 2017) and €1.5 billion, or 12.8 percent, were denominated in Euro (€2.3 billion, or 18.0 percent, at December 31, 2017).

At March 31, 2018, undrawn committed credit lines totaling €7.6 billion included the €6.25 billion syndicated revolving credit facility, as described below, and €1.4 billion of other revolving credit facilities. At December 31, 2017, undrawn committed credit lines totaling €7.6 billion included the €6.25 billion syndicated revolving credit facility, as described below, and approximately €1.3 billion of other revolving credit facilities.

Capital Market and Other Financing Transactions

Medium Term Note Programme

In March 2018, the Group repaid a note at maturity with a principal amount of €1,250 million that was issued through the Medium Term Note (“MTN”) Programme.

Revolving Credit Facilities

In March 2018, the Group amended its syndicated revolving credit facility originally signed in June 2015 and previously amended in March 2017 (as amended, the “RCF”). The amendment extended the RCF’s final maturity to March 2023. The RCF, which is available for general corporate purposes and for the working capital needs of the Group, is structured in two tranches: €3.125 billion, with a 37-month tenor and two extension options of 1-year and of 11-months exercisable on the first and second anniversary of the amendment signing date, respectively, and €3.125 billion, with a 60-month tenor. The amendment was accounted for as a debt modification and, as a result, the new costs associated with the March 2018 amendment as well as the remaining unamortized debt issuance costs related to the original €5.0 billion RCF and the previous March 2017 amendment will be amortized over the life of the amended RCF.

Cash Flows

The following table summarizes the cash flows from operating, investing and financing activities for the three months ended March 31, 2018 and 2017. Refer to our Interim Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2018 and 2017 included elsewhere in this Interim Report for additional detail.



	Three months ended March 31
(€ million)	2018			2017
Cash flows from operating activities	€	2,348		€	1,577
Cash flows used in investing activities	(1,773		)	(1,921		)
Cash flows used in financing activities	(1,390		)	(2,970		)
Translation exchange differences	(244		)	(94		)
Total change in cash and cash equivalents	(1,059		)	(3,408		)
Cash and cash equivalents at beginning of the period	12,638			17,318
Cash and cash equivalents at end of the period	€	11,579		€	13,910

Operating Activities

For the three months ended March 31, 2018, cash flows from operating activities were the result of Net profit of €1,021 million primarily adjusted: (1) to add back €1,545 million for depreciation and amortization expense, and (2) for the negative effect of the change in working capital of €399 million, which was primarily driven by (i) an increase of €1,007 million in inventories mainly due to the launch of new models in NAFTA and LATAM as well as an increase in production volumes compared to year-end December 2017, leading to higher levels of work-in-progress and raw materials, (ii) an increase of €174 million in trade receivables and (iii) an increase of €216 million in other receivables net of other payables, mainly due to an increase in indirect tax receivables, which were partially offset by (iv) an increase of €998 million in trade payables mainly due to increased production volumes in NAFTA compared to year-end December 2017.

For the three months ended March 31, 2017, cash flows from operating activities were primarily the result of Net profit of €641 million adjusted: (1) to add back €1,600 million for depreciation and amortization expense and (2) for the negative effect of the change in working capital of €581 million, which was primarily driven by (i) an increase of €998 million in inventories mainly due to volume increase in EMEA and Maserati, (ii) an increase of €255 million in trade receivables primarily as a result of the limited plant activity in December 2016 due to the holiday shutdown and (iii) an increase of €237 million in other payables and receivables, partially offset by (iv) an increase of €909 million in trade payables mainly due to increased production volumes in NAFTA in March 2017 compared to December 2016.

Investing Activities

For the three months ended March 31, 2018, cash used in investing activities was primarily the result of €1,356 million of capital expenditures, including €460 million of capitalized development expenditures and an increase in receivables from financing activities of €437 million, which was mainly attributed to increased dealer financing.

For the three months ended March 31, 2017, cash used in investing activities was primarily the result of €2,231 million of capital expenditures, including €674 million of capitalized development costs, mainly related to the operations in NAFTA, and the proceeds received of €144 million from the sale of the investment in CNH Industrial N.V. (“CNHI”), which was recognized in the Change in securities line item within the Statement of Cash Flows (refer to Note 14, Fair Value Measurement, in the Interim Condensed Consolidated Financial Statements included elsewhere in this Interim Report).

Financing Activities

For the three months ended March 31, 2018, cash used in financing activities was primarily the result of the repayment of a note at maturity with a principal amount of €1,250 million that was issued through the MTN Programme.

For the three months ended March 31, 2017, cash used in financing activities was primarily the result of (1) the voluntary prepayment of the outstanding principal and accrued interest of U.S.$1,826 million (€1,721 million) of the FCA US Tranche B Term Loan due 2017 and (2) the repayment at maturity of a note under the MTN Programme with a principal amount of €850 million.

Net debt and Net industrial debt

The following table summarizes our Net debt and Net industrial debt at March 31, 2018 and December 31, 2017 and provides a reconciliation of Debt, the most directly comparable measure included in our Consolidated Statement of Financial Position, to Net debt.



	At March 31, 2018									At December 31, 2017
(€ million)	Industrial Activities			Financial Services			Consolidated			Industrial Activities			Financial Services			Consolidated
Third party debt (principal)	€	(14,814	)	€	(1,505	)	€	(16,319	)	€	(16,375	)	€	(1,647	)	€	(18,022	)
Capital market⁽¹⁾	(8,122		)	(420		)	(8,542		)	(9,443		)	(308		)	(9,751		)
Bank debt	(5,997		)	(731		)	(6,728		)	(6,219		)	(986		)	(7,205		)
Other debt⁽²⁾	(695		)	(354		)	(1,049		)	(713		)	(353		)	(1,066		)
Accrued interest and other adjustments⁽³⁾	81			(4		)	77			53			(2		)	51
Debt	(14,733		)	(1,509		)	(16,242		)	(16,322		)	(1,649		)	(17,971		)
Intercompany, net⁽⁴⁾	1,265			(1,265		)	—			844			(844		)	—
Current financial receivables from jointly-controlled financial services companies⁽⁵⁾	362			—			362			285			—			285
Debt, net of intercompany and current financial receivables from jointly-controlled financial services companies	(13,106		)	(2,774		)	(15,880		)	(15,193		)	(2,493		)	(17,686		)
Derivative financial assets/(liabilities), net and collateral deposits⁽⁶⁾	226			—			226			204			2			206
Current debt securities⁽⁷⁾	172			—			172			176			—			176
Cash and cash equivalents	11,395			184			11,579			12,423			215			12,638
Total Net debt	€	(1,313	)	€	(2,590	)	€	(3,903	)	€	(2,390	)	€	(2,276	)	€	(4,666	)

______________________________________________________________________________________________________________________________

(1) Includes notes (€8,104 million at March 31, 2018 and €9,422 million at December 31, 2017) and other debt instruments (€438 million at March 31, 2018 and €329 million at December 31, 2017) issued in financial markets, mainly from LATAM financial services companies.

(2) Includes asset backed financing, (i.e., sales of receivables for which de-recognition is not allowed under IFRS) (€374 million at March 31, 2018 and €360 million at December 31, 2017), arrangements accounted for as a lease under IFRIC 4-Determining whether an arrangement contains a lease, and other financial payables.

(3) Includes adjustments for fair value accounting on debt and net (accrued)/deferred interest as well as other amortizing cost adjustments.

(4) Net amount between industrial activities entities' financial receivables due from financial services entities (€1,390 million at March 31, 2018 and €983 million at December 31, 2017) and industrial activities entities' financial payables due to financial services entities (€125 million at March 31, 2018 and €139 million at December 31, 2017).

(5) Financial receivables due from FCA Bank.

(6) Fair value of derivative financial instruments (net positive €159 million at March 31, 2018 and net positive €145 million at December 31, 2017) and collateral deposits (€67 million at March 31, 2018 and €61 million at December 31, 2017).

(7) Excludes certain debt securities held pursuant to applicable regulations (€56 million at March 31, 2018 and €59 million at December 31, 2017).

At March 31, 2018, Net debt of €3,903 million was €763 million lower than Net debt of €4,666 million at December 31, 2017. Net industrial debt decreased by €1,077 million, reflecting cash flows from operating activities of €976 million net of €1,356 million of capital expenditures for the period (refer to -Cash Flows - Operating Activities, above).

Net debt from financial services increased by €314 million, primarily due to an increase in the receivables portfolio which was funded by an increase in intercompany debt.

Risks and Uncertainties

Except as noted below, the Group believes that the risks and uncertainties identified for the three months ended March 31, 2018 are in line with the main risks and uncertainties to which the Group is exposed and that were identified and discussed in Item 3D of the Group's Form 20-F for the year ended December 31, 2017 filed with the SEC on February 20, 2018, and the Annual Report for the year ended December 31, 2017 filed with the AFM also on February 20, 2018. Those risks and uncertainties should be read in conjunction with this Interim Report.

Regarding the risk factor, Our businesses are affected by global financial markets and general economic and other conditions over which we have little or no control, the Group adds the following:

In March 2018, the U.S. government announced the intent to implement significant tariffs on steel and aluminum imported from non-exempted countries. Although these tariffs are not expected to have a direct material impact on our business, they could result in a significant market-wide increase in the cost of steel and aluminum.

In addition, future retaliatory tariffs implemented by U.S. trading partners (as well as any subsequent response by the U.S.) could have a material adverse effect on our business, financial condition and results of operations. Retaliatory tariffs that directly impact our products could reduce consumer demand and/or make our products less profitable. In addition, a continued escalation in tariff activity between the U.S. and its major trading partners, including China, could negatively impact global economic activity, which could in turn reduce demand for our products.

Outlook

The Group confirms full-year guidance for 2018⁽¹⁾:



Net revenues	~ €125 billion
Adjusted EBIT	≥ €8.7 billion
Adjusted net profit	~ €5.0 billion
Net industrial cash	~ €4.0 billion

______________________________________________________________________________________________________________________________

(1) Amounts do not include any impacts from the previously announced potential spin-off of the Magneti Marelli business

INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND NOTES AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 2018

FIAT CHRYSLER AUTOMOBILES N.V. AND SUBSIDIARIES

INTERIM CONDENSED CONSOLIDATED INCOME STATEMENT

(in € million, except per share amounts)

(Unaudited)



		Three months ended March 31
	Note	2018		2017
Net revenues	3	€	27,027	€	27,719
Cost of revenues		23,057		23,588
Selling, general and other costs		1,624		1,841
Research and development costs		874		846
Result from investments		87		96
Restructuring costs		3		35
Net financial expenses	4	309		436
Profit before taxes		1,247		1,069
Tax expense	5	226		428
Net profit		€	1,021	€	641

Net profit attributable to:
Owners of the parent		1,016		637
Non-controlling interests		5		4
		€	1,021	€	641

Earnings per share:	18
Basic earnings per share		€	0.66	€	0.42
Diluted earnings per share		€	0.65	€	0.41

The accompanying notes are an integral part of the Interim Condensed Consolidated Financial Statements.

FIAT CHRYSLER AUTOMOBILES N.V. AND SUBSIDIARIES

INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(in € million)

(Unaudited)



		Three months ended March 31
	Note	2018			2017
Net profit (A)		€	1,021		€	641

Items that will not be reclassified to the Consolidated Income Statement in subsequent periods:	17
Gains/(Losses) on equity instruments measured at fair value through other comprehensive income		—			11
Total items that will not be reclassified to the Consolidated Income Statement in subsequent periods (B1)		—			11

Items that may be reclassified to the Consolidated Income Statement in subsequent periods:	17
Gains on cash flow hedging instruments		103			61
Foreign exchange losses		(438		)	(16		)
Share of Other comprehensive loss for equity method investees		(28		)	(21		)
Tax effect		(28		)	(10		)
Total items that may be reclassified to the Consolidated Income Statement in subsequent periods (B2)		(391		)	14

Total Other comprehensive income/(loss), net of tax (B1)+(B2)=(B)		(391		)	25

Total Comprehensive income (A)+(B)		€	630		€	666

Total Comprehensive income attributable to:
Owners of the parent		€	627		€	661
Non-controlling interests		3			5
		€	630		€	666

The accompanying notes are an integral part of the Interim Condensed Consolidated Financial Statements.

FIAT CHRYSLER AUTOMOBILES N.V. AND SUBSIDIARIES

INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

(in € million)

(Unaudited)



	Note	At March 31, 2018		At December 31, 2017
Assets
Goodwill and intangible assets with indefinite useful lives	6	€	13,036	€	13,390
Other intangible assets		11,472		11,542
Property, plant and equipment		28,032		29,014
Investments accounted for using the equity method		1,993		2,008
Other financial assets		443		482
Deferred tax assets		2,074		2,004
Trade and other receivables	7	687		666
Tax receivables		81		83
Prepaid expenses and other assets		319		328
Other non-current assets		508		508
Total Non-current assets		58,645		60,025
Inventories	8	13,731		12,922
Assets sold with a buy-back commitment		1,860		1,748
Trade and other receivables	7	8,667		7,887
Tax receivables		195		215
Prepaid expenses and other assets		416		377
Other financial assets		533		487
Cash and cash equivalents		11,579		12,638
Total Current assets		36,981		36,274
Total Assets		€	95,626	€	96,299
Equity and liabilities
Equity	17
Equity attributable to owners of the parent		€	21,523	€	20,819
Non-controlling interests		181		168
Total Equity		21,704		20,987
Liabilities
Long-term debt	12	10,587		10,726
Employee benefits liabilities	10	8,437		8,584
Provisions	11	5,446		5,770
Other financial liabilities		1		1
Deferred tax liabilities		496		388
Tax payables		46		74
Other liabilities	13	2,459		2,500
Total Non-current liabilities		27,472		28,043
Trade payables		22,583		21,939
Short-term debt and current portion of long-term debt	12	5,655		7,245
Other financial liabilities		132		138
Employee benefits liabilities	10	635		694
Provisions	11	8,922		9,009
Tax payables		395		309
Other liabilities	13	8,128		7,935
Total Current liabilities		46,450		47,269
Total Equity and liabilities		€	95,626	€	96,299

The accompanying notes are an integral part of the Interim Condensed Consolidated Financial Statements.

FIAT CHRYSLER AUTOMOBILES N.V. AND SUBSIDIARIES

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(in € million)

(Unaudited)



		Three months ended March 31
	Note	2018			2017
Cash flows from operating activities:
Net profit		€	1,021		€	641
Amortization and depreciation		1,545			1,600
Change in inventories, trade and other receivables and payables		(399		)	(581		)
Dividends received		66			35
Change in provisions		44			(195		)
Change in deferred taxes	5	(66		)	142
Other changes		137			(65		)
Total		2,348			1,577
Cash flows used in investing activities:
Investments in property, plant and equipment and intangible assets		(1,356		)	(2,231		)
Net change in receivables from financing activities		(437		)	149
Change in securities		5			147
Other changes		15			14
Total		(1,773		)	(1,921		)
Cash flows used in financing activities:
Repayment of notes	12	(1,250		)	(850		)
Issuance of other long-term debt		385			198
Repayment of other long-term debt	12	(397		)	(1,919		)
Net change in short-term debt and other financial assets/liabilities		(139		)	(399		)
Capital increase		11			—
Total		(1,390		)	(2,970		)
Translation exchange differences		(244		)	(94		)
Total change in Cash and cash equivalents		(1,059		)	(3,408		)
Cash and cash equivalents at beginning of the period		12,638			17,318
Cash and cash equivalents at end of the period		€	11,579		€	13,910

The accompanying notes are an integral part of the Interim Condensed Consolidated Financial Statements.

FIAT CHRYSLER AUTOMOBILES N.V. AND SUBSIDIARIES

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(in € million)

(Unaudited)



	Attributable to owners of the parent
	Share capital		Other reserves			Cash flow hedge reserve			Currency translation differences			Available-for-sale financial assets			Remeasure-ment of defined benefit plans			Cumulative share of OCI of equity method investees			Non-controlling interests		Total
At December 31, 2016	€	19	€	17,312		€	(63	)	€	2,912		€	(11	)	€	(768	)	€	(233	)	€	185	€	19,353
Net profit	—		637			—			—			—			—			—			4		641
Other comprehensive income/(loss)	—		—			51			(17		)	11			—			(21		)	1		25
Share-based compensation⁽¹⁾	—		43			—			—			—			—			—			—		43
Other changes	—		(3		)	—			—			—			—			—			4		1
At March 31, 2017	€	19	€	17,989		€	(12	)	€	2,895		€	—		€	(768	)	€	(254	)	€	194	€	20,063

______________________________________________________________________________________________________________________________

(1) Includes €17 million tax benefit related to the long-term incentive plans.



	Attributable to owners of the parent
	Share capital		Other reserves		Cash flow hedge reserve		Currency translation differences			Financial Assets measured at FVOCI		Remeasure-ment of defined benefit plans			Cumulative share of OCI of equity method investees			Non-controlling interests			Total
At December 31, 2017	€	19	€	20,921	€	68	€	970		€	3	€	(810	)	€	(352	)	€	168		€	20,987
Impact from the adoption of IFRS 15 and IFRS 9	—		21		—		—			—		—			—			—			21
At January 1, 2018	19		20,942		68		970			3		(810		)	(352		)	168			21,008
Capital increase	—		—		—		—			—		—			—			11			11
Net profit	—		1,016		—		—			—		—			—			5			1,021
Other comprehensive income/(loss)	—		—		75		(436		)	—		—			(28		)	(2		)	(391		)
Share-based compensation⁽¹⁾	—		54		—		—			—		—			—			—			54
Other changes	—		2		—		—			—		—			—			(1		)	1
At March 31, 2018	€	19	€	22,014	€	143	€	534		€	3	€	(810	)	€	(380	)	€	181		€	21,704

______________________________________________________________________________________________________________________________

(1) Includes €29 million tax benefit related to the long-term incentive plans.

The accompanying notes are an integral part of the Interim Condensed Consolidated Financial Statements.

FIAT CHRYSLER AUTOMOBILES N.V. AND SUBSIDIARIES

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of preparation

Authorization of Interim Condensed Consolidated Financial Statements and compliance with International Financial Reporting Standards

The accompanying Interim Condensed Consolidated Financial Statements together with the notes thereto (the “Interim Condensed Consolidated Financial Statements”) were authorized for issuance on April 26, 2018 and have been prepared in accordance with both International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”) as well as IFRS as adopted by the European Union.⁽¹⁾ The designation “IFRS” also includes International Accounting Standards (“IAS”), as well as all interpretations of the IFRS Interpretations Committee (“IFRIC”).

The Interim Condensed Consolidated Financial Statements, which have been prepared in accordance with IAS 34 – Interim Financial Reporting, do not include all of the information and notes required for complete financial statements and should be read in conjunction with the audited annual consolidated financial statements as of and for the year ended December 31, 2017 included within the Annual Report for the year ended December 31, 2017, filed with the AFM on February 20, 2018 (the “FCA Consolidated Financial Statements at December 31, 2017”). The accounting policies are consistent with those used at December 31, 2017, except as described in the section —New standards and amendments effective from January 1, 2018 below.

Basis of preparation

The preparation of the Interim Condensed Consolidated Financial Statements requires management to make estimates and assumptions that affect the reported amounts of revenues, expenses, assets, liabilities and disclosure of contingent liabilities. If in the future such estimates and assumptions, which are based on management’s best judgment at the date of the Interim Condensed Consolidated Financial Statements, deviate from the actual circumstances, the original estimates and assumptions will be modified as appropriate in the period in which the circumstances change. The Interim Condensed Consolidated Financial Statements include all adjustments considered necessary by management to fairly state the Group's results of operations, financial position and cash flows. For a description of the significant estimates, judgments and assumptions of the Group, refer to Note 2, Basis of Preparation — Use of estimates in the FCA Consolidated Financial Statements at December 31, 2017.

______________________________________________________________________________________________________________________________

(1) There is no effect on these Interim Condensed Consolidated Financial Statements resulting from differences between IFRS as issued by the IASB and IFRS as adopted by the European Union.

New standards and amendments effective from January 1, 2018

The cumulative effect of the changes made to our Consolidated Statement of Financial Position as of January 1, 2018 for the adoption of IFRS 15 - Revenue from Contracts with Customers and IFRS 9 - Financial Instruments is as follows:



(€ million)	At December 31, 2017 (as previously reported)		IFRS 15 Adoption Effect			IFRS 9 Adoption Effect			At January 1, 2018 (as adjusted)
Assets
Goodwill and intangible assets with indefinite useful lives	€	13,390	€	—		€	—		€	13,390
Other intangible assets	11,542		—			—			11,542
Property, plant and equipment	29,014		—			—			29,014
Investments accounted for using the equity method	2,008		—			(9		)	1,999
Other financial assets	482		—			(59		)	423
Deferred tax assets	2,004		(5		)	—			1,999
Trade and other receivables	666		—			—			666
Tax receivables	83		—			—			83
Prepaid expenses and other assets⁽¹⁾	328		—			—			328
Other non-current assets	508		—			—			508
Total Non-current assets	60,025		(5		)	(68		)	59,952
Inventories	12,922		—			—			12,922
Assets sold with a buy-back commitment	1,748		(288		)	—			1,460
Trade and other receivables	7,887		—			—			7,887
Tax receivables	215		—			—			215
Prepaid expenses and other assets⁽¹⁾	377		—			—			377
Other financial assets	487		—			59			546
Cash and cash equivalents	12,638		—			—			12,638
Total Current assets	36,274		(288		)	59			36,045
Total Assets	€	96,299	€	(293	)	€	(9	)	€	95,997
Equity and liabilities
Equity
Equity attributable to owners of the parent	€	20,819	€	30		€	(9	)	€	20,840
Non-controlling interests	168		—			—			168
Total Equity	20,987		30			(9		)	21,008
Liabilities
Long-term debt	10,726		—			—			10,726
Employee benefits liabilities	8,584		—			—			8,584
Provisions	5,770		—			—			5,770
Other financial liabilities	1		—			—			1
Deferred tax liabilities	388		2			—			390
Tax payables	74		—			—			74
Other liabilities	2,500		(17		)	—			2,483
Total Non-current liabilities	28,043		(15		)	—			28,028
Trade payables	21,939		(73		)	—			21,866
Short-term debt and current portion of long-term debt	7,245		—			—			7,245
Other financial liabilities	138		—			—			138
Employee benefits liabilities	694		—			—			694
Provisions	9,009		1			—			9,010
Tax payables	309		—			—			309
Other liabilities	7,935		(236		)	—			7,699
Total Current liabilities	47,269		(308		)	—			46,961
Total Equity and liabilities	€	96,299	€	(293	)	€	(9	)	€	95,997

______________________________________________________________________________________________________________________________

(1) Caption previously reported as “Accrued income and prepaid expenses”

IFRS 15 - Revenue from contracts with customers

IFRS 15 - Revenue from contracts with customers (“IFRS 15”) requires companies to recognize revenue upon transfer of control of goods or services to a customer at an amount that reflects the consideration it expects to receive for those goods or services. The Group adopted IFRS 15 and all the related amendments using the modified retrospective method, with the cumulative effect of initially applying the standard recognized as an adjustment to the Group’s opening equity balance on January 1, 2018. The comparative period has not been restated and continues to be reported under the accounting standards in effect for periods prior to January 1, 2018. We do not expect a material impact to our Consolidated Financial Statements from the adoption of this standard on an ongoing basis.

The majority of our revenue continues to be recognized in a manner consistent with prior years. Revenue from the sale of vehicles and service parts is recognized upon transfer of control to our customers, which generally corresponds to the date when the vehicles and service parts are made available to dealers or distributors, or when the vehicles and service parts are released to the carrier responsible for transporting them to dealers or distributors. Under IFRS 15, however, new vehicle sales through our Guarantee Depreciation Program (“GDP”), under which the Group guarantees the residual value or otherwise assumes responsibility for the minimum resale value of the vehicle, as well as those vehicles which include a put option for which the customer does not have a significant economic incentive to exercise, will be recognized as revenue when the vehicles are shipped, rather than being accounted for as an operating lease.

The impact of adoption on our Interim Condensed Consolidated Income Statement for the three months ended March 31, 2018 and Interim Condensed Statement of Financial Position at March 31, 2018 was as follows:



	Three months ended March 31, 2018
	As reported	Amounts without adoption of IFRS 15	Effect of change higher/(lower)
	(€ million)
Consolidated Income Statement
Net revenues	27,027	27,059	(32	)
Cost of revenues	23,057	23,095	(38	)
Tax expense	226	224	2
Net profit	1,021	1,017	4



	At March 31, 2018
	As reported	Balances without adoption of IFRS 15	Effect of change higher/(lower)
	(€ million)
Consolidated Statement of Financial Position
Assets
Deferred tax assets	2,074	2,078	(4	)
Assets sold with a buy-back commitment	1,860	2,101	(241	)

Equity
Equity attributable to owners of the parent	21,523	21,489	34

Liabilities
Deferred tax liabilities	496	492	4
Other liabilities (non-current)	2,459	2,474	(15	)
Trade payables	22,583	22,638	(55	)
Provisions (current)	8,922	8,919	3
Tax payables (current)	395	395	—
Other liabilities (current)	8,128	8,344	(216	)

Revenue recognition

Revenue is recognized when control of our vehicles, services or parts has been transferred and the Group’s performance obligations to our customers have been satisfied. Revenue is measured as the amount of consideration the Group expects to receive in exchange for transferring goods or providing services. The timing of when the Group transfers the goods or services to the customer may differ from the timing of the customer’s payment. The Group recognizes a contract liability when it invoices an amount to a customer prior to the transfer of the goods or services provided. When the Group gives our customers the right to return eligible goods, the Group estimates the expected returns based on an analysis of historical experiences. Sales, value added and other taxes that the Group collects on behalf of others concurrently with revenue generating activities are excluded from revenue and are recognized within the Other liabilities and the Tax payables line items in the Consolidated Statement of Financial Position. Incidental items that are immaterial in the context of the contract are recognized as expense.

The Group also enters into contracts with multiple performance obligations. For these contracts, the Group allocates revenue from the transaction price to the distinct goods and services in the contract on a relative standalone selling price basis. To the extent that the Group sells the good or service separately in the same market, the standalone selling price is the observable price at which the Group sells the good or service separately. For all other goods or services, the Group estimates the standalone selling price using a cost-plus-margin approach.

Sales of goods

The Group has determined that our customers from the sale of vehicles and service parts are generally dealers, distributors or fleet customers. Transfer of control, and therefore revenue recognition, generally corresponds to the date when the vehicles or service parts are made available to the customer, or when the vehicles or service parts are released to the carrier responsible for transporting them to the customer. This is also the point at which invoices are issued, with payment for vehicles typically due immediately and payment for service parts typically due in the following month. For component part sales, revenue recognition is consistent with that of service parts. The Group also sells tooling, with control transferring at the point in time when the customer accepts the tooling.

The cost of incentives, if any, is estimated at the inception of a contract at the expected amount that will ultimately be paid and is recognized as a reduction to revenue at the time of the sale. If a vehicle contract transaction has multiple performance obligations, the cost of incentives is allocated entirely to the vehicle as the intent of the incentives is to encourage sales of vehicles. If the estimate of the incentive changes following the sale to the customer, the change in estimate is recognized as an adjustment to revenue in the period of the change. Refer to the section - Sales incentives included within the 2017 Annual Report (the “FCA Consolidated Financial Statements at December 31, 2017”) for more information on these programs.

New vehicle sales through GDP are recognized as revenue when control of the vehicle transfers to the fleet customer, except in situations where the Group issues a put for which there is a significant economic incentive to exercise, as discussed below. Upon recognition of the vehicle revenue, the Group establishes a liability equal to the estimated amount of any residual value guarantee.

The Group also sells vehicles where, in addition to guaranteeing the residual value, the contract includes a put option whereby the fleet customer can require the Group to repurchase the vehicles. For these types of arrangements, the Group assesses whether a significant economic incentive exists for the customer to exercise its put option. If the Group determines that a significant economic incentive does not exist for the customer to exercise its put option, then revenue is recognized when control of the vehicle transfers to the fleet customer and a liability is recognized equal to the estimated amount of the residual value guarantee. If the Group determines that a significant economic incentive exists, then the arrangement is accounted for similarly to a repurchase obligation, as described in Lease installments from assets sold with buy-back commitments below.

Services provided

When control of a good transfers to the customer prior to the completion of shipping activities for which FCA is responsible, this represents a separate performance obligation for which the shipping revenue is recognized when the shipping service is complete. Other revenues from services provided are primarily comprised of maintenance plans and extended warranties, and are recognized over the contract period in proportion to the costs expected to be incurred based on our historical experience. These services are either included in the selling price of the vehicle or separately priced. Revenue for services is allocated based on the estimated stand-alone selling price. Costs associated with the sale of contracts are deferred and are subsequently amortized to expense consistent with how the related revenue is recognized. The Group had €174 million of deferred service contract costs at March 31, 2018 and recognized €20 million of amortization expense during the three months ended March 31, 2018.

Contract revenues

Revenue from construction contracts, which is comprised of industrial automation systems sold by the Group's Components segment, is recognized as revenue over the contract period in proportion to the costs expected to be incurred based on our historical experience. A loss is recognized if the sum of the expected costs for services under the contract exceeds the transaction price.

Lease installments from assets sold with buy-back commitments

Vehicle sales to fleet customers can include a repurchase obligation, whereby the Group is required to repurchase the vehicles at a given point in time. The Group accounts for such sales as an operating lease. Upon the transfer of vehicles to the fleet customer, the Group records a liability equal to the proceeds received within Other liabilities in the Consolidated Statement of Financial Position. The difference between the proceeds received and the guaranteed repurchase amount is recognized as revenue over the contractual term on a straight-line basis. The cost of the vehicle is recorded within Assets sold with a buy-back commitment in the Consolidated Statement of Financial Position and the difference between the cost of the vehicle and the estimated residual value is recognized within Cost of revenues in the Consolidated Income Statement over the contractual term.

Interest income of financial services activities

Interest income, which is primarily generated from the Group by providing dealer and retail financing, is recognized using the effective interest method.

IFRS 9 - Financial Instruments

IFRS 9 - Financial Instruments (“IFRS 9”) replaces IAS 39 - Financial Instruments. In particular, it amends the previous guidance in three main areas:


•	The classification and measurement of financial assets, which is driven by cash flow characteristics and the business model in which an asset is held;


•	The accounting for impairment of financial assets through the introduction of an “expected credit loss” impairment model, replacing the incurred loss method under IAS 39; and


•	Hedge accounting, in particular removing some of the restrictions in applying hedge accounting under IAS 39 and to more closely align the accounting for hedge instruments with risk management policies.

In accordance with the transitional provisions in IFRS 9, the Group did not restate prior periods. For hedge accounting, the Group applied the standard prospectively. Comparative figures have not been restated for the classification and measurement provisions of the standard, including impairment, and continue to be reported under the accounting standards in effect for periods prior to January 1, 2018. The impact of adoption on our Consolidated Financial Statements was not material.

Financial assets and liabilities

Financial assets primarily include trade receivables, receivables from financing activities, investments in other companies, derivative financial instruments, cash and cash equivalents, and debt securities that represent temporary investments of available funds and do not satisfy the requirements for being classified as cash equivalents.

Financial liabilities primarily consist of debt, derivative financial instruments, trade payables and other liabilities. The classification of financial liabilities under IFRS 9 is unchanged compared with the previous accounting requirements under IAS 39.

Receivables from dealer financing activities are typically generated by sales of vehicles and are generally managed under dealer network financing programs as a component of the portfolio of the Group's financial services companies. These receivables are interest bearing with the exception of an initial, limited, non-interest bearing period. The contractual terms governing the relationships with the dealer networks vary according to market and payment terms, which range from two to twelve months.

Classification and measurement (policy applicable from January 1, 2018)

The classification of a financial asset is dependent on the Group’s business model for managing such financial assets and their contractual cash flows. The Group considers whether the contractual cash flows represent solely payments of principal and interest that are consistent with a basic lending arrangement. Where the contractual terms introduce exposure to risk or volatility that are inconsistent with a basic lending arrangement, the related financial assets are classified and measured at fair value through profit or loss (“FVPL”).



Financial asset cash flow business model	Initial measurement⁽¹⁾	Measurement category⁽³⁾
Solely to collect the contractual cash flows (Held to Collect)	Fair Value less transaction costs	Amortized Cost⁽²⁾
Collect both the contractual cash flows and generate cash flows arising from the sale of assets (Held to Collect and Sell)	Fair Value less transaction costs	Fair value through other comprehensive income (“FVOCI”)
Generate cash flows primarily from the sale of assets (Held to Sell)	Fair Value	FVPL

______________________________________________________________________________________________________________________________

(1) A trade receivable without a significant financing component, as defined by IFRS 15, is initially measured at the transaction price.

(2) Receivables with maturities of over one year, which bear no interest or have an interest rate significantly lower than market rates are discounted using market rates.

(3) On initial recognition, the Group may irrevocably designate a financial asset at FVPL that otherwise meets the requirements to be measured at amortized cost or at FVOCI if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

Factors considered by the Group in determining the business model for a group of financial assets include:


•	past experience on how the cash flows for these assets were collected


•	the frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and future sales activity expectations


•	how the asset’s performance is evaluated and reported to key management personnel


•	how risks are assessed and managed and how management is compensated

Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

Cash and cash equivalents include cash at banks, units in money market funds and other money market securities, commercial paper and certificate of deposits that are readily convertible into cash, with original maturities of three months or less at the date of purchase. Cash and cash equivalents are subject to an insignificant risk of changes in value and consist of balances across various primary national and international money market instruments. Money market funds consist of investments in high quality, short-term, diversified financial instruments that can generally be liquidated on demand and are measured at FVPL. Cash at banks and Other cash equivalents are measured at amortized cost.

Investments in other companies are measured at fair value. Equity investments for which there is no quoted market price in an active market and there is insufficient financial information in order to determine fair value may be measured at cost as an estimate of fair value, as permitted by IFRS 9. The Group may irrevocably elect to present subsequent changes in the investment’s fair value in Other comprehensive income (“OCI”) upon the initial recognition of an equity investment that is not held to sell. This election is made on an investment-by-investment basis. Generally, any dividends from these investments are recognized in Other income from investments within Result from investments when the Group’s right to receive payment is established. Other net gains and losses are recognized in OCI and will not be reclassified to the Consolidated Income Statement in subsequent periods. Impairment losses (and the reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value in OCI.

Impairment of financial assets (policy applicable from January 1, 2018)

The Group’s credit risk differs in relation to the type of activity. In particular, receivables from financing activities, such as dealer and retail financing that are carried out through the Group’s financial services companies, are exposed both to the direct risk of default and the deterioration of the creditworthiness of the counterparty, whereas trade receivables arising from the sale of vehicles and spare parts, are mostly exposed to the direct risk of counterparty default. These risks are mitigated by the fact that collection exposure is spread across a large number of counterparties.

The IFRS 9 impairment requirements are based on a forward-looking expected credit loss (“ECL”) model. ECL is a probability-weighted estimate of the present value of cash shortfalls.

The calculation of the amount of ECL is based on the risk of default by the counterparty, which is determined by taking into account the information available at the end of each reporting period as to the counterparty’s solvency, the fair value of any guarantees and the Group’s historical experience. The Group considers a financial asset to be in default when: (i) the borrower is unlikely to pay its obligations in full and without consideration of compensating guarantees or collateral (if any exist); or (ii) the financial asset is more than 90 days past due.

The Group applies two impairment models for financial assets as set out in IFRS 9: the simplified approach and the general approach. The table below indicates the impairment model used for each of our financial asset categories. Impairment losses on financial assets are recognized in the Consolidated Income Statement within the corresponding line items, based on the classification of the counterparty.



Financial asset	IFRS 9 impairment model
Trade receivables	Simplified approach
Receivables from financing activities	General approach
Other receivables	General approach

In order to test for impairment, individually significant receivables and receivables for which collectability is at risk are assessed individually, while all other receivables are grouped into homogeneous risk categories based on shared risk characteristics such as instrument type, industry or geographical location of the counterparty.

The simplified approach for determining the lifetime ECL allowance is performed in two steps:


•	All trade receivables that are in default, as defined above, are individually assessed for impairment; and


•	A general reserve is recognized for all other trade receivables (including those not past due) based on historical loss rates.

The Group applies the general approach as determined by IFRS 9 by assessing at each reporting date whether there has been a significant increase in credit risk on the financial instrument since initial recognition. The Group considers receivables to have experienced a significant increase in credit risk when certain quantitative or qualitative indicators have been met or the borrower is more than 30 days past due on its contractual payments.

The “three-stages” for determining and measuring the impairment based on changes in credit quality since initial recognition are summarized below:



Stage	Description	Time period for measurement of ECL
Stage 1	A financial instrument that is not credit-impaired on initial recognition	12-month ECL
Stage 2	A financial instrument with a significant increase in credit risk since initial recognition	Lifetime ECL
Stage 3	A financial instrument that is credit-impaired or has defaulted	Lifetime ECL

Considering forward-looking economic information, ECL is determined by projecting the probability of default, exposure at default and loss given default for each future contractual period and for each individual exposure or collective portfolio. The discount rate used in the ECL calculation is the stated effective interest rate or an approximation thereof. Each reporting period, the assumptions underlying the ECL calculation are reviewed and updated as necessary. Since adoption, there have been no significant changes in estimation techniques or significant assumptions that led to material changes in the ECL allowance.

The gross carrying amount of a financial asset is written-off to the extent that there is no realistic prospect of recovery. This is generally the case when the Group determines that a debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. However, financial assets that are written off could still be subject to enforcement activities.

Derivative financial instruments (policy applicable from January 1, 2018)

Derivative financial instruments are used for economic hedging purposes in order to reduce currency, interest rate and market price risks (primarily related to commodities). In accordance with IFRS 9, derivative financial instruments are recognized on the basis of the settlement date and, upon initial recognition, are measured at fair value less (in case a financial asset is not measured at FVPL) transaction costs that are directly attributable to the acquisition of the financial assets. Subsequent to initial recognition, all derivative financial instruments are measured at fair value. Furthermore, derivative financial instruments qualify for hedge accounting when (i) there is formal designation and documentation of the hedging relationship and the Group’s risk management objective and strategy for undertaking the hedge at inception of the hedge and (ii) the hedge is expected to be effective.

When derivative financial instruments qualify for hedge accounting, the following accounting treatments apply:

•

Fair value hedges - where a derivative financial instrument is designated as a hedge of the exposure to changes in fair value of a recognized asset or liability attributable to a particular risk that could affect the Consolidated Income Statement, the gain or loss from remeasuring the hedging instrument at fair value is recognized in the Consolidated Income Statement. The gain or loss on the hedged item attributable to the hedged risk adjusts the carrying amount of the hedged item and is recognized in the Consolidated Income Statement.

•

Cash flow hedges - where a derivative financial instrument is designated as a hedge of the exposure to variability in future cash flows of a recognized asset or liability or a highly probable forecasted transaction and could affect the Consolidated Income Statement, the effective portion of any gain or loss on the derivative financial instrument is recognized directly in Other comprehensive income/(loss). When the hedged forecasted transaction results in the recognition of a non-financial asset, the gains and losses previously deferred in Other comprehensive income/(loss) are reclassified and included in the initial measurement of the cost of the non-financial asset. The effective portion of any gain or loss is recognized in the Consolidated Income Statement at the same time as the economic effect arising from the hedged item that affects the Consolidated Income Statement. The gain or loss associated with a hedge or part of a hedge that has become ineffective is recognized in the Consolidated Income Statement immediately.

When a hedging instrument or hedge relationship is terminated but the hedged transaction is still expected to occur, the cumulative gain or loss realized to the point of termination remains and is recognized in the Consolidated Income Statement at the same time as the underlying transaction occurs. If the hedged transaction is no longer probable, the cumulative unrealized gain or loss held in Other comprehensive income/(loss) is recognized in the Consolidated Income Statement immediately.

•

Hedges of a net investment - if a derivative financial instrument is designated as a hedging instrument for a net investment in a foreign operation, the effective portion of the gain or loss on the derivative financial instrument is recognized in Other comprehensive income/(loss). The cumulative gain or loss is reclassified from Other comprehensive income/(loss) to the Consolidated Income Statement upon disposal of the foreign operation.

Hedge effectiveness is determined at the inception of the hedge relationship and through periodic prospective effectiveness assessments to ensure that an economic relationship exists between the hedged item and hedging instrument. The Group enters into hedge relationships where the critical terms of the hedging instrument match closely or exactly with the terms of the hedged item, and so a qualitative assessment of effectiveness is performed. If changes in circumstances affect the terms of the hedged item such that the critical terms no longer match closely or perfectly with the critical terms of the hedging instrument, the Group uses the hypothetical derivative method to assess effectiveness.

Ineffectiveness is measured by comparing the cumulative changes in fair value of the hedging instrument and cumulative change in fair value of the hedged item arising from the designated risk. The primary potential sources of hedge ineffectiveness are mismatches in timing or the critical terms of the hedged item and the hedging instrument.

The hedge ratio is the relationship between the quantity of the derivative and the hedged item. The Group’s derivatives have the same underlying quantity as the hedged items, therefore the hedge ratio is expected to be one for one.

If hedge accounting cannot be applied, the gains or losses from the fair value measurement of derivative financial instruments are recognized immediately in the Consolidated Income Statement.

Transfers of financial assets

The Group derecognizes financial assets when the contractual rights to the cash flows arising from the asset are no longer held or if it transfers substantially all the risks and rewards of ownership of the financial asset. On derecognition of financial assets, the difference between the carrying amount of the asset and the consideration received or receivable for the transfer of the asset is recognized in the Consolidated Income Statement.

The Group transfers certain of its financial, trade and tax receivables, mainly through factoring transactions. Factoring transactions may be either with recourse or without recourse. Certain transfers include deferred payment clauses requiring first loss cover (for example, when the payment by the factor of a minor part of the purchase price is dependent on the total amount collected from the receivables), whereby the transferor has priority participation in the losses, or requires a significant exposure to the variability of cash flows arising from the transferred receivables to be retained. These types of transactions do not meet the requirements of IFRS 9 for the derecognition of the assets since the risks and rewards connected with ownership of the financial asset are not substantially transferred, and accordingly the Group continues to recognize these receivables within the Consolidated Statement of Financial Position and recognizes a financial liability for the same amount under Asset-backed financing, which is included within Debt. These types of receivables are classified as held-to-collect, since the business model is consistent with the Group’s continuing recognition of the receivables.

Transition

The total impact on the Group’s Equity attributable to owners of the parent as at January 1, 2018, resulting from the initial application of the IFRS 9 impairment model on the financial assets held by FCA Bank, our jointly-controlled financial services company, which is accounted for under the equity method, is as follows:



	At January 1, 2018
	(€ million)
Equity attributable to owners of the parent - IAS 39	€	20,819
Impact on the Equity method (net of tax)	(9		)
Adjusted Equity attributable to owners of the parent - IFRS 9	€	20,810

During the first quarter of 2018, the Group reclassified an immaterial amount of gains from OCI to Inventories.

The Group does not expect a material impact to its Net profit on an ongoing basis from the adoption of this standard.

On January 1, 2018, the financial instruments of the Group were reclassified into the appropriate IFRS 9 categories. The main effects resulting from the reclassification between measurement categories are as follows:



Financial statement line item	IAS 39 measurement category^(D)	At December 31, 2017		Reclassification				At January 1, 2018		IFRS 9 measurement category	Financial statement line item
(€ million)
Other financial assets (non-current)											Other financial assets (non-current)
Derivative financial assets	FVPL^(E)	€	19	€	—			€	19	FVPL^(E)	Derivative financial assets
Debt securities measured at fair value through profit or loss	FVPL	59		(59		)	^(A)
Debt securities held-to-maturity	AC	2		(2		)
				2				2		AC	Other assets
Equity instruments measured at cost	Cost	43		(43		)	^(B)
				20			^(B)	20		FVPL	Equity instruments measured at FVPL
Equity instruments measured at fair value through other comprehensive income	FVOCI (AFS)	23		23			^(B)	46		FVOCI	Equity instruments measured at FVOCI
Financial receivables	AC (L&R)	275		—				275		AC	Financial receivables
Collateral deposits	FVPL	61		—				61		FVPL	Collateral deposits
Total Other financial assets		€	482	€	(59	)		€	423		Total Other financial assets

Other receivables (non-current)											Other receivables (non-current)
Receivables from financing activities	AC (L&R)	€	194	€	—			€	194	AC	Receivables from financing activities
Other receivables	AC (L&R)	472		—				472		AC	Other receivables
Total Other receivables		€	666	€	—			€	666		Total Other receivables

Trade and other receivables (current)											Trade and other receivables (current)
Trade receivables	AC (L&R)	€	2,460	€	(28	)	^(C)	€	2,432	AC	Trade receivables
				28			^(C)	28		FVPL	Trade receivables
Receivables from financing activities	AC (L&R)	2,946		(700		)	^(C)	2,246		AC	Receivables from financing activities
				700			^(C)	700		FVPL	Receivables from financing activities
Other receivables	AC (L&R)	2,481		—				2,481		AC	Other receivables
Total Trade and other receivables		€	7,887	€	—			€	7,887		Total Trade and other receivables

Other financial assets (current)											Other financial assets (current)
Derivative financial assets	FVPL^(E)	€	265	€	—			€	265	FVPL^(E)	Derivative financial assets
Debt securities measured at fair value through other comprehensive income	FVOCI (AFS)	4		(4		)
				4				4		AC	Other financial assets
Debt securities measured at fair value through profit or loss	FVPL (HFT)	172		59			^(A)	231		FVPL	Debt securities measured at FVPL
Held-for-trading investments	FVPL (HFT)	46		(46		)
				46				46		FVPL	Equity instruments measured at FVPL
Total Other financial assets		€	487	€	59			€	546		Total Other financial assets

Cash and cash equivalents											Cash and cash equivalents
Cash at banks	FVPL	€	6,396	€	—			€	6,396	AC	Cash at banks
Money market securities	FVPL	6,242		(3,530		)		2,712		FVPL	Money market securities
				3,530				3,530		AC	Other cash equivalents
Total Cash and cash equivalents		€	12,638	€	—			€	12,638		Total Cash and cash equivalents

______________________________________________________________________________________________________________________________

(A) As of January 1, 2018, debt securities of €59 million were reclassified from non-current to current to reflect the held to sell business model with no impact on retained earnings.

(B) As permitted by IFRS 9, the Group has designated certain investments in other companies at the date of initial application as measured at FVOCI

(C) Certain trade receivables and receivables from financing activities, mainly attributable to the EMEA region, were reclassified from amortized cost to FVPL as a result of the held to sell business model.

(D) AFS: available-for-sale; HTM: held-to-maturity; L&R: Loans & Receivables; HFT: held-for-trading; FV: fair value.

(E) Except for derivatives designated in cash flow hedging relationship, as described above.

Other new standards and amendments

The following amendments and interpretations, which were effective from January 1, 2018, were adopted by the Group. The adoption of these amendments had no effect on the Interim Condensed Consolidated Financial Statements.

•

IFRS 2 - Share-based Payments, to provide requirements on the accounting for (i) the effects of vesting and non-vesting conditions on the measurement of cash-settled share-based payments, (ii) share-based payment transactions with a net settlement feature for withholding tax obligations and (iii) a modification to the terms and conditions of a share-based payment that changes the classification of the transaction from cash-settled to equity-settled.

•

Applying IFRS 9, Financial Instruments with IFRS 4, Insurance Contracts (Amendments to IFRS 4). The amendments provide two options for entities that issue insurance contracts within the scope of IFRS 4: (i) an option that permits entities to reclassify, from profit or loss to other comprehensive income, some of the income or expenses arising from designated financial assets (the “overlay approach”) and (ii) an optional temporary exemption from applying IFRS 9 for entities whose predominant activity is issuing contracts within the scope of IFRS 4 (the “deferral approach”).


•	Annual Improvements to IFRS Standards 2014–2016 Cycle, which included amendments to IAS 28 - Investments in Associates and Joint Ventures (effective January 1, 2018). The amendments clarify, correct or remove redundant wording in the related standard.


•	IFRIC Interpretation 22 - Foreign Currency Transactions and Advance Consideration which addresses the exchange rate to use in transactions that involve advance consideration paid or received in a foreign currency.

New standards and amendments not yet effective

Reference should be made to Note 2, Basis of Presentation – New Standards and Amendments Not Yet Effective within the FCA Consolidated Financial Statements at December 31, 2017 for a description of new standards not yet effective as of March 31, 2018.

Exchange rates

The principal exchange rates used to translate other currencies into Euro were as follows:



	For the three months ended March 31, 2018	At March 31, 2018	At December 31, 2017	For the three months ended March 31, 2017	At March 31, 2017
U.S. Dollar (U.S.$)	1.229	1.232	1.199	1.065	1.069
Brazilian Real (BRL)	3.989	4.094	3.973	3.347	3.380
Chinese Renminbi (CNY)	7.815	7.747	7.804	7.335	7.364
Canadian Dollar (CAD)	1.554	1.590	1.504	1.410	1.427
Mexican Peso (MXN)	23.037	22.525	23.661	21.617	20.018
Polish Zloty (PLN)	4.179	4.211	4.177	4.321	4.227
Argentine Peso (ARS)	24.207	24.778	22.595	16.685	16.475
Pound Sterling (GBP)	0.883	0.875	0.887	0.860	0.856
Swiss Franc (CHF)	1.165	1.178	1.170	1.069	1.070

2. Scope of consolidation

During the three months ended March 31, 2018 there were no changes to our scope of consolidation.

Refer to Note 20, Subsequent events for the announcement of the potential separation of our Magneti Marelli business.

3. Net revenues

Net revenues were as follows:



	Three months ended March 31
	2018		2017
	(€ million)
Revenues from:
Sales of goods	€	25,813	€	26,845
Services provided	865		560
Construction contract revenues	247		197
Lease installments from assets sold with a buy-back commitment	60		76
Interest income of financial services activities	42		41
Total Net revenues	€	27,027	€	27,719



	Mass-Market Vehicles
Three months ended March 31, 2018	NAFTA		LATAM		APAC		EMEA		Maserati		Components		Other activities		Total
	(€ million)
Revenues from:
Sale of goods	€	15,880	€	1,805	€	588	€	5,354	€	736	€	1,444	€	6	€	25,813
Services provided	506		58		4		216		8		24		49		865
Construction contract revenues	—		—		—		—		—		247		—		247
Revenues from goods and services	16,386		1,863		592		5,570		744		1,715		55		26,925

Lease installments from assets sold with a buy-back commitment	18		—		—		42		—		—		—		60
Interest income from financial services activities	—		24		15		3		—		—		—		42
Total Net revenues	€	16,404	€	1,887	€	607	€	5,615	€	744	€	1,715	€	55	€	27,027

The Group recognized a net decrease in Net revenues of €64 million during the three months ended March 31, 2018 from performance obligations satisfied in the prior year. This was primarily due to changes in the estimated cost of sales incentive programs occurring after the Group had transferred control of vehicles to the dealers.

4. Net financial expenses

The following table summarizes the Group’s financial income and expenses included within Net financial expenses:



	Three months ended March 31
	2018		2017
	(€ million)
Interest income and other financial income	€	51	€	46

Financial expenses:
Interest expense and other financial expenses	237		336
Write-down of financial assets	2		10
Losses on disposal of securities	10		3
Net interest expense on employee benefits provisions	67		80
Total Financial expenses	316		429

Net expenses from derivative financial instruments and exchange rate differences	44		53

Total Financial expenses and Net expenses from derivative financial instruments and exchange rate differences	360		482

Net financial expenses	€	309	€	436

5. Tax expense

Tax expense was as follows:



	Three months ended March 31
	2018			2017
	(€ million)
Current tax expense	€	227		€	286
Deferred tax (benefit)/expense	(3		)	124
Tax expense relating to prior periods	2			18
Total Tax expense	€	226		€	428

The effective tax rate was 18 percent and 40 percent for the three months ended March 31, 2018 and 2017, respectively. The decrease in the effective tax rate was primarily due to the impact of the December 2017 U.S. tax reform.

6. Goodwill and intangible assets with indefinite useful lives

Goodwill and intangible assets with indefinite useful lives at March 31, 2018 and December 31, 2017 are summarized as below:



	At March 31, 2018		At December 31, 2017
	(€ million)
Goodwill	€	10,122	€	10,396
Other intangible assets with indefinite useful lives	2,914		2,994
Total Goodwill and intangible assets with indefinite useful lives	€	13,036	€	13,390

The decrease during the three months ended March 31, 2018 was primarily related to foreign currency translation of the U.S. Dollar to the Euro.

7. Trade and other receivables

Trade and other receivables consisted of the following:



	At March 31, 2018						At December 31, 2017
	Current		Non-current		Total		Current		Non-current		Total
	(€ million)
Trade receivables	€	2,562	€	—	€	2,562	€	2,460	€	—	€	2,460
Receivables from financing activities	3,326		215		3,541		2,946		194		3,140
Other receivables	2,779		472		3,251		2,481		472		2,953
Total Trade and other receivables	€	8,667	€	687	€	9,354	€	7,887	€	666	€	8,553

As result of the impairment methodology implemented under IFRS 9, there was an immaterial impact to the ECL allowance at March 31, 2018.

During the three months ended March 31, 2018, the Group wrote-off an immaterial amount of receivables which are still subject to enforcement activities.

Trade receivables

The following table shows the ECL allowance for trade receivables measured at amortized cost at March 31, 2018:



	At March 31, 2018
	Current and less than 90 days past due			90 days or more past due			Total
	(€ million)
Gross amount	€	2,388		€	408		€	2,796
ECL allowance	(18		)	(256		)	(274		)
Carrying amount	€	2,370		€	152		€	2,522

In addition to the amounts above, a further €40 million of trade receivables were measured at FVPL. Refer to Note 14, Fair value measurement.

Receivables from financing activities

Receivables from financing activities mainly relate to the Group’s fully consolidated financial services companies and are summarized as follows:



	At March 31, 2018		At December 31, 2017
	(€ million)
Dealer financing	€	2,539	€	2,295
Retail financing	477		420
Finance leases	5		4
Other	520		421
Total Receivables from financing activities	€	3,541	€	3,140

The following table shows the ECL allowance for receivables from financing activities measured at amortized cost at March 31, 2018:



	At March 31, 2018
	Stage 1			Stage 2			Stage 3			Total
	(€ million)
Gross amount	€	2,608		€	53		€	23		€	2,684
ECL allowance	(14		)	(2		)	(12		)	(28		)
Carrying amount	€	2,594		€	51		€	11		€	2,656

In addition to the amounts above, a further €885 million of receivables from financing activities were measured at FVPL. Refer to Note 14, Fair value measurement.

Other receivables

At March 31, 2018, Other receivables primarily consisted of tax receivables for VAT and other indirect taxes of €2,379 million (€2,153 million at December 31, 2017) and is net of an ECL allowance of €43 million.

Transfer of financial assets

At March 31, 2018, the Group had receivables due after that date which had been transferred without recourse and which were derecognized in accordance with IFRS 9, Financial Instruments, amounting to €8,088 million (€7,866 million at December 31, 2017). The transfers related to trade receivables and other receivables of €7,141 million (€6,752 million at December 31, 2017) and financial receivables of €947 million (€1,114 million at December 31, 2017). These amounts included receivables of €5,202 million (€4,933 million at December 31, 2017), mainly due from the sales network, transferred to FCA Bank, our jointly-controlled financial services company.

8. Inventories



	At March 31, 2018		At December 31, 2017
	(€ million)
Finished goods and goods for resale	€	8,920	€	8,261
Work-in-progress, raw materials and manufacturing supplies	4,564		4,476
Construction contract assets	247		185
Total Inventories	€	13,731	€	12,922

The Construction contracts, net asset/(liability) relates to the design and production of industrial automation systems and related products and is summarized as follows:



	At March 31, 2018			At December 31, 2017
	(€ million)
Aggregate amount of costs incurred and recognized profits (less recognized losses) to date	€	954		€	881
Less: Progress billings	(860		)	(886		)
Construction contracts, net asset/(liability)	94			(5		)
Construction contract assets	247			185
Less: Construction contract liabilities (Note 13)	(153		)	(190		)
Construction contracts, net asset/(liability)	€	94		€	(5	)

Changes in the Group’s construction contracts, net asset/(liability) were as follows for the three months ended March 31, 2018:



	At January 1, 2018			Advances received from customers			Amounts recognized within revenue		Other changes		At March 31, 2018
	(€ million)
Construction contracts, net asset/(liability)	€	(5	)	€	(156	)	€	247	€	8	€	94

The entire amount of Construction contract liabilities is expected to be recognized as revenue in the following twelve months.

9. Share-based compensation

Performance Share Units

In February 2018, FCA awarded a total of 2.45 million Performance Share Units (“PSU”) to certain key employees under the framework equity incentive plan, as described in Note 26, Equity, in the FCA Consolidated Financial Statements at December 31, 2017. The PSU awards, which represent the right to receive FCA common shares, include a total shareholder return (“TSR”) target. These awards (“PSU TSR awards”) will vest based upon market conditions covering a five -year performance period from January 2017 through December 2021. Accordingly, the total number of shares that will eventually be issued may vary from the original award of 2.45 million units. One third of the total PSU TSR awards will vest in 2020, a cumulative two-thirds in 2021 and a cumulative 100 percent in 2022 if the respective performance goals for the years 2017 to 2019, 2017 to 2020 and 2017 to 2021 are achieved.

Restricted Share Units

In February 2018, FCA awarded 590 thousand Restricted Share Units (“RSUs”) to certain key employees of the Company, which represent the right to receive FCA common shares. These shares will vest in three equal tranches in 2019, 2020 and 2021. The fair values of the awards were measured using the FCA stock price on the grant date.

Share-based compensation expense

Including previously granted awards, total expense for the PSU and RSU awards of €25 million and €26 million was recorded for the three months ended March 31, 2018, respectively. The total number of PSU and RSU awards outstanding at March 31, 2018 were 14.63 million and 5.47 million respectively.

Anti-dilution

The documents governing FCA's long-term incentive plans contain anti-dilution provisions which provide for an adjustment to the number of awards granted under the plans in order to preserve, or alternatively prevent the enlargement of, the benefits intended to be made available to the recipients of the awards should an event occur that impacts our capital structure. In January 2018, as a result of the distribution of the Company's entire interest in GEDI Gruppo Editoriale S.p.A. to holders of FCA common shares on July 2, 2017, the Compensation Committee of FCA approved a conversion factor of 1.003733 that was applied to outstanding awards under the Long Term Incentive Plan to make equity award holders whole for the resulting diminution in the value of an FCA common share. There was no change to the total cost of these awards to be amortized over the remaining vesting period as a result of these adjustments.

10. Employee benefits liabilities

Employee benefits liabilities include provisions for both pension plans and health care, legal, severance indemnity and other post-employment benefits (“OPEB”) and consisted of the following:



	At March 31, 2018						At December 31, 2017
	Current		Non-current		Total		Current		Non-current		Total
	(€ million)
Pension benefits	€	34	€	4,760	€	4,794	€	34	€	4,789	€	4,823
Health care and life insurance plans	122		2,081		2,203		126		2,153		2,279
Other post-employment benefits	106		856		962		109		878		987
Other provisions for employees	373		740		1,113		425		764		1,189
Total Employee benefits liabilities	€	635	€	8,437	€	9,072	€	694	€	8,584	€	9,278

The decrease during the three months ended March 31, 2018 was primarily related to foreign currency translation of the U.S. Dollar to the Euro.

Pension and OPEB costs included in the Interim Condensed Consolidated Income Statement were as follows:



	Three months ended March 31
	2018					2017
	Pension			OPEB		Pension			OPEB
	(€ million)
Current service cost	€	42		€	8	€	45		€	8
Interest expense	223			24		287			29
Interest (income)	(183		)	—		(239		)	—
Other administrative costs	20			—		24			—
Total	€	102		€	32	€	117		€	37

Total contributions of €36 million were made to our pension plans in the three months ended March 31, 2018.

11. Provisions



	At March 31, 2018						At December 31, 2017
	Current		Non-current		Total		Current		Non-current		Total
	(€ million)
Product warranty and recall campaigns	€	2,479	€	3,968	€	6,447	€	2,676	€	4,049	€	6,725
Sales incentives	5,430		—		5,430		5,377		—		5,377
Other provisions and risks	1,013		1,478		2,491		956		1,721		2,677
Total Provisions	€	8,922	€	5,446	€	14,368	€	9,009	€	5,770	€	14,779

A total provision of €3 million was recognized during the three months ended March 31, 2018 for workforce restructuring costs within the Components segment (refer to Note 19, Segment reporting).

12. Debt



	At March 31, 2018						At December 31, 2017
	Current		Non-current		Total		Current		Non-current		Total
	(€ million)
Notes	€	748	€	7,504	€	8,252	€	2,054	€	7,572	€	9,626
Borrowings from banks	3,738		2,723		6,461		4,132		2,780		6,912
Asset-backed financing	374		—		374		357		—		357
Other debt	795		360		1,155		702		374		1,076
Total Debt	€	5,655	€	10,587	€	16,242	€	7,245	€	10,726	€	17,971

Notes

In March 2018, the Group repaid a note at maturity with a principal amount of €1,250 million that was issued through the Medium Term Note (“MTN”) Programme.

Borrowings from banks

Revolving Credit Facilities

At March 31, 2018, undrawn committed credit lines totaling €7.6 billion included the €6.25 billion RCF and €1.4 billion of other revolving credit facilities. At December 31, 2017, undrawn committed credit lines totaling €7.6 billion included the €6.25 billion RCF and approximately €1.3 billion of other revolving credit facilities.

13. Other liabilities

Other liabilities consisted of the following:



	At March 31, 2018						At December 31, 2017
	Current		Non-current		Total		Current		Non-current		Total
	(€ million)
Payables for GDP and buy-back agreements	€	2,546	€	—	€	2,546	€	2,234	€	—	€	2,234
Accrued expenses and deferred income	1,109		814		1,923		1,573		2,260		3,833
Indirect taxes payables	1,012		18		1,030		799		19		818
Payables to personnel	958		15		973		988		16		1,004
Social security payables	279		6		285		313		6		319
Construction contract liabilities (Note 8)	153		—		153		190		—		190
Service contract liability	477		1,399		1,876		—		—		—
Other	1,594		207		1,801		1,838		199		2,037
Total Other liabilities	€	8,128	€	2,459	€	10,587	€	7,935	€	2,500	€	10,435

The impact of the adoption of IFRS 15 on Other liabilities as at January 1, 2018, was as follows:



	At December 31, 2017 (as previously reported)						Adjustments/Reclassifications									At January 1, 2018 (as adjusted)
	Current		Non-Current		Total		Current			Non-Current			Total			Current		Non-Current		Total
	(€ million)
Payables for GDP and buy-back agreements	€	2,234	€	—	€	2,234	€	(293	)	€	—		€	(293	)	€	1,941	€	—	€	1,941
Accrued expenses and deferred income	1,573		2,260		3,833		(440		)	(1,414		)	(1,854		)	1,133		846		1,979
Service contract liability	—		—		—		497			1,397			1,894			497		1,397		1,894
Balances unaffected by IFRS 15 adoption	4,128		240		4,368		—			—			—			4,128		240		4,368
Total Other liabilities	€	7,935	€	2,500	€	10,435	€	(236	)	€	(17	)	€	(253	)	€	7,699	€	2,483	€	10,182

Service contract liability

The service contract liability is mainly comprised of maintenance plans and extended warranties. Changes in the Group’s service contract liability were as follows for the three months ended March 31, 2018:



	At January 1, 2018		Additional amounts arising during the period		Amounts recognized within revenue			Other changes			At March 31, 2018
	(€ million)
Service contract liability	€	1,894	€	201	€	(161	)	€	(58	)	€	1,876

Of the total Service contract liability at March 31, 2018, the Group expects to recognize approximately €373 million in 2018, €420 million in 2019, €343 million in 2020 and €740 million thereafter.

14. Fair value measurement

Assets and liabilities that are measured at fair value on a recurring basis

The following table shows the fair value hierarchy, based on observable and unobservable inputs, for financial assets and liabilities that are measured at fair value on a recurring basis at March 31, 2018 and December 31, 2017:



	At March 31, 2018								At December 31, 2017
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(€ million)
Debt securities and equity instruments measured at FVOCI	€	3	€	21	€	23	€	47	€	3	€	24	€	—	€	27
Debt securities and equity instruments measured at FVPL	273		—		22		295		275		—		2		277
Derivative financial assets	—		282		10		292		—		254		30		284
Collateral deposits	67		—		—		67		61		—		—		61
Receivables from financing activities	—		—		885		885		—		—		—		—
Trade receivables	—		40		—		40		—		—		—		—
Cash at banks⁽¹⁾	—		—		—		—		6,396		—		—		6,396
Money market securities⁽¹⁾	3,895		—		—		3,895		4,404		1,838		—		6,242
Total Assets	€	4,238	€	343	€	940	€	5,521	€	11,139	€	2,116	€	32	€	13,287
Derivative financial liabilities	—		129		4		133		—		138		1		139
Total Liabilities	€	—	€	129	€	4	€	133	€	—	€	138	€	1	€	139

______________________________________________________________________________________________________________________________

(1) Amounts relating to Cash at banks and certain Money market securities have been reclassified to amortized cost at January 1, 2018. Refer to Note 1, Basis of Preparation.

The impact of the adoption of IFRS 9 on the fair value hierarchy as at January 1, 2018, was as follows:



	At December 31, 2017 (as previously reported)								Adjustments/Reclassifications											At January 1, 2018 (as adjusted)
	Level 1		Level 2		Level 3		Total		Level 1			Level 2			Level 3		Total			Level 1		Level 2		Level 3		Total
	(€ million)
Debt securities and equity instruments measured at FVOCI	€	3	€	24	€	—	€	27	€	—		€	(4	)	€	23	€	19		€	3	€	20	€	23	€	46
Debt securities and equity instruments measured at FVPL	275		—		2		277		—			—			20		20			275		—		22		297
Derivative financial assets	—		254		30		284		—			—			—		—			—		254		30		284
Collateral deposits	61		—		—		61		—			—			—		—			61		—		—		61
Receivables from financing activities	—		—		—		—		—			—			700		700			—		—		700		700
Trade receivables	—		—		—		—		—			28			—		28			—		28		—		28
Cash at banks⁽¹⁾	6,396		—		—		6,396		(6,396		)	—			—		(6,396		)	—		—		—		—
Money market securities⁽¹⁾	4,404		1,838		—		6,242		(1,692		)	(1,838		)	—		(3,530		)	2,712		—		—		2,712
Total Assets	€	11,139	€	2,116	€	32	€	13,287	€	(8,088	)	€	(1,814	)	€	743	€	(9,159	)	€	3,051	€	302	€	775	€	4,128
Derivative financial liabilities	—		138		1		139		—			—			—		—			—		138		1		139
Total Liabilities	€	—	€	138	€	1	€	139	€	—		€	—		€	—	€	—		€	—	€	138	€	1	€	139

______________________________________________________________________________________________________________________________

(1) Amounts relating to Cash at banks and certain Money market securities have been reclassified to amortized cost at January 1, 2018. Refer to Note 1, Basis of Preparation.

During the three months ended March 31, 2018, there were no transfers between levels in the fair value hierarchy. For assets and liabilities recognized in the financial statements at fair value on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization at the end of each reporting period.

The fair value of Other financial assets and liabilities, which mainly include derivative financial instruments, is measured by taking into consideration market parameters at the balance sheet date and using valuation techniques widely accepted in the financial business environment as described below:


•	the fair value of forward contracts and currency swaps is determined by taking the prevailing exchange rates and interest rates at the balance sheet date;


•	the fair value of interest rate swaps and forward rate agreements is determined by taking the prevailing interest rates at the balance sheet date and using the discounted expected cash flow method;


•	the fair value of combined interest rate and currency swaps is determined using the exchange and interest rates prevailing at the balance sheet date and the discounted expected cash flow method; and


•	the fair value of swaps and options hedging commodity price risk is determined by using suitable valuation techniques and taking market parameters at the balance sheet date (in particular, underlying prices, interest rates and volatility rates).

The fair value of money market securities is based on available market quotations. Where appropriate, the fair value of money market securities is determined with discounted expected cash flow techniques using observable market yields (categorized as Level 2).

The fair value of Receivables from financing activities, which are classified in Level 3 of the fair value hierarchy, has been estimated using discounted cash flow models. The most significant inputs used in this measurement are market discount rates that reflect conditions applied in various reference markets on receivables with similar characteristics, adjusted in order to take into account the credit risk of the counterparties.

The following is a reconciliation of the changes in items measured at fair value and classified within Level 3:



	Three months ended March 31
	2018							2017
	Receivables from financing activities		Debt securities and equity instruments		Derivative financial assets/(liabilities)			Debt securities and equity instruments		Derivative financial assets/(liabilities)
			(€ million)
At January 1	€	700	€	45	€	29		€	12	€	19
Gains recognized in Consolidated Income Statement	—		—		7			—		—
(Losses)/Gains recognized in Other comprehensive income/(loss)	—		—		(17		)	—		23
Issues/Settlements	185		—		(13		)	—		(5		)
At March 31	€	885	€	45	€	6		€	12	€	37

Gains/(losses) included in the Interim Condensed Consolidated Income Statement during the three months ended March 31, 2018 and 2017 were recognized within Cost of revenues. Gains/(losses) recognized in Other comprehensive income/(loss) during the three months ended March 31, 2018 and 2017 were included within Cash flow hedge reserve within Equity in the Interim Condensed Consolidated Statement of Financial Position.

Assets and liabilities not measured at fair value on a recurring basis

The carrying value for current receivables and payables is a reasonable approximation of the fair value as the present value of future cash flows does not differ significantly from the carrying amount.

The carrying value of Cash at banks and Other cash equivalents usually approximate fair value due to the short maturity of these instruments.

The following table summarizes the carrying amount and fair value for financial assets and liabilities not measured at fair value on a recurring basis:



		At March 31, 2018				At December 31, 2017
	Note	Carrying amount		Fair Value		Carrying amount		Fair Value
		(€ million)
Dealer financing		€	1,654	€	1,654	€	2,295	€	2,295
Retail financing		477		451		420		405
Finance leases		5		5		4		4
Other receivables from financing activities		520		520		421		421
Total Receivables from financing activities⁽¹⁾	7	€	2,656	€	2,630	€	3,140	€	3,125

Notes		€	8,252	€	8,868	€	9,626	€	10,365
Other debt		7,616		7,626		7,988		8,001
Asset-backed financing		374		374		357		357
Total Debt	12	€	16,242	€	16,868	€	17,971	€	18,723

______________________________________________________________________________________________________________________________

(1) Amount at March 31, 2018 excludes receivables measured at FVPL

Notes that are traded in active markets for which close or last trade pricing is available are classified within Level 1 of the fair value hierarchy. Notes for which such prices are not available are valued at the last available price or based on quotes received from independent pricing services or from dealers who trade in such securities and are classified within Level 2 of the fair value hierarchy. At March 31, 2018, €8,861 million and €7 million of Notes were classified within Level 1 and Level 2, respectively. At December 31, 2017, €10,358 million and €7 million of Notes were classified within Level 1 and Level 2, respectively.

The fair value of Other debt classified within Level 2 of the fair value hierarchy has been estimated using discounted cash flow models. The main inputs used are year-end market interest rates, adjusted for market expectations of the Group’s non-performance risk implied in quoted prices of traded securities issued by the Group and existing credit derivatives on Group liabilities. The fair value of the debt that requires significant adjustments using unobservable inputs is classified in Level 3. At March 31, 2018, €6,523 million and €1,103 million of Other Debt was classified within Level 2 and Level 3, respectively. At December 31, 2017, €6,796 million and €1,205 million of Other Debt were classified within Level 2 and Level 3, respectively.

15. Related party transactions

Related parties of the Group are entities and individuals capable of exercising control, joint control or significant influence over the Group and its subsidiaries. Refer to Note 24, Related party transactions, in the FCA Consolidated Financial Statements at December 31, 2017, for a description of the Group's transactions with the Group's unconsolidated subsidiaries, joint ventures, associates and other related parties.

The amounts for significant transactions with related parties recognized in the Interim Condensed Consolidated Income Statements were as follows:



	Three months ended March 31
	2018									2017
	Net revenues		Cost of revenues		Selling, general and other costs/(income)			Net Financial expenses		Net revenues		Cost of revenues		Selling, general and other costs/(income)			Net Financial expenses/ (income)
	(€ million)
Joint arrangements and associates	€	940	€	782	€	(19	)	€	10	€	1,085	€	805	€	(35	)	€	8
CNHI	€	142	€	86	€	2		€	—	€	138	€	85	€	—		€	—
Ferrari	€	19	€	60	€	—		€	—	€	26	€	87	€	—		€	—

Assets and liabilities from significant transactions with related parties were as follows:



	At March 31, 2018										At December 31, 2017
	Trade and other receivables		Trade payables		Other liabilities		Asset-backed financing		Debt		Trade and other receivables		Trade payables		Other liabilities		Asset-backed financing		Debt
	(€ million)
Joint arrangements and associates	€	817	€	480	€	362	€	360	€	35	€	644	€	507	€	274	€	319	€	33
CNHI	€	60	€	86	€	3	€	—	€	—	€	47	€	86	€	11	€	—	€	—
Ferrari	€	22	€	58	€	1	€	—	€	—	€	23	€	75	€	—	€	—	€	—

16. Guarantees granted, commitments and contingent liabilities

Litigation

Takata airbag inflators

We are aware of putative class action lawsuits filed in March 2018 against FCA US in the U.S. District Courts for the Southern District of Florida and the Eastern District of Michigan, asserting claims under federal and state laws alleging economic loss due to Takata airbag inflators installed in certain of our vehicles. At this early stage, we are unable to reliably evaluate the likelihood that a loss will be incurred or estimate a range of possible loss.

Rear Impact Litigation

On July 9, 2012, a lawsuit was filed against FCA US in the Superior Court of Decatur County, Georgia, U.S. (the “Court”), with respect to a March 2012 fatality in a rear-impact collision involving a 1999 Jeep Grand Cherokee. Plaintiffs alleged that the manufacturer had acted in a reckless and wanton fashion when it designed and sold the vehicle due to the placement of the fuel tank behind the rear axle and had breached a duty to warn of the alleged danger. On April 2, 2015, a jury found in favor of the plaintiffs and the trial court entered a judgment against FCA US in the amount of U.S.$148.5 million (€141 million). On July 24, 2015, the Court issued a remittitur reducing the judgment against FCA US to U.S.$40 million (€38 million).

FCA US believes the jury verdict was not supported by the evidence or the law and appealed the Court’s verdict. FCA US maintains that the 1999 Jeep Grand Cherokee is not defective, and its fuel system does not pose an unreasonable risk to motor vehicle safety. The vehicle met or exceeded all applicable Federal Motor Vehicle Safety Standards, including the standard governing fuel system integrity. Furthermore, FCA US submitted extensive data to NHTSA validating that the vehicle performs as well as, or better than, peer vehicles in impact studies, and nothing revealed in the trial altered this data. During the trial, however, FCA US was not allowed to introduce all the data previously provided to NHTSA, which demonstrated that the vehicle’s fuel system is not defective.

On November 15, 2016, the Georgia Court of Appeals affirmed the Court’s verdict and judgment of U.S.$40 million (€38 million). On March 15, 2018, the Georgia Supreme Court affirmed the judgment of the Georgia Court of Appeals. FCA US declined to pursue further appeals and the final amount of the outstanding judgment, including accrued interest, did not materially exceed our existing provisions.

Emissions Matters

During the three months ended March 31, 2018, we continued to cooperate with several governmental investigations. In particular we continued to work with the U.S. Environmental Protection Agency (“EPA”) and the California Air Resources Board (“CARB”) to address their concerns about certain software-based features in the emissions control systems in approximately 100,000 2014-2016 model year light-duty Ram 1500 and Jeep Grand Cherokee diesel vehicles that were the subject of Notices of Violation issued in January 2017. We are also continuing to defend a number of private and governmental claims related to diesel emissions issues in various proceedings.

During the period, we continued testing on the 2014-2016 model year vehicles of the modified emissions software calibrations that we implemented in our 2017 model year vehicles which have been approved for sale by EPA and CARB with no required hardware changes. We expect that this testing may be completed during the second quarter of 2018, although no assurance can be given as to the outcome and timing of the regulatory approval processes.

In connection with the civil lawsuit filed against us by the Environmental and Natural Resources Division of the U.S. Department of Justice (“DOJ-ENRD”) on behalf of the EPA and the putative class action filed on behalf of consumers, we have also been engaged in a confidential mediation process under the auspices of a settlement master appointed by the court. While there can be no assurance as to the outcome of any of these discussions, we are continuing to work with the governmental agencies and, to resolve their concerns, we may seek to reach a settlement with these agencies shortly following completion of the regulatory approval process. Although CARB is not a party to the litigation, it is also participating in this mediation.

Any settlement of civil lawsuits or claims by EPA and CARB may involve the payment of a civil penalty, the funding of environmental remediation projects and commitments from us including as to the implementation of the modified emissions software calibrations. Any settlement with private plaintiffs may include payments to consumers or incurrence of other costs as well as, possibly, similar commitments to consumers. At this time, we cannot predict whether or when any settlements may be reached or, if no settlement is reached, the ultimate outcome of any litigation or related governmental investigations. Due to the large number of possible outcomes, we are unable to reliably estimate a range of probable losses. Resolution of these matters may also adversely affect our reputation with consumers, which may negatively impact demand for our vehicles and could have a material adverse effect on our business, financial condition and results of operations.

In addition, refer to Note 25, Guarantees granted, commitments and contingent liabilities, in the FCA Consolidated Financial Statements at December 31, 2017 for information on the Group's other pending litigation proceedings and governmental investigations.

17. Equity

Share capital

At March 31, 2018, the authorized share capital of FCA was forty million Euro (€40,000,000), divided into two billion (2,000,000,000) FCA common shares, nominal value of one Euro cent (€0.01) per share and two billion (2,000,000,000) special voting shares, nominal value of one Euro cent (€0.01) per share.

At March 31, 2018, the fully-paid up share capital of FCA amounted to €19 million (€19 million at December 31, 2017) and consisted of 1,549,647,057 common shares and 408,941,767 special voting shares, all with a par value of €0.01 each (1,540,089,690 common shares and 408,941,767 special voting shares, all with a par value of €0.01 each at December 31, 2017).

Other comprehensive income/(loss)

Other comprehensive income/(loss) was as follows:



	Three months ended March 31
	2018			2017
	(€ million)
Items that will not be reclassified to the Consolidated Income Statement in subsequent periods:
Gains on equity instruments measured at FVOCI	—			11
Total items that will not be reclassified to the Consolidated Income Statement (B1)	—			11

Items that may be reclassified to the Consolidated Income Statement in subsequent periods:
Gains/(losses) on cash flow hedging instruments arising during the period	142			(11		)
(Losses)/gains on cash flow hedging instruments reclassified to the Consolidated Income Statement	(39		)	72
Total Gains/(Losses) on cash flow hedging instruments	103			61
Foreign exchange losses	(438		)	(16		)
Share of Other comprehensive loss for equity method investees arising during the period	(20		)	(15		)
Share of Other comprehensive loss for equity method investees reclassified to the Consolidated Income Statement	(8		)	(6		)
Total Share of Other comprehensive (loss) for equity method investees	(28		)	(21		)
Total Items that may be reclassified to the Consolidated Income Statement (B2)	(363		)	24
Total Other comprehensive income/(loss) (B1)+(B2)	(363		)	35
Tax effect	(28		)	(10		)
Total Other comprehensive income/(loss), net of tax	€	(391	)	€	25

The tax effect relating to Other comprehensive income/(loss) was as follows:



	Three months ended March 31
	2018									2017
	Pre-tax balance			Tax income/(expense)			Net balance			Pre-tax balance			Tax income/(expense)			Net balance
	(€ million)
Gains/(losses) on cash flow hedging instruments	€	103		€	(28	)	€	75		€	61		€	(10	)	€	51
Gains on equity instruments measured at FVOCI	—			—			—			11			—			11
Foreign exchange losses	(438		)	—			(438		)	(16		)	—			(16		)
Share of Other comprehensive loss for equity method investees	(28		)	—			(28		)	(21		)	—			(21		)
Total Other comprehensive income/(loss)	€	(363	)	€	(28	)	€	(391	)	€	35		€	(10	)	€	25

18. Earnings per share

Basic earnings per share

Basic earnings per share for the three months ended March 31, 2018 and 2017 was determined by dividing the Net profit attributable to the equity holders of the parent by the weighted average number of shares outstanding during each period.

The following table summarizes the amounts used to calculate the basic earnings per share:



		Three months ended March 31
		2018		2017
Net profit attributable to owners of the parent	million	€	1,016	€	637
Weighted average number of shares outstanding	thousand	1,542,107		1,529,948
Basic earnings per share	€	€	0.66	€	0.42

Diluted earnings per share

In order to calculate the diluted earnings per share for the three months ended March 31, 2018, the weighted average number of shares outstanding was increased to take into consideration the theoretical effect of the potential common shares that would be issued for the outstanding and unvested PSU awards and RSU awards at March 31, 2018 as determined using the treasury stock method.

For the three months ended March 31, 2018, there were no instruments excluded from the calculation of diluted earnings per share because of an anti-dilutive effect.

For the three months ended March 31, 2017, the theoretical effect that would arise if the PSU and RSU awards granted in March 2017 were exercised was not taken into consideration in the calculation of diluted earnings per share as this would have had an anti-dilutive effect.

The following tables summarize the amounts used to calculate the diluted earnings per share for the three months ended March 31, 2018 and 2017:



		Three months ended March 31
		2018		2017
Net profit attributable to owners of the parent	million	€	1,016	€	637
Weighted average number of shares outstanding	thousand	1,542,107		1,529,948
Number of shares deployable for share-based compensation	thousand	24,295		21,586
Weighted average number of shares outstanding for diluted earnings per share	thousand	1,566,402		1,551,534
Diluted earnings per share	€	€	0.65	€	0.41

19. Segment reporting

The Group’s activities are carried out through six reportable segments: four regional mass-market vehicle segments (NAFTA, LATAM, APAC and EMEA); Maserati, our global luxury brand segment; and a global Components segment. These reportable segments reflect the operating segments of the Group that are regularly reviewed by the Chief Executive Officer, who is the “chief operating decision maker,” for making strategic decisions, allocating resources and assessing performance, and that exceed the quantitative threshold provided in IFRS 8 - Operating Segments, or whose information is considered useful for the users of the financial statements.

The Group’s four regional mass-market vehicle reportable segments deal with the design, engineering, development, manufacturing, distribution and sale of passenger cars, light commercial vehicles and related parts and services in specific geographic areas: NAFTA (U.S., Canada, Mexico and Caribbean islands), LATAM (South and Central America), APAC (Asia and Pacific countries) and EMEA (Europe, Middle East and Africa). The Group's global luxury brand reportable segment, Maserati, deals with the design, engineering, development, manufacturing, worldwide distribution and sale of luxury vehicles under the Maserati brand. The Group's global Components reportable segment deals with the production and sale of lighting components, body control units, suspensions, shock absorbers, electronic systems and exhaust systems, powertrain components, engine control units, plastic molding components, cast iron and aluminum components, as well as the design and production of industrial automation systems and related products for the automotive industry.

Other activities include the results of the activities and businesses that are not operating segments under IFRS 8 – Operating Segments. In addition, Unallocated items and eliminations include consolidation adjustments and eliminations. Financial income and expenses and income taxes are not attributable to the performance of the segments as they do not fall under the scope of their operational responsibilities.

Adjusted Earnings Before Interest and Taxes (“Adjusted EBIT”) is the measure used by the chief operating decision maker to assess performance, allocate resources to the Group's operating segments and to view operating trends, perform analytical comparisons and benchmark performance between periods and among the segments. Adjusted EBIT excludes certain adjustments from Net profit including gains/(losses) on the disposal of investments, restructuring, impairments, asset write-offs and unusual income/(expenses) that are considered rare or discrete events that are infrequent in nature, and also excludes Net financial expenses and Tax expense/(benefit). See below for a reconciliation of Net profit, which is the most directly comparable measure included in our Consolidated Income Statement, to Adjusted EBIT. Operating assets are not included in the data reviewed by the chief operating decision maker, and as a result and as permitted by IFRS 8 – Operating Segments, the related information is not provided.

The following tables summarize selected financial information by segment for the three months ended March 31, 2018 and 2017:



	Mass-Market Vehicles
Three months ended March 31, 2018	NAFTA			LATAM			APAC			EMEA			Maserati			Components			Other activities			Unallocated items & eliminations			FCA
	(€ million)
Revenues	€	16,413		€	1,890		€	619		€	5,640		€	754		€	2,482		€	154		€	(925	)	€	27,027
Revenues from transactions with other segments	(9		)	(3		)	(12		)	(25		)	(10		)	(767		)	(99		)	925			—
Revenues from external customers	€	16,404		€	1,887		€	607		€	5,615		€	744		€	1,715		€	55		€	—		€	27,027

Net profit																									€	1,021
Tax expense																									€	226
Net financial expenses																									€	309
Adjustments:
U.S. special bonus payment⁽¹⁾	109			—			—			—			—			6			—			—			115
Restructuring costs⁽²⁾	—			—			—			—			—			3			—			—			3
Recovery of costs for recall - contested with supplier	(63		)	—			—			—			—			—			—			—			(63		)
Adjusted EBIT	€	1,216		€	74		€	10		€	182		€	86		€	118		€	(50	)	€	(25	)	€	1,611

Share of profit of equity method investees	€	—		€	—		€	5		€	75		€	—		€	5		€	5		€	—		€	90

______________________________________________________________________________________________________________________________

(1) Special bonus payment of $2,000 to approximately 60,000 employees as a result of the Tax Cuts and Jobs Act.

(2) Restructuring costs primarily related to Components. Refer to Note 11, Provisions.

(3) Recovery of amounts accrued in 2016 in relation to costs for a recall contested with a supplier.



	Mass-Market Vehicles
Three Months Ended March 31, 2017	NAFTA			LATAM			APAC			EMEA			Maserati			Components			Other activities			Unallocated items & eliminations			FCA
	(€ million)
Revenues	€	17,100		€	1,672		€	666		€	5,630		€	949		€	2,532		€	185		€	(1,015	)	€	27,719
Revenues from transactions with other segments	(18		)	(4		)	(9		)	(25		)	(5		)	(855		)	(99		)	1,015			—
Revenues from external customers	€	17,082		€	1,668		€	657		€	5,605		€	944		€	1,677		€	86		€	—		€	27,719

Net profit																									€	641
Tax expense																									€	428
Net financial expenses																									€	436
Adjustments:
Restructuring costs⁽¹⁾	—			32			—			—			—			3			—			—			35
Other	—			—			—			—			—			(5		)	—			—			(5		)
Adjusted EBIT	€	1,241		€	(20	)	€	21		€	178		€	107		€	118		€	(55	)	€	(55	)	€	1,535

Share of profit of equity method investees	€	—		€	—		€	14		€	71		€	—		€	2		€	2		€	1		€	90

______________________________________________________________________________________________________________________________

(1) Restructuring costs primarily related to LATAM. Refer to Note 11, Provisions.

20. Subsequent events

On April 5, 2018, the FCA Board of Directors announced that it had authorized FCA management to develop and implement a plan to separate the Magneti Marelli business from the Group and to distribute shares of a new holding company for Magneti Marelli to the shareholders of FCA. The separation is expected to be completed by the end of 2018 or early 2019 and shares of Magneti Marelli are expected to be listed on the Milan stock exchange.

The separation of Magneti Marelli will be subject to customary regulatory approvals, tax and legal considerations, final approval of the transaction structure by the FCA Board of Directors and other customary requirements.

Exhibit 99.2 FCA NV 2018.03.31 Additional Information Financial Data by Activity

Exhibit 99.2

Income Statement by activity

Unaudited



	For the three months ended March 31, 2018			For the three months ended March 31, 2017
(€ million)	Group	Industrial activities	Financial services	Group	Industrial activities	Financial services
Net revenues	27,027	26,975	73	27,719	27,667	77
Cost of revenues	23,057	23,048	30	23,588	23,561	52
Selling, general and other costs	1,624	1,617	7	1,841	1,832	9
Research and development costs	874	874	—	846	846	—
Result from investments	87	37	50	96	50	46
Restructuring costs	3	3	—	35	35	—
Net financial expenses	309	309	—	436	436	—
Profit before taxes	1,247	1,161	86	1,069	1,007	62
Tax expense	226	214	12	428	424	4
Result from intersegment investments	—	74	—	—	58	—
Net profit	1,021	1,021	74	641	641	58

Adjusted EBIT	1,611	1,525	86	1,535	1,473	62

Statement of Financial Position by activity

Unaudited



	At March 31, 2018			At December 31, 2017
(€ million)	Group	Industrial activities	Financial services	Group	Industrial activities	Financial services
Assets
Goodwill and intangible assets with indefinite useful lives	13,036	13,036	—	13,390	13,390	—
Other intangible assets	11,472	11,469	3	11,542	11,539	3
Property, plant and equipment	28,032	28,030	2	29,014	29,012	2
Investments and other financial assets	2,969	3,353	1,274	2,977	3,356	1,228
Deferred tax assets	2,074	2,030	44	2,004	1,955	49
Inventories	13,731	13,731	—	12,922	12,922	—
Assets sold with a buy-back commitment	1,860	1,860	—	1,748	1,748	—
Trade receivables	2,562	2,562	22	2,460	2,461	19
Receivables from financing activities	3,541	1,825	3,219	3,140	1,356	2,906
Tax receivables	276	282	3	298	293	5
Other assets	4,494	4,487	7	4,166	4,157	9
Cash and cash equivalents	11,579	11,395	184	12,638	12,423	215
TOTAL ASSETS	95,626	94,060	4,758	96,299	94,612	4,436
Equity and Liabilities
Equity	21,704	21,704	1,637	20,987	20,987	1,598
Employee benefits liabilities	9,072	9,070	2	9,278	9,276	2
Provisions	14,368	14,367	10	14,779	14,777	11
Deferred tax liabilities	496	496	—	388	388	—
Debt	16,242	14,858	2,899	17,971	16,461	2,632
Trade payables	22,583	22,585	17	21,939	21,939	8
Other financial liabilities	133	133	—	139	139	—
Tax payables	441	427	23	383	370	22
Other liabilities	10,587	10,420	170	10,435	10,275	163
TOTAL EQUITY AND LIABILITIES	95,626	94,060	4,758	96,299	94,612	4,436

Statement of Cash Flows by activity

Unaudited



	For the three months ended March 31, 2018						For the three months ended March 31, 2017
(€ million)	Group		Industrial activities		Financial services		Group		Industrial activities		Financial services
CASH FLOW FROM OPERATING ACTIVITIES:
Net profit	1,021		1,021		74		641		641		58
Amortization and depreciation	1,545		1,544		1		1,600		1,599		1
Net losses/(gains) on disposal of non-current assets and other non-cash items	(75	)	(88	)	(61	)	(54	)	(70	)	(42	)
Change in items due to buy back commitments	212		212		—		(11	)	(11	)	—
Dividends received	66		87		—		35		41		—
Change in provisions	44		44		—		(195	)	(195	)	—
Change in deferred taxes	(66	)	(71	)	5		142		142		—
Change in working capital	(399	)	(417	)	18		(581	)	(603	)	22
TOTAL	2,348		2,332		37		1,577		1,544		39
CASH FLOWS FROM/(USED IN) INVESTING ACTIVITIES:
Investments in property, plant and equipment and intangible assets	(1,356	)	(1,356	)	—		(2,231	)	(2,231	)	—
Investments in joint ventures, associates and unconsolidated subsidiaries	1		1		—		—		—		—
Proceeds from the sale of non-current assets	12		12		—		—		—		—
Net change in receivables from financing activities	(437	)	(76	)	(361	)	149		(12	)	161
Change in securities	5		5		—		147		148		(1	)
Other changes	2		2		—		14		14		—
TOTAL	(1,773	)	(1,412	)	(361	)	(1,921	)	(2,081	)	160
CASH FLOWS FROM/(USED IN) FINANCING ACTIVITIES:
Net change in Debt and other financial assets/liabilities	(1,401	)	(1,717	)	316		(2,970	)	(2,783	)	(187	)
Increase in share capital	11		11		—		—		—		—
Distributions paid	—		—		(21	)	—		—		—
Other changes	—		—		—		—		—		(6	)
TOTAL	(1,390	)	(1,706	)	295		(2,970	)	(2,783	)	(193	)
Translation exchange differences	(244	)	(242	)	(2	)	(94	)	(94	)	—
TOTAL CHANGE IN CASH AND CASH EQUIVALENTS	(1,059	)	(1,028	)	(31	)	(3,408	)	(3,414	)	6
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD	12,638		12,423		215		17,318		17,167		151
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD	11,579		11,395		184		13,910		13,753		157

q12018fcadebtmaturitiesl

Q1 2018 Additional Information: Debt 1 Note: Numbers may not add due to rounding Net debt breakdown - Unaudited Exhibit 99.3 €B Dec. 31, ‘17 Mar. 31, ‘18 Cons. Ind. Fin. Cons. Ind. Fin. 18.0 15.5 2.5 Gross debt (*) 16.2 13.4 2.8 (0.3) (0.3) - Fin. Receiv. from Fin.Co. JV (0.4) (0.4) - (0.2) (0.2) (0.0) Derivatives M-to-M, Net (0.2) (0.2) 0.0 (12.8) (12.6) (0.2) Cash & marketable securities (11.8) (11.6) (0.2) 4.7 2.4 2.3 Net debt 3.9 1.3 2.6 (*): net of Intersegment receivables

Q1 2018 Additional Information: Debt 2 Note: Numbers may not add due to rounding Outstanding Dec. 31, ’17 Outstanding Mar. 31, ’18 17.7 Cash maturities 15.9 7.2 Bank debt 6.7 9.8 Capital market debt 8.5 0.7 Other debt 0.7 0.4 Asset-backed financing 0.4 (0.1) Accruals (0.1) 18.0 Debt vs Third Parties 16.2 (0.3) Fin. Receiv. From Fin.Co. JV (0.4) 17.7 Gross Debt (Net of Fin. Receiv. From Fin.Co. JV) 15.9 (12.8) Cash & marketable securities (11.8) (0.2) Derivatives (assets)/liabilities (0.2) 4.7 Net debt 3.9 7.6 Undrawn committed revolving facilities 7.6 Debt breakdown- Unaudited €B

Q1 2018 Additional Information: Debt 3 Debt maturity schedule - Unaudited €B Outstanding Mar. 31 ‘18 9M 2018 2019 2020 2021 2022 Beyond 6.7 Bank debt 3.7 1.1 0.7 0.4 0.3 0.5 8.5 Capital market debt 0.8 1.7 1.2 1.0 1.4 2.5 0.7 Other debt 0.4 0.1 0.0 0.0 0.0 0.1 15.9 Total cash maturities * 4.9 3.0 1.9 1.4 1.7 3.0 11.8 Cash and marketable securities 7.6 Undrawn committed revolving facilities 19.4 Total available liquidity 8.1(**) Sale of receivables (IFRS de- recognition compliant) 5.2 of which receivables sold to financial services JVs (FCA Bank) Note: Numbers may not add due to rounding * Excludes accruals and Asset backed financing (€ 0.4B in March 2018). Total Debt vs Third Parties € 16.2B ** Non including € 1.2B receivables sold from InCo to FinCo and not sold to Third Parties