0001605484-21-000032 | 20-F | XBRL Viewer

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Document and Entity Information - € / shares	12 Months Ended
Document and Entity Information - € / shares	Dec. 31, 2020	Dec. 31, 2019
Document Information [Line Items]
Entity Registrant Name	Stellantis N.V.
Entity File Number	001-36675
Entity Incorporation, State or Country Code	P7
Entity Address, Address Line One	Singaporestraat 92-100
Entity Common Stock, Shares Outstanding	1,574,714,499
Entity Address, City or Town	Lijnden
Entity Address, Postal Zip Code	P7 1175 RA
Entity Address, Country	NL
Contact Personnel Email Address	general.counsel@stellantis.com
Entity Listing, Par Value Per Share	€ 0.01
Document Accounting Standard	International Financial Reporting Standards
Entity Filer Category	Large Accelerated Filer
Entity Emerging Growth Company	false
Entity Shell Company	false
Document Annual Report	true
Document Transition Report	false
Document Registration Statement	false
Entity Current Reporting Status	Yes
Document Type	20-F
Document Fiscal Period Focus	2020
Document Fiscal Period Focus	FY
Number of shares outstanding (in shares)	2,024,333,013	1,976,461,041
Entity Central Index Key	0001605484
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Period End Date	Dec. 31, 2020
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Interactive Data Current	Yes
Document Shell Company Report	false
Special voting shares
Document Information [Line Items]
Entity Listing, Par Value Per Share	€ 0.01
Number of shares outstanding (in shares)	449,618,514	408,941,767
Common shares
Document Information [Line Items]
Number of shares outstanding (in shares)	1,574,714,499	1,567,519,274
Business Contact
Document Information [Line Items]
Entity Address, Address Line One	Singaporestraat 92-100
Entity Address, City or Town	Lijnden
Entity Address, Postal Zip Code	P7 1175 RA
Entity Address, Country	NL
Contact Personnel Name	Giorgio Fossati
City Area Code	+31 20
Local Phone Number	3421 707

CONSOLIDATED INCOME STATEMENT - EUR (€) € in Millions	12 Months Ended
CONSOLIDATED INCOME STATEMENT - EUR (€) € in Millions	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Profit or loss [abstract]
Net revenues	€ 86,676	€ 108,187	€ 110,412
Cost of revenues	75,962	93,164	95,011
Selling, general and other costs	5,501	6,455	7,318
Research and development costs	2,979	3,612	3,051
Result from investments:	179	209	235
Share of the profit of equity method investees	184	208	240
Other income from investments	(5)	1	(5)
Gains on disposal of investments	4	15	0
Restructuring costs	73	154	103
Net financial expenses	988	1,005	1,056
Profit before taxes	1,356	4,021	4,108
Tax expense	1,332	1,321	778
Net profit from continuing operations	24	2,700	3,330
Profit from discontinued operations, net of tax	0	3,930	302
Net profit	24	6,630	3,632
Net profit attributable to:
Owners of the parent	29	6,622	3,608
Non-controlling interests	(5)	8	24
Net profit/(loss) from continuing operations attributable to:
Net profit from continuing operations attributable to owners of the parent	29	2,694	3,323
Non-controlling interests	€ (5)	€ 6	€ 7
Earnings per share [abstract]
Basic earnings per share (in EUR per share)	€ 0.02	€ 4.23	€ 2.33
Diluted earnings per share (in EUR per share)	0.02	4.22	2.30
Earnings per share for Net profit from continuing operations:
Basic earnings per share from continuing operations (in EUR per share)	0.02	1.72	2.15
Diluted earnings per share (in EUR per share)	€ 0.02	€ 1.71	€ 2.12

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME - EUR (€) € in Millions	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Statement of comprehensive income [abstract]
Net profit	€ 24	€ 6,630	€ 3,632
Items that will not be reclassified to the Consolidated Income Statement in subsequent periods:
(Losses)/gains on remeasurement of defined benefit plans	(110)	(63)	317
Other comprehensive income, before tax, gains (losses) from investments in debt instruments	(1)	0	0
Share of (losses)/gains on remeasurement of defined benefit plans for equity method investees	0	(5)	0
Other comprehensive income, before tax, financial assets measured at fair value through other comprehensive income	(5)	6	(4)
Related tax impact	21	7	(76)
Items relating to discontinued operations, net of tax	0	(9)	2
Total items that will not be reclassified to the Consolidated Income Statement in subsequent periods (B1)	(95)	(64)	239
Items that may be reclassified to the Consolidated Income Statements in subsequent periods:
(Losses)/gains on cash flow hedging instruments	(22)	(191)	(9)
Exchange (losses)/gains on translating foreign operations	(2,696)	268	126
Share of Other comprehensive (loss) for equity method investees	(104)	(15)	(103)
Related tax impact	7	50	(6)
Items relating to discontinued operations, net of tax	0	9	(91)
Total items that may be reclassified to the Consolidated Income Statement in subsequent periods (B2)	(2,815)	121	(83)
Total Other comprehensive income/(loss), net of tax (B1)+(B2)=(B)	(2,910)	57	156
Total Comprehensive income (A)+(B)	(2,886)	6,687	3,788
Total Comprehensive income attributable to:
Comprehensive income, attributable to owners of parent	(2,875)	6,676	3,763
Non-controlling interests	(11)	11	25
Total Comprehensive income (A)+(B)	(2,886)	6,687	3,788
Total Comprehensive income attributable to owners of the parent:
Continuing operations	(2,875)	2,749	3,558
Discontinued operations	0	3,927	205
Owners of the parent	€ (2,875)	€ 6,676	€ 3,763

CONSOLIDATED STATEMENT OF FINANCIAL POSITION - EUR (€) € in Millions	Dec. 31, 2020	Dec. 31, 2019
Assets
Goodwill and intangible assets with indefinite useful lives	€ 13,055	€ 14,257
Other intangible assets	12,519	12,447
Property, plant and equipment	27,582	28,608
Investments accounted for using the equity method	2,086	2,009
Other financial assets	331	340
Deferred tax assets	1,096	1,689
Other receivables	1,721	2,376
Tax receivables	95	94
Prepaid expenses and other assets	394	535
Other non-current assets	798	757
Total Non-current assets	59,677	63,112
Inventories	8,094	9,722
Assets sold with a buy-back commitment	852	1,626
Trade and other receivables	5,545	6,628
Tax receivables	89	372
Prepaid expenses and other assets	457	524
Other financial assets	851	670
Cash and cash equivalents	23,846	15,014
Assets held for sale	319	376
Total Current assets	40,053	34,932
Total Assets	99,730	98,044
Equity
Equity attributable to owners of the parent	25,737	28,537
Non-controlling interests	124	138
Total Equity	25,861	28,675
Liabilities
Long-term debt	17,036	8,025
Employee benefits liabilities	8,328	8,507
Provisions	4,966	5,027
Other financial liabilities	280	124
Deferred tax liabilities	1,845	1,628
Tax liabilities	248	278
Other liabilities	2,129	2,426
Total Non-current liabilities	34,832	26,015
Trade payables	20,576	21,616
Short-term debt and current portion of long-term debt	4,081	4,876
Employee benefit liabilities	592	544
Provisions	7,255	8,978
Other financial liabilities	353	194
Tax liabilities	228	122
Other liabilities	5,749	6,788
Liabilities held for sale	203	236
Total Current liabilities	39,037	43,354
Total Equity and liabilities	€ 99,730	€ 98,044

CONSOLIDATED STATEMENT OF CASH FLOWS - EUR (€) € in Millions	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Cash flows from operating activities:
Net profit from continuing operations	€ 24	€ 2,700	€ 3,330
Amortization and depreciation	5,143	5,445	5,507
Net losses on disposal of tangible and intangible assets	3	19	1
Net gains on disposal of investments	(22)	(15)	0
Other non-cash items	1,192	1,541	129
Dividends received	73	156	75
Change in provisions	(434)	(1,744)	842
Change in deferred taxes	894	864	457
Change due to assets sold with buy-back commitments and GDP vehicles	(249)	(65)	158
Change in inventories	983	1,017	1,399
Change in trade receivables	366	100	19
Change in trade payables	565	2,020	(1,240)
Change in other liabilities, payables and receivables	645	(1,268)	(1,213)
Cash flows (used in)/from operating activities - discontinued operations	0	(308)	484
Total	9,183	10,462	9,948
Cash flows used in investing activities:
Investments in property, plant and equipment and intangible assets	(8,600)	(8,385)	(5,392)
Investments in joint ventures, associates and unconsolidated subsidiaries	(63)	(2)	(3)
Proceeds from the sale of tangible and intangible assets	77	53	47
Proceeds from sales of investments other than investments accounted for using equity method	71	0	0
Net change in receivables from financing activities	396	336	(676)
Change in securities	207	(235)	(75)
Other changes	(3)	55	(7)
Net cash proceeds from disposal of discontinued operations	0	5,348	0
Cash flows used in investing activities - discontinued operations	0	(155)	(632)
Total	(7,915)	(2,985)	(6,738)
Cash flows from/(used) in financing activities:
Issuance of notes	3,500	0	0
Repayment of notes	(1,376)	(1,480)	(1,850)
Proceeds of other long-term debt	15,215	329	935
Repayment of other long-term debt	(8,295)	(1,163)	(2,852)
Net change in short-term debt and other financial assets/liabilities	43	(782)	1,062
Distributions paid	0	(3,056)	(1)
Other changes	0	0	11
Cash flows from/(used in) financing activities - discontinued operations	0	325	(90)
Total	9,087	(5,827)	(2,785)
Translation exchange differences	(1,513)	212	106
Total change in Cash and cash equivalents	8,842	1,862	531
Cash and cash equivalents at beginning of the period	15,014	12,450	12,638
Add: Cash and cash equivalents classified as part of disposal group held for sale	17	719	0
Total change in Cash and cash equivalents	8,842	1,862	531
Less: Cash and cash equivalents at end of the period - included within Assets held for sale	27	17	719
Cash and cash equivalents at end of the period	€ 23,846	€ 15,014	€ 12,450

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY - EUR (€) € in Millions	Total	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	Reserve of gains and losses on financial assets measured at fair value through other comprehensive income [member]
Equity \| Previously stated	€ 20,987	€ 19	€ 20,921	€ 68	€ 970	€ 3	€ (810)	€ (352)	€ 168
Equity \| Increase (decrease) due to changes in accounting policy	21		21
Equity	21,008	19	20,942	68	970	3	(810)	(352)	168
Equity, beginning balance (Previously stated) at Dec. 31, 2017	20,987	19	20,921	68	970	3	(810)	(352)	168
Equity, beginning balance (Increase (decrease) due to changes in accounting policy) at Dec. 31, 2017	21		21
Equity, beginning balance at Dec. 31, 2017	21,008	19	20,942	68	970	3	(810)	(352)	168
Capital increase	11								11
Dividends recognised as distributions to owners	1		0						(1)
Share-based compensation	82	0	82
Net profit	3,632		3,608						24
Other comprehensive income/(loss)	156		0	(22)	41	(4)	243	(103)	1
Other changes	15		18	(1)	0	0	0	0	(2)
Equity, ending balance (Previously stated) at Dec. 31, 2018	24,903	19	24,650	45	1,011	(1)	(567)	(455)	201
Equity, ending balance (Increase (decrease) due to changes in accounting policy) at Dec. 31, 2018	0		0
Equity, ending balance at Dec. 31, 2018	24,903	19	24,650	45	1,011	(1)	(567)	(455)	201
Equity \| Previously stated	24,903	19	24,650	45	1,011	(1)	(567)	(455)	201
Equity \| Increase (decrease) due to changes in accounting policy	0		0
Equity	24,903	19	24,650	45	1,011	(1)	(567)	(455)	201
Equity \| Previously stated	24,903	19	24,650	45	1,011	(1)	(567)	(455)	201
Equity \| Increase (decrease) due to changes in accounting policy	0		0
Equity	24,903	19	24,650	45	1,011	(1)	(567)	(455)	201
Dividends recognised as distributions to owners	3,085		3,056						29
Share-based compensation	115	1	114
Net profit	6,630		6,622						8
Other comprehensive income/(loss)	57			(138)	270	6	(64)	(20)	3
Increase (decrease) through disposal of subsidiary, equity	44		(109)	(6)	97		109		(47)
Other changes	11		24	(15)					2
Equity, ending balance (Previously stated) at Dec. 31, 2019	28,675	20	28,245	(114)	1,378	5	(522)	(475)	138
Equity, ending balance at Dec. 31, 2019	28,675	20
Equity \| Previously stated	28,675	20	28,245	(114)	1,378	5	(522)	(475)	138
Equity \| Increase (decrease) due to changes in accounting policy	0		0
Equity	24,903	20	24,650	45	1,011	(1)	(567)	(455)	201
Equity \| Previously stated	28,675	20	28,245	(114)	1,378	5	(522)	(475)	138
Equity	28,675	20
Equity \| Previously stated	28,675	20	28,245	(114)	1,378	5	(522)	(475)	138
Equity	28,675	20
Equity, beginning balance (Previously stated) at Dec. 31, 2019	28,675	20	28,245	(114)	1,378	5	(522)	(475)	138
Equity, beginning balance at Dec. 31, 2019	28,675	20
Dividends recognised as distributions to owners	0								0
Share-based compensation	60	0	60
Net profit	24		29						(5)
Other comprehensive income/(loss)	(2,910)			(17)	(2,688)	(5)	(89)	(104)	(6)	€ (1)
Other changes	12		17	(2)					(3)
Equity, ending balance at Dec. 31, 2020	25,861	20	28,351	(133)	(1,310)	0	(611)	(579)	124	(1)
Equity \| Previously stated	28,675	20	28,245	(114)	1,378	5	(522)	(475)	138
Equity	28,675	20	28,351	(133)	(1,310)	0	(611)	(579)	124	(1)
Equity	€ 25,861	€ 20	€ 28,351	€ (133)	€ (1,310)	€ 0	€ (611)	€ (579)	€ 124	€ (1)

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Parenthetical) - EUR (€) € in Millions	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Reclassification of gains/losses from other comprehensive income to inventories	€ 2	€ 15

Principal activities	12 Months Ended
Principal activities	Dec. 31, 2020
General Information About Financial Statements [Abstract]
Principal Activities	On January 29, 2014, the Board of Directors of Fiat S.p.A. approved a proposed corporate reorganization resulting in the formation of Fiat Chrysler Automobiles N.V. and establishing Fiat Chrysler Automobiles N.V., organized in the Netherlands, as the parent of the FCA Group with its principal executive offices located at 25 St. James's Street, London SW1A 1HA, United Kingdom. Fiat Chrysler Automobiles N.V. was incorporated as a public limited liability company (naamloze vennootschap) under the laws of the Netherlands on April 1, 2014 under the name Fiat Investments N.V. On October 12, 2014, the cross-border legal merger of Fiat S.p.A. into its 100 percent owned direct subsidiary Fiat Investments N.V. (the “2014 Merger”) became effective. The 2014 Merger, which took the form of a reverse merger, resulted in Fiat Investments N.V. being the surviving entity and it was renamed Fiat Chrysler Automobiles N.V. (“FCA NV”). The FCA Group and its subsidiaries, of which the most significant was FCA US LLC (“FCA US”, formerly known as Chrysler Group LLC), together with its subsidiaries, were engaged in the design, engineering, manufacturing, distribution and sale of automobiles and light commercial vehicles, engines, transmission systems, metallurgical products and production systems. In addition, the FCA Group was also involved in certain other activities, including (mainly captive) services, which represent an insignificant portion of the its business. Refer to Note 3, Scope of consolidation for information on the presentation of Magneti Marelli as a discontinued operation. On January 16, 2021, Peugeot S.A. (“PSA”) merged with and into Fiat Chrysler Automobiles N.V., with Fiat Chrysler Automobiles N.V. as the surviving company in the merger (the “merger”). On January 17, 2021, the combined company was renamed Stellantis N.V., the current members of the board of directors were appointed and the Stellantis articles of association became effective. On this date, the Stellantis management and board of directors collectively obtained the power and ability to control the assets, liabilities and operations of both FCA and PSA. As such, under IFRS 3, Business Combinations, January 17, 2021 is the acquisition date for the business combination. In 2021, the merger will be accounted for by Stellantis using the acquisition method of accounting in accordance with IFRS 3, which requires the identification of the acquirer and the acquiree for accounting purposes. Based on the assessment of the indicators under IFRS 3 and consideration of all pertinent facts and circumstances, FCA and PSA’s management determined that PSA is the acquirer for accounting purposes and as such, the merger will be accounted for as a reverse acquisition. As a result, the financial statements of Stellantis N.V. in subsequent filings will represent the historical financial statements of PSA. Refer to Note 31, Subsequent events, included elsewhere in these financial statements for additional detail. Unless otherwise specified, the terms “FCA Group” and “FCA” refer to FCA NV, together with its subsidiaries and its predecessor prior to the completion of the 2014 Merger, or any one or more of them, as the context may require. Any references to “Fiat” refer solely to Fiat S.p.A., the predecessor of FCA NV prior to the 2014 Merger. Unless otherwise specified, the terms “we”, “our”, “us”, the “Group”, the “Company” and “Stellantis” refer to Stellantis N.V., together with its consolidated subsidiaries, or any one or more of them, as the context may require. All references in this report to “Euro” and “€” refer to the currency introduced at the start of the third stage of European Economic and Monetary Union pursuant to the Treaty on the Functioning of the European Union, as amended. The FCA 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 (“U.S.”). Stellantis has filed a list of subsidiaries and associated companies, prepared in accordance with Sections 379 and 414, Book 2, Dutch Civil Code, at the Dutch trade register of Amsterdam.

Basis of presentation

12 Months Ended

Dec. 31, 2020

Corporate Information And Statement Of IFRS Compliance [Abstract]

Disclosure of significant accounting policies

Significant accounting policies

Basis of consolidation

Subsidiaries

Subsidiaries are entities over which the FCA Group had control. Control was achieved when the FCA Group had power over the investee, when it was exposed to, or had rights to, variable returns from its involvement with the investee and had the ability to use its power over the investee to affect the amount of the investor’s returns. Subsidiaries were consolidated on a line by line basis from the date which control was achieved by the FCA Group. The FCA Group reassessed whether or not it controlled an investee if facts and circumstances indicated that there were changes to one or more of the three elements of control listed above.

The FCA Group recognized a non-controlling interest in the acquiree on a transaction-by-transaction basis, either at fair value or at the non-controlling interest’s share of the recognized amounts of the acquiree’s identifiable net assets. Net profit or loss and each component of Other comprehensive income/(loss) were attributed to Equity attributable to owners of the parent and to Non-controlling interests. Total comprehensive income/(loss) of subsidiaries was attributed to Equity attributable to the owners of the parent and to the non-controlling interest even if this resulted in a deficit balance in Non-controlling interests.

Changes in the FCA Group’s ownership interests in a subsidiary that did not result in the FCA Group losing control over the subsidiary were accounted for as equity transactions. The carrying amounts of Equity attributable to owners of the parent and Non-controlling interests were adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the carrying amount of the non-controlling interests and the fair value of the consideration paid or received in the transaction was recognized directly in Equity attributable to the owners of the parent.

Subsidiaries were deconsolidated from the date on which control ceased. When the FCA Group ceased to have control over a subsidiary, it derecognized the assets (including any goodwill) and liabilities of the subsidiary at their carrying amounts, derecognized the carrying amount of non-controlling interests in the former subsidiary and recognized the fair value of any consideration received from the transaction. Any retained interest in the former subsidiary was then remeasured to its fair value.

All intra-group balances and transactions, and any unrealized gains and losses arising from intra-group transactions, were eliminated in preparing the Consolidated Financial Statements.

Interests in Joint Ventures and Associates

A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement.

An associate is an entity over which the FCA Group had significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but does not have control or joint control over those policies.

Joint ventures and associates were accounted for using the equity method of accounting from the date joint control or significant influence was obtained. On acquisition, any excess of the investment over the share of the net fair value of the investee's identifiable assets and liabilities was recognized as goodwill and was included in the carrying amount of the investment. Any excess of the FCA Group’s share of the net fair value of the investee’s identifiable assets and liabilities over the cost of the investment was included as income in the determination of the FCA Group’s share of the investee’s profit/(loss) in the acquisition period.

Under the equity method, investments were initially recognized at cost and adjusted thereafter to recognize the FCA Group’s share of the profit/(loss) and other comprehensive income/(loss) of the investee. The FCA Group’s share of the investee’s profit/(loss) was recognized in the Consolidated Income Statement. Distributions received from an investee reduced the carrying amount of the investment. Post-acquisition movements in Other comprehensive income/(loss) were recognized in Other comprehensive income/(loss) with a corresponding adjustment to the carrying amount of the investment.

Unrealized gains arising on transactions between the FCA Group and its joint ventures and associates were eliminated to the extent of the FCA Group’s interest in the joint venture or associate. Unrealized losses were also eliminated unless the transaction provided evidence of an impairment of the asset transferred.

When the FCA Group’s share of the losses of a joint venture or associate exceeded its interest in that joint venture or associate, the FCA Group discontinued recognizing its share of further losses. Additional losses were provided for and a liability was recognized only to the extent that the FCA Group had incurred legal or constructive obligations or made payments on behalf of the joint venture or associate.

The FCA Group discontinued the use of the equity method from the date the investment ceased to be an associate or a joint venture, or when it was classified as available-for-sale.

Interests in Joint Operations

A joint operation is a type of joint arrangement whereby the parties that have joint control have rights to the assets and obligations for the liabilities relating to the arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.

When the FCA Group undertook its activities under joint operations, it recognized its related interest in the joint operation including: (i) its assets, including its share of any assets held jointly, (ii) its liabilities, including its share of any liabilities incurred jointly, (iii) its revenue from the sale of its share of the output arising from the joint operation, (iv) its share of the revenue from the sale of the output by the joint operation and (v) its expenses, including its share of any expenses incurred jointly.

Assets held for sale, Assets held for distribution and Discontinued Operations

Pursuant to IFRS 5 - Non-current Assets Held for Sale and Discontinued Operations, non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the asset or disposal group is available for immediate sale in its present condition, subject only to terms that are usual and customary for sales of such an asset or disposal group, and the sale is highly probable, with the sale expected to be completed within one year from the date of classification.

Non-current assets and disposal groups classified as held for sale were measured at the lower of their carrying amount and fair value less costs to sell and were presented separately in the Consolidated Statement of Financial Position. Non-current assets and disposal groups were not classified as held for sale within the comparative period presented for the Consolidated Statement of Financial Position.

A discontinued operation was a component of the FCA Group that either had been disposed of or was classified as held for sale and (i) represented either a separate major line of business or a geographical area of operations, (ii) was part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations, or (iii) was a subsidiary acquired exclusively with a view to resell and the disposal involves loss of control.

Classification as a discontinued operation occurred upon disposal or, if earlier, when the asset or disposal group met the criteria to be classified as held for sale. When the asset or disposal group was classified as a discontinued operation, the comparative information was reclassified within the Consolidated Income Statement and the Consolidated Statement of Cash Flows as if the asset or disposal group had been discontinued from the start of the earliest comparative period presented. In addition, when an asset or disposal group was classified as held for sale, depreciation and amortization ceased.

The classification, presentation and measurement requirements of IFRS 5 - Non-current Assets Held for Sale and Discontinued Operations outlined above also applied to an asset or disposal group that was classified as held for distribution to owners, whereby there must be commitment to the distribution, the asset or disposal group must be available for immediate distribution and the distribution must be highly probable.

Foreign currency

The functional currency of the FCA Group’s entities was the currency used in their respective primary economic environments. In individual companies, transactions in foreign currencies were recorded at the exchange rate prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies were translated at the exchange rate prevailing at the date of the Consolidated Statement of Financial Position. Exchange differences arising on the settlement of monetary items or on reporting monetary items at rates different from those initially recorded, were recognized in the Consolidated Income Statement.

All assets and liabilities of foreign consolidated companies with a functional currency other than the Euro are translated using the closing rates as at the date of the Consolidated Statement of Financial Position. Income and expenses were translated into Euro at the average exchange rate for the period. Translation differences arising from the application of this method were classified within Other comprehensive income/(loss) until the disposal of the subsidiary. Average exchange rates for the period were used in preparing the Consolidated Statement of Cash Flows to translate the cash flows of foreign subsidiaries.

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


	2020		2019		2018
	Average	At December 31	Average	At December 31	Average	At December 31
U.S. Dollar (U.S.$)	1.142	1.227	1.119	1.123	1.181	1.145
Brazilian Real (BRL)	5.894	6.374	4.413	4.516	4.308	4.444
Chinese Renminbi (CNY)	7.875	8.023	7.735	7.821	7.808	7.875
Canadian Dollar (CAD)	1.530	1.563	1.485	1.460	1.529	1.561
Mexican Peso (MXN)	24.519	24.416	21.557	21.220	22.705	22.492
Polish Zloty (PLN)	4.443	4.560	4.298	4.257	4.261	4.301
Argentine Peso (ARS)(1)	103.043	103.043	67.258	67.258	43.074	43.074
Pound Sterling (GBP)	0.890	0.899	0.878	0.851	0.885	0.895
Swiss Franc (CHF)	1.071	1.080	1.112	1.085	1.155	1.127

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(1) From July 1, 2018 onwards, Argentina’s economy was considered to be hyperinflationary. Transactions after July 1, 2018 for entities with the Argentinian Peso as the functional currency were translated using the spot rate at the end of the period.

Intangible assets

Goodwill

Goodwill represents the excess of the fair value of consideration paid in a business combination over the fair value of net tangible and identifiable intangible assets acquired. Goodwill was not amortized but was tested for impairment annually or more frequently if events or changes in circumstances indicated that it might be impaired. After initial recognition, goodwill was measured at cost less any accumulated impairment losses.

Intangible assets with indefinite useful lives

Intangible assets with indefinite useful lives consisted principally of brands which have no legal, contractual, competitive, economic or other factors that limit their useful lives. Intangible assets with indefinite useful lives were not amortized but were tested for impairment annually, or more frequently if events or changes in circumstances indicated that the asset may be impaired.

Development expenditures

Development expenditures for vehicle production and related components, engines and production systems were recognized as an asset if both of the following conditions within IAS 38 – Intangible assets were met: (i) that development expenditure can be measured reliably and (ii) that the technical feasibility of the product, projected volumes and pricing supported the view that the development expenditure would generate future economic benefits. Capitalized development expenditures included all direct and indirect costs that could be directly attributed to the development process. All other development expenditures were expensed as incurred.

Capitalized development expenditures were amortized on a straight-line basis from when the related asset was available for use, generally from the beginning of production, over the expected life cycle of the models (generally 5-6 years) or powertrains (generally 10-12 years) developed.

Property, plant and equipment

Cost

Property, plant and equipment was initially recognized at cost and included the purchase price, any costs directly attributable to bringing the assets to the location and condition necessary to be capable of operating in the manner intended by management and any initial estimate of the costs of dismantling and removing the asset and restoring the site on which it is located. Self-constructed assets were initially recognized at production cost. Subsequent expenditures and the cost of replacing parts of an asset were capitalized only if they increased the future economic benefits embodied in that asset. All other expenditures were expensed as incurred. When such replacement costs were capitalized, the carrying amount of the parts that were replaced was expensed to the Consolidated Income Statement.

Depreciation

During the years ended December 31, 2020, 2019 and 2018, assets depreciated on a straight-line basis over their estimated useful lives used the following depreciation rates:


			Depreciation rates
Buildings			3% - 10%
Plant, machinery and equipment			3% - 33%
Other assets			5% - 33%

Borrowing Costs

Borrowing costs that were directly attributable to the acquisition, construction or production of property, plant or equipment or an intangible asset that was deemed to be a qualifying asset as defined in IAS 23 - Borrowing Costs were capitalized. The amount of borrowing costs eligible for capitalization corresponded to the actual borrowing costs incurred during the period, less any investment income on the temporary investment of any borrowed funds not yet used. The amount of borrowing costs capitalized in the year ended December 31, 2020 and 2019 was €320 million and €213 million, respectively.

Leases

As a Lessee

At the inception of a contract, the FCA Group assessed whether the contract was, or contained, a lease. A contract was, or contained a lease if the contract conveyed the right to control the use of an identified asset for a period of time in exchange for consideration.

This policy was applied to contracts entered into, or modified, on or after January 1, 2019.

At inception or on reassessment of a contract that contained a lease component, the FCA Group allocated the consideration in the contract to each lease component on the basis of their relative stand-alone prices. Except for real estate properties, the FCA Group elected not to separate non-lease components and would account for the lease and non-lease components as a single lease component.

Right-of-use asset

The FCA Group recognized a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset was initially measured at cost, which comprised the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or restore the underlying asset or the site on which it is located, less any lease incentives received.

The right-of-use asset was subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful life of the right-to-use asset was determined based on the nature of the asset, taking into consideration the lease term. In addition, the right-of-use asset was periodically reduced by impairment losses, if any, and adjusted for certain corresponding remeasurements of the lease liability.

Lease liability

The lease liability was initially measured at the present value of the lease payments that had not been paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate could not be readily determined, the FCA Group's incremental borrowing rate. The incremental borrowing rate was determined considering macro-economic factors such as the risk free rate based on the relevant currency and term, as well as FCA specific factors contributing to FCA’s credit spread, including the impact of security. The FCA Group primarily used the incremental borrowing rate as the discount rate for its lease liabilities.

Lease payments used to measure the lease liability included the following, if appropriate:

•fixed payments, including in-substance fixed payments;

•variable lease payments that depended on an index or a rate, initially measured using the index or rate applicable as at the commencement date;

•amounts expected to be payable under a residual value guarantee;

•if reasonably certain to exercise, the exercise price under a purchase option, or lease payments in an optional renewal period; and

•penalties for early termination of a lease unless the FCA Group was reasonably certain not to terminate early.

The lease liability was subsequently measured at amortized cost using the effective interest method. It was remeasured when there was a change in future lease payments arising from a change in an index or rate, if there was a change in the FCA Group's estimate of the amount expected to be payable under a residual value guarantee, or if the FCA Group changed its assessment of whether it would exercise a purchase, extension or termination option. When the lease liability was remeasured in this way, a corresponding adjustment was made to the carrying amount of the right-of-use asset, or was recorded in profit or loss if the carrying amount of the right-of-use asset had been reduced to zero.

The FCA Group presented right-of-use assets that did not meet the definition of investment property in Property, plant and equipment and lease liabilities in Long-term debt and Short-term debt and current portion of long-term debt in the Consolidated Statement of Financial Position.

The FCA Group elected to not recognize right-of-use assets and lease liabilities for short-term leases and low-value leases for all classes of leased assets. The FCA Group recognized the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

As a Lessor

When the FCA Group acted as a lessor, it determined at lease inception whether each lease was a finance lease or an operating lease.

To classify each lease, the FCA Group made an overall assessment of whether the lease transferred substantially all the risks and rewards incidental to ownership of the underlying asset. If the risks and rewards were substantially transferred, then the lease was a finance lease; if not, then it was an operating lease. As part of this assessment, the FCA Group considered certain indicators such as whether the lease was for the major part of the economic life of the asset.

Impairment of long-lived assets

Annually, or more frequently if facts or circumstances indicated otherwise, the FCA Group assessed whether there was any indication that its finite-lived intangible assets (including capitalized development expenditures) and its property, plant and equipment may have been impaired.

If indications of impairment were present, the carrying amount of the asset was reduced to its recoverable amount which was the higher of fair value less costs of disposal and its value in use, if the carrying amount exceeded the recoverable amount. The recoverable amount was determined for the individual asset, unless the asset did not generate cash inflows that were largely independent of those from other assets or groups of assets, in which case the asset was tested as part of the cash-generating unit (“CGU”) to which the asset belonged. A CGU was the smallest identifiable group of assets that generated cash inflows that were largely independent of the cash inflows from other assets or groups of assets. In assessing the value in use of an asset or CGU, the estimated future cash flows were discounted to their present value using a discount rate that reflected current market assessments of the time value of money and the risks specific to the asset or CGU.

When an impairment loss for assets no longer existed or had decreased, the carrying amount of the asset or CGU was increased to the revised estimate of its recoverable amount but not in excess of the carrying amount that would have been recorded had no impairment loss been recognized. The reversal of an impairment loss was recognized in the Consolidated Income Statement. Refer to the section Use of estimates below for additional information.

Financial assets and liabilities

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

Financial liabilities primarily consisted of debt, derivative financial instruments, trade payables and other liabilities.

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

Classification and measurement

The classification of a financial asset was dependent on the FCA Group’s business model for managing such financial assets and their contractual cash flows. The FCA Group considered whether the contractual cash flows represented solely payments of principal and interest that were consistent with a basic lending arrangement. Where the contractual terms introduced exposure to risk or volatility that was inconsistent with a basic lending arrangement, the related financial assets were 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 including 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 including transaction costs	Fair value through other comprehensive income (“FVOCI”)
Generate cash flows primarily from the sale of assets (Held to Sell)	Fair Value	FVPL

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(1) A trade receivable without a significant financing component, as defined by IFRS 15, was 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 were discounted using market rates.

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

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

•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 was evaluated and reported to key management personnel; and

•how risks were assessed and managed and how management was compensated.

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

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

Investments in other companies were measured at fair value. Equity investments for which there was no quoted market price in an active market and there was insufficient financial information in order to determine fair value could be measured at cost as an estimate of fair value, as permitted by IFRS 9 - Financial Instruments (“IFRS 9”). The FCA Group could 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 was not held to sell. This election was made on an investment-by-investment basis. Generally, any dividends from these investments were recognized in Other income from investments within Result from investments when the FCA Group’s right to receive payment was established. Other net gains and losses were recognized in OCI and would 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 were not reported separately from other changes in fair value in OCI.

Impairment of financial assets

The FCA Group’s credit risk differed in relation to the type of activity. In particular, receivables from financing activities, such as dealer and retail financing that were carried out through the FCA Group’s financial services companies, were 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, were mostly exposed to the direct risk of counterparty default. These risks were mitigated by different kinds of securities received and the fact that collection exposure was 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 was based on the risk of default by the counterparty, which was 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 FCA Group’s historical experience. The FCA Group considered a financial asset to be in default when: (i) the borrower was unlikely to pay its obligations in full and without consideration of compensating guarantees or collateral (if any exist); or (ii) the financial asset was more than 90 days past due.

The FCA Group applied 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 FCA’s financial asset categories. Impairment losses on financial assets were 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 was at risk were assessed individually, while all other receivables were 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 was performed in two steps:

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

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

The FCA Group applied the general approach as determined by IFRS 9 by assessing at each reporting date whether there was a significant increase in credit risk on the financial instrument since initial recognition. The FCA Group considered receivables to have experienced a significant increase in credit risk when certain quantitative or qualitative indicators were met or the borrower was 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 was 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 was the stated effective interest rate or an approximation thereof. Each reporting period, the assumptions underlying the ECL calculation were reviewed and updated as necessary. Since adoption, there were 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 was written-off to the extent that there was no realistic prospect of recovery. This was generally the case when the FCA Group determined that a debtor did 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 were written off could still be subject to enforcement activities.

Derivative financial instruments

Derivative financial instruments were 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 were recognized on the basis of the settlement date and, upon initial recognition, were measured at fair value less (in case a financial asset is not measured at FVPL) transaction costs that were directly attributable to the acquisition of the financial assets. Subsequent to initial recognition, all derivative financial instruments were measured at fair value. Furthermore, derivative financial instruments qualified for hedge accounting when (i) there was formal designation and documentation of the hedging relationship and the FCA Group’s risk management objective and strategy for undertaking the hedge at inception of the hedge and (ii) the hedge was expected to be effective.

When derivative financial instruments qualified for hedge accounting, the following accounting treatments applied:

•Fair value hedges - where a derivative financial instrument was 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 was recognized in the Consolidated Income Statement. The gain or loss on the hedged item attributable to the hedged risk adjusted the carrying amount of the hedged item and was recognized in the Consolidated Income Statement.

•Cash flow hedges - where a derivative financial instrument was 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 was 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) were reclassified and included in the initial measurement of the cost of the non-financial asset. The effective portion of any gain or loss was recognized in the Consolidated Income Statement at the same time as the economic effect arising from the hedged item that affected the Consolidated Income Statement. The gain or loss associated with a hedge or part of a hedge that became ineffective was recognized in the Consolidated Income Statement immediately.

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

•Hedges of a net investment - if a derivative financial instrument was 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 was recognized in Other comprehensive income/(loss). The cumulative gain or loss was reclassified from Other comprehensive income/(loss) to the Consolidated Income Statement upon disposal of the foreign operation.

Hedge effectiveness was determined at the inception of the hedge relationship and through periodic prospective effectiveness assessments to ensure the hedge relationships met the effectiveness requirements (including the existence of an economic relationship between the hedged item and hedging instrument). The FCA Group entered into hedge relationships where the critical terms of the hedging instrument matched closely or exactly with the terms of the hedged item, and so a qualitative assessment of effectiveness was performed. In the event there was a hedge relationship where the critical terms of the hedged item did not match closely or perfectly with the critical terms of the hedging instrument, the FCA Group would perform a quantitative assessment to assess effectiveness.

Ineffectiveness was 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 were mismatches in timing or the critical terms of the hedged item and the hedging instrument.

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

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

Refer to Note 16, Derivative financial assets and liabilities, for additional information on fair value measurements.

Transfers of financial assets

The FCA Group derecognized financial assets when the contractual rights to the cash flows arising from the asset were no longer held or if it transferred 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 was recognized in the Consolidated Income Statement.

The FCA Group transferred certain of its financial, trade and tax receivables, mainly through factoring transactions. Factoring transactions could be either with recourse or without recourse. Certain transfers included deferred payment clauses requiring first loss cover (for example, when the payment by the factor of a minor part of the purchase price was dependent on the total amount collected from the receivables), whereby the transferor had priority participation in the losses, or required a significant exposure to the variability of cash flows arising from the transferred receivables to be retained. These types of transactions did 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 were not substantially transferred, and accordingly the FCA Group continued to recognize these receivables within the Consolidated Statement of Financial Position and recognized a financial liability for the same amount under Asset-backed financing, which is included within Debt. These types of receivables were classified as held-to-collect, since the business model is consistent with the FCA Group’s continued recognition of the receivables.

Inventories

Raw materials, semi-finished products and finished goods inventories were stated at the lower of cost and net realizable value, with cost being determined on a first-in, first-out (“FIFO”) basis. The measurement of Inventories included the direct cost of materials and labor as well as indirect costs (variable and fixed). A provision was made for obsolete and slow-moving raw materials, finished goods, spare parts and other supplies based on their expected future use and realizable value. Net realizable value was the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs for sale and distribution.

The measurement of production systems construction contracts was based on the stage of completion, which was determined as the proportion of cost incurred at the balance sheet date over the estimated total contract cost. These items were presented net of progress billings received from customers. Any losses on such contracts were recorded in the Consolidated Income Statement in the period in which they were identified.

Employee benefits

Defined contribution plans

Costs arising from defined contribution plans were expensed as incurred.

Defined benefit plans

The FCA Group’s net obligations were determined separately for each defined benefit plan by estimating the present value of future benefits that employees had earned and deducting the fair value of any plan assets. The present value of defined benefit obligations was measured using actuarial techniques and actuarial assumptions that were unbiased, mutually compatible and attribute benefits to periods in which the obligation to provide post-employment benefits arose by using the Projected Unit Credit Method. Plan assets were recognized and measured at fair value.

When the net obligation was a potential asset, the recognized amount was limited to the present value of any economic benefits available in the form of future refunds or reductions in future contributions to the plan (asset ceiling).

The components of defined benefit cost were recognized as follows:

•Service cost was recognized in the Consolidated Income Statement by function and was presented within the relevant line items (Cost of revenues, Selling, general and other costs, and Research and development costs);

•Net interest expense on the defined benefit liability/(asset) was recognized in the Consolidated Income Statement within Net financial expenses and was determined by multiplying the net liability/(asset) by the discount rate used to discount obligations taking into account the effect of contributions and benefit payments made during the year; and

•Remeasurement components of the net obligation, which comprise actuarial gains and losses, the return on plan assets (excluding interest income recognized in the Consolidated Income Statement) and any change in the effect of the asset ceiling were recognized immediately in Other comprehensive income/(loss). These remeasurement components were not reclassified to the Consolidated Income Statement in a subsequent period.

Past service costs arising from plan amendments and curtailments and gains and losses on the settlement of a plan were recognized immediately in the Consolidated Income Statement.

Other long term employee benefits

The FCA Group’s obligations represented the present value of future benefits that employees had earned in return for their service. Remeasurement components on other long term employee benefits were recognized in the Consolidated Income Statement in the period in which they arose.

Share-based compensation

The FCA Group has several compensation plans that provided for the granting of share-based compensation to certain employees and directors. Share-based compensation plans were accounted for in accordance with IFRS 2 -Share-based Payment, which required the recognition of share-based compensation expense based on fair value.

For equity-settled transactions, the cost was determined by the fair value at the date when the grant was determined with reference to the grant-date share price and, where applicable, using a Monte Carlo simulation model. Refer to Note 18 -Share-based compensation for further information.

Share-based compensation expense was recognized within Selling, general and other costs within the Consolidated Income Statement, together with a corresponding increase in equity, over the period in which the service and, where applicable, the performance conditions were fulfilled (“vesting period”). The cumulative expense was recognized for equity-settled transactions at each reporting date using the graded vesting method and reflected the FCA Group’s best estimate of the number of equity instruments that would ultimately vest. The expense, or credit, in the Consolidated Income Statement for a period represented the movement in cumulative expense recognized as at the beginning and end of that period.

Service and non-market performance conditions were not taken into account when determining the grant date fair value of awards, but the likelihood of the conditions being met was assessed as part of the FCA Group’s best estimate of the number of equity instruments that would ultimately vest. Market performance conditions were reflected within the grant date fair value. Any other conditions attached to an award, but without an associated service requirement, were considered to be non-vesting conditions. Non-vesting conditions were reflected in the fair value of an award and lead to an immediate expensing of an award unless there were also service and/or performance conditions.

No expense was recognized for awards that do not ultimately vest because non-market performance and/or service conditions had not been met. Where awards included a market or non-vesting condition, the transactions were treated as vested irrespective of whether the market or non-vesting condition was satisfied, provided that all other performance and/or service conditions were satisfied.

When the terms of an equity-settled award were modified, the minimum expense recognized was the grant date fair value of the unmodified award, provided the original vesting terms of the award were met. Any incremental expense between the original grant and the modified grant, measured at the date of modification, was recognized over the modified vesting terms. Where an award was cancelled by the entity or by the counterparty, any unrecognized element of the fair value of the award was expensed immediately through the Consolidated Income Statement.

For cash-settled transactions, a liability was recognized for the fair value measured initially and at each reporting date up to and including the settlement date. The fair value was expensed over the period until the vesting date, with recognition of a corresponding liability. The approach used to account for vesting conditions when measuring equity-settled transactions also applies to cash-settled transactions.

Revenue recognition

Revenue was recognized when control of FCA’s vehicles, services or parts had been transferred and the FCA Group’s performance obligations to its customers had been satisfied. Revenue was measured as the amount of consideration the FCA Group expected to receive in exchange for transferring goods or providing services. The timing of when the FCA Group transferred the goods or services to the customer could differ from the timing of the customer’s payment. The FCA Group recognized a contract liability when it invoiced an amount to a customer prior to the transfer of the goods or services provided. When the FCA Group gave its customers the right to return eligible goods, the FCA Group estimated the expected returns based on an analysis of historical experiences. Sales, value added and other taxes that the FCA Group collected on behalf of others concurrently with revenue generating activities were excluded from revenue and were recognized within the Other liabilities and the Tax liabilities line items in the Consolidated Statement of Financial Position. Incidental items that were immaterial in the context of the contract were recognized as expense.

The FCA Group also entered into contracts with multiple performance obligations. For these contracts, the FCA Group allocated 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 FCA Group sold the good or service separately in the same market, the standalone selling price was the observable price at which the FCA Group sold the good or service separately. For all other goods or services, the FCA Group estimated the standalone selling price using a cost-plus-margin approach.

Sales of goods

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

The cost of incentives, if any, was estimated at the inception of a contract at the expected amount that would ultimately be paid and was recognized as a reduction to revenue at the time of the sale. If a vehicle contract transaction had multiple performance obligations, the cost of incentives was allocated entirely to the vehicle as the intent of the incentives was to encourage sales of vehicles. If the estimate of the incentive changed following the sale to the customer, the change in estimate was recognized as an adjustment to revenue in the period of the change. Refer to the Use of estimates - Sales incentives for more information on these programs.

New vehicle sold through Guaranteed Depreciation Program (“GDP”) were recognized as revenue when control of the vehicle transferred to the fleet customer, except in situations where the FCA Group issued a put option for which there was a significant economic incentive to exercise, as discussed below. Upon recognition of the vehicle revenue, the FCA Group established a liability equal to the estimated amount of any residual value guarantee.

The FCA Group also sold vehicles where, in addition to guaranteeing the residual value, the contract included a put option whereby the fleet customer could require the FCA Group to repurchase the vehicles. For these types of arrangements, the FCA Group assessed whether a significant economic incentive existed for the customer to exercise its put option. If the FCA Group determined that a significant economic incentive did not exist for the customer to exercise its put option, then revenue was recognized when control of the vehicle transferred to the fleet customer and a liability was recognized equal to the estimated amount of the residual value guarantee. If the FCA Group determined that a significant economic incentive existed, then the arrangement was accounted for similarly to a repurchase obligation, as described in Lease installments from assets sold with buy-back commitments.

Services provided

When control of a good transferred to the customer prior to the completion of shipping activities for which the FCA Group was responsible, this represented a separate performance obligation for which the shipping revenue was recognized when the shipping service was complete. Other revenues from services provided were primarily comprised of maintenance plans and extended warranties, and also included connectivity services, and were recognized over the contract period in proportion to the costs expected to be incurred based on FCA’s historical experience. These services were either included in the selling price of the vehicle or separately priced. Revenue for services was allocated based on the estimated stand-alone selling price. Costs associated with the sale of contracts were deferred and were subsequently amortized to expense consistent with how the related revenue was recognized. The FCA Group had €204 million of deferred service contract costs at December 31, 2020 (€224 million at December 31, 2019) and recognized €96 million of amortization expense during the year ended December 31, 2020 (€68 million during the year ended December 31, 2019).

Contract revenues

Revenue from construction contracts, which was comprised of industrial automation systems, included within “Other activities”, was recognized as revenue over the contract period in proportion to the costs expected to be incurred based on FCA’s historical experience. A loss was recognized if the sum of the expected costs for services under the contract exceeded the transaction price.

Lease installments from assets sold with buy-back commitments

Vehicle sold to fleet customers could include a repurchase obligation, whereby the FCA Group was required to repurchase the vehicles at a given point in time. The FCA Group accounted for such sales as an operating lease. Upon the transfer of vehicles to the fleet customer, the FCA Group recorded 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 was recognized as revenue over the contractual term on a straight-line basis. The cost of the vehicle was 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 was recognized within Cost of revenues in the Consolidated Income Statement over the contractual term.

Interest income of financial services activities

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

Cost of revenues

Cost of revenues comprised expenses incurred in the manufacturing and distribution of vehicles and parts. Historically the most significant element was the cost of materials and components and the remaining costs included labor (consisting of direct and indirect wages), transportation costs, depreciation of property, plant and equipment and amortization of other intangible assets relating to production. In addition, expenses which were directly attributable to the financial services companies, including interest expense related to their financing as a whole and provisions for risks and write-downs of assets, were recorded within Cost of revenues (€25 million, €48 million and €75 million for the years ended December 31, 2020, 2019 and 2018, respectively). Cost of revenues also included €124 million, €195 million and €293 million related to the decrease in value for assets sold with buy-back commitments for the years ended December 31, 2020, 2019 and 2018, respectively. In addition, estimated costs related to product warranty and recall campaigns were recorded within Cost of revenues (refer to the section Use of estimates below for further information).

Government Grants

Government grants were recognized in the Consolidated Financial Statements when there was reasonable assurance of the FCA Group's compliance with the conditions for receiving such grants and that the grants would be received. Government grants were recognized as income over the same periods as the related costs which they are intended to offset.

The benefit of a government loan at a below-market rate of interest was treated as a government grant. The benefit of the below-market rate of interest was measured as the difference between the initial carrying amount of the loan (fair value plus transaction costs) and the proceeds received, and it was accounted for in accordance with the policies used for the recognition of government grants.

Taxes

Income taxes included all taxes which were based on the taxable profits of the FCA Group. Current and deferred taxes were recognized as a benefit or expense and were included in the Consolidated Income Statement for the period, except for tax arising from (i) a transaction or event which was recognized, in the same or a different period, either in Other comprehensive income/(loss) or directly in Equity, or (ii) a business combination.

Deferred taxes were accounted for under the full liability method. Deferred tax liabilities were recognized for all taxable temporary differences between the carrying amounts of assets or liabilities and their tax base, except to the extent that the deferred tax liabilities arose from the initial recognition of goodwill or the initial recognition of an asset or liability in a transaction which was not a business combination and at the time of the transaction, affected neither accounting profit nor taxable profit. Deferred tax assets were recognized for all deductible temporary differences to the extent that it was probable that taxable profit would be available against which the deductible temporary differences could be utilized, unless the deferred tax assets arose from the initial recognition of an asset or liability in a transaction that was not a business combination and at the time of the transaction, affected neither accounting profit nor taxable profit.

Deferred tax assets and liabilities were measured at the substantively enacted tax rates in the respective jurisdictions in which the FCA Group operates that were expected to apply to the period when the asset was realized or liability was settled.

The FCA Group recognized deferred tax liabilities associated with the existence of a subsidiary’s undistributed profits when it was probable that this temporary difference would not reverse in the foreseeable future, except when it was able to control the timing of the reversal of the temporary difference. The FCA Group recognized deferred tax assets associated with the deductible temporary differences on investments in subsidiaries only to the extent that it was probable that the temporary differences would reverse in the foreseeable future and taxable profit would be available against which the temporary difference could be utilized.

Deferred tax assets relating to the carry-forward of unused tax losses and tax credits, as well as those arising from deductible temporary differences, were recognized to the extent that it was probable that future profits would be available against which they could be utilized. The FCA Group monitored unrecognized deferred tax assets at each reporting date and recognized a previously unrecognized deferred tax asset to the extent that it had become probable that future taxable profit would allow the deferred tax asset to be recovered. Refer to Use of estimates - Recoverability of deferred tax assets for additional detail.

Current income taxes and deferred taxes were offset when they relate to the same taxation jurisdiction and there was a legally enforceable right of offset. Other taxes not based on income, such as property taxes and capital taxes, were included within Selling, general and other costs.

Refer to Note 7, Tax expense, for additional information on tax expense and deferred tax assets.

Fair Value Measurement

Fair value for measurement and disclosure purposes was determined as the consideration that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using a valuation technique. Fair value measurement was based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

•in the principal market for the asset or liability; or

•in the absence of a principal market, in the most advantageous market for the asset or liability.

The fair value of an asset or a liability was measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their own economic best interest. A fair value measurement of a non-financial asset took into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use. In estimating fair value, FCA used market-observable data to the extent it was available. When market-observable data was not available, FCA used valuation techniques that maximize the use of relevant observable inputs and minimize the use of unobservable inputs.

IFRS 13 - Fair Value Measurement establishes a hierarchy which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets and liabilities (Level 1 inputs) and the lowest priority to unobservable inputs (level 3 inputs). In some cases, the inputs used to measure the fair value of an asset or a liability might be categorized within different levels of the fair value hierarchy. In those cases, the fair value measurement was categorized in its entirety in the same level of the fair value hierarchy at the lowest level input that is significant to the entire measurement.

Levels used in the hierarchy are as follows:

•Level 1 inputs included quoted prices (unadjusted) in active markets for identical assets and liabilities that the FCA Group could access at the measurement date. Level 1 primarily consisted of financial instruments such as cash and cash equivalents and certain available-for-sale and held-for-trading securities.

•Level 2 inputs included those which were directly or indirectly observable as of the measurement date. Level 2 instruments included commercial paper and non-exchange-traded derivatives such as over-the-counter currency and commodity forwards, swaps and option contracts, which were valued using models or other valuation methodologies. These models were primarily industry-standard models that considered various assumptions, including quoted forward prices for similar instruments in active markets, quoted prices for identical or similar inputs not in active markets, and observable inputs.

•Level 3 inputs were unobservable from objective sources in the market and reflected management judgment about the assumptions market participants would use in pricing the instruments. Instruments in this category included non-exchange-traded derivatives such as certain over-the-counter commodity option and swap contracts.

Refer to Note 23, Fair value measurement, for additional information on fair value measurements.

Use of estimates

The Consolidated Financial Statements were prepared in accordance with IFRS which required the use of estimates, judgments and assumptions that affect the carrying amount of assets and liabilities, the disclosure of contingent assets and liabilities and the amounts of income and expenses recognized. The estimates and associated assumptions were based on management's best judgment of elements that were known when the financial statements are prepared, on historical experience and on any other factors that are considered to be relevant.

Estimates and underlying assumptions were historically reviewed by the FCA Group periodically and when circumstances required. Actual results could differ from the estimates, which required adjustment accordingly. The effects of any changes in estimates were recognized in the Consolidated Income Statement in the period in which the adjustment was made, or in future periods.

Items requiring estimates for which there was a risk that a material difference could arise in the future in respect of the carrying amounts of assets and liabilities were discussed below.

Employee Benefits

The FCA Group historically provided post-employment benefits for certain of its active employees and retirees, which varied according to the legal, fiscal and economic conditions of each country in which the FCA Group operated and changed periodically. The plans were classified by the FCA Group on the basis of the type of benefit provided as follows: pension benefits, health care and life insurance plans and other post-employment benefits.

The FCA Group companies provided certain post-employment benefits, such as pension or health care benefits, to their employees under defined contribution plans whereby the group paid contributions to public or private plans on a legally mandatory, contractual, or voluntary basis. The FCA Group recognized the cost for defined contribution plans as incurred and classified this by function within Cost of revenues, Selling, general and other costs, and Research and development costs in the Consolidated Income Statement.

Pension plans

The FCA Group sponsored both non-contributory and contributory defined benefit pension plans primarily in the U.S. and Canada, the majority of which were funded. Non-contributory pension plans covered certain hourly and salaried employees and the benefits were based on a fixed rate for each year of service. Additionally, contributory benefits were provided to certain salaried employees under the salaried employees’ retirement plans.

The FCA Group’s defined benefit pension plans were accounted for on an actuarial basis, which required the use of estimates and assumptions to determine the net liability or net asset. The FCA Group estimated the present value of the projected future payments to all participants by taking into consideration parameters of a financial nature such as discount rates, the rate of salary increases and the likelihood of potential future events estimated by using demographic assumptions, which could have an effect on the amount and timing of future payments, such as mortality, dismissal and retirement rates, which were developed to reflect actual and projected plan experience. Mortality rates were developed using FCA plan-specific populations, recent mortality information published by recognized experts in this field, primarily the U.S. Society of Actuaries and the Canadian Institute of Actuaries, and other data where appropriate to reflect actual and projected plan experience. The expected amount and timing of contributions was based on an assessment of minimum funding requirements. From time to time, contributions were made beyond those that are legally required.

Plan obligations and costs were based on existing retirement plan provisions. Assumptions regarding any potential future changes to benefit provisions beyond those to which the FCA Group was presently committed were not made. Significant differences in actual experience or significant changes in the following key assumption could affect the pension obligations and pension expense:

•Discount rates. FCA’s discount rates were based on yields of high-quality (AA-rated) fixed income investments for which the timing and amounts of maturities match the timing and amounts of the projected benefit payments.

The effects of actual results differing from assumptions and of amended assumptions were included in Other comprehensive income/(loss). The weighted average discount rates used to determine the defined benefit obligation for the defined benefit plans were 2.6 percent and 3.3 percent at December 31, 2020 and 2019, respectively.

At December 31, 2020, the effect on the defined benefit obligation of a decrease or increase in the discount rate, holding all other assumptions constant, is as follows:


			Effect on pension benefit obligation increase/(decrease) in Net liability
			( € million)
10 basis point decrease in discount rate			301
10 basis point increase in discount rate			(294)

Refer to Note 19, Employee benefits liabilities, for additional information on the FCA Group’s pension plans.

Other post-employment benefits

Other post-employment benefits comprised other employee benefits granted to Group employees in Europe and includes the Italian employee severance indemnity (trattamento di fine rapporto, or “TFR”) obligation required under Italian Law, amounting to €543 million at December 31, 2020 and €584 million at December 31, 2019.

The amount of TFR to which each employee is entitled must be paid when the employee leaves the Group and is calculated based on the period of employment and the taxable earnings of each employee. Under certain conditions, the entitlement may be partially advanced to an employee during their working life.

The legislation governing this scheme was amended by Law 296 of December 27, 2006 and subsequent decrees and regulations issued in 2007. Under these amendments, companies with at least 50 employees were obliged to transfer the TFR obligation to the “Treasury fund” managed by the Italian state-owned social security body (“INPS”) or to supplementary pension funds. Prior to the amendments, accruing TFR for employees of all Italian companies could be managed by the company itself. Consequently, the Italian companies’ obligation to INPS and the contributions to supplementary pension funds take the form of defined contribution plans under IAS 19 - Employee Benefits, whereas the amounts recorded in the provision for employee severance pay retain the nature of defined benefit plans. Accordingly, the provision for employee severance indemnity in Italy consisted of the residual TFR obligation through December 31, 2006. This is an unfunded defined benefit plan as the benefits have already been entirely earned, with the sole exception of future revaluations. Since 2007, the scheme has been classified as a defined contribution plan and the FCA Group recognized the associated cost over the period in which the employee rendered service.

Changes in defined benefit obligations for other post-employment benefits were as follows:


	2020		2019
	(€ million)
Present value of obligations at January 1	€	793	€	819
Included in the Consolidated Income Statement	14		20
Included in Other comprehensive income:
Actuarial (gains)/losses from:
- Demographic and other assumptions	(18)		11
- Financial assumptions	13		41
Effect of movements in exchange rates	(7)		3
Other:
Benefits paid	(32)		(90)
Transfer to Liabilities held for sale	—		(20)
Other changes	—		9
Present value of obligations at December 31	€	763	€	793

Amounts recognized in the Consolidated Income Statement were as follows:


	Years ended December 31,
	2020		2019		2018
	(€ million)
Current service cost	€	7	€	6	€	9
Interest expense	7		12		14
Past service costs/(credits) and losses/(gains) arising from settlements	—		1		—
Items relating to discontinued operations	—		1		—
Total recognized in the Consolidated Income Statement	€	14	€	20	€	23

The discount rates used for the measurement of the Italian TFR obligation were based on yields of high-quality (AA rated) fixed income securities for which the timing and amounts of maturities matched the timing and amounts of the projected benefit payments. For this plan, the single weighted average discount rate that reflected the estimated timing and amount of the scheme future benefit payments for 2020 was 0.5 percent (0.6 percent in 2019). The average duration of the Italian TFR was approximately 7 years. Retirement or employee leaving rates were developed to reflect actual and projected Group experience and legal requirements for retirement in Italy.

Other provisions for employees

Other provisions for employees primarily included long-term disability benefits, supplemental unemployment benefits, variable and other deferred compensation, as well as bonuses granted for tenure at the Company.

Provisions

12 Months Ended

Dec. 31, 2020

Other Provisions, Contingent Liabilities And Contingent Assets [Abstract]

Provisions

consisted of the following:


	At December 31,
	2020						2019(1)
	Current		Non-current		Total		Current		Non-current		Total
	(€ million)
Product warranty and recall campaigns	€	2,045	€	3,671	€	5,716	€	2,406	€	3,900	€	6,306
Sales incentives	4,078		—		4,078		5,479		—		5,479
Legal proceedings and disputes	397		183		580		303		222		525
Commercial risks	410		301		711		441		120		561
Restructuring	64		24		88		72		34		106
Other risks	261		787		1,048		277		751		1,028
Total Provisions	€	7,255	€	4,966	€	12,221	€	8,978	€	5,027	€	14,005

Changes in Provisions were as follows:


	At January 1, 2020		Additional provisions		Settlements		Unused amounts		Translation differences		Transfer to Liabilities held for sale		Other changes		At December 31, 2020
	(€ million)
Product warranty and recall campaigns	€	6,306	€	2,777	€	(2,897)	€	—	€	(488)	€	—	€	18	€	5,716
Sales incentives	5,479		10,524		(11,636)		(11)		(324)		—		46		4,078
Legal proceedings and disputes	525		286		(165)		(11)		(56)		—		1		580
Commercial risks	561		338		(125)		(4)		(55)		—		(4)		711
Restructuring costs	106		66		(64)		(12)		(6)		—		(2)		88
Other risks	1,028		317		(198)		(29)		(38)		—		(32)		1,048
Total Provisions	€	14,005	€	14,308	€	(15,085)	€	(67)	€	(967)	€	—	€	27	€	12,221

Product warranty and recall campaigns

At December 31, 2020, the Product warranty and recall campaigns provision decreased primarily due to lower volumes in North America, reflecting COVID-19 related disruptions, partially offset by higher recall campaign costs.

At December 31, 2019, the Product warranty and recall campaigns provision decreased slightly primarily due to lower volumes in North America.

The cash outflow for the non-current portion of the Product warranty and recall campaigns provision is primarily expected within a period through 2023.

Sales incentives

As described within Note 2, Basis of preparation - Use of estimates, the FCA Group recorded the estimated cost of sales incentive programs offered to dealers and consumers as a reduction to revenue at the time of sale of the vehicle to the dealer. At December 2020, the Sales incentive provision decreased primarily due to lower dealer stock levels.

Legal proceedings and disputes

As described within Note 2, Basis of preparation - Use of estimates, a provision for legal proceedings was recognized when it was deemed probable that the proceedings would result in an outflow of resources. As the ultimate outcome of pending litigation was uncertain, the timing of cash outflows for the Legal proceedings and disputes provision was also uncertain.

During the year ended December 31, 2020, a provision of €222 million was recognized for estimated probable loss to settle matters under investigation by the U.S. Department of Justice primarily related to criminal investigations associated with U.S. diesel emissions matters (refer to Note 25 - Guarantees granted, commitments and contingent liabilities for further information).

During the year ended December 31, 2020, approximately €0.1 billion of payments were made for civil, environmental and consumer claims related to U.S. diesel emissions matters accrued in 2018 (refer to Note 25, Guarantees granted, commitments and contingent liabilities).

Commercial risks

Commercial risks arose in connection with the sale of products and services, such as onerous maintenance contracts, and as a result of certain regulatory emission requirements. For items such as onerous maintenance contracts, a provision was recognized when the expected costs to complete the services under these contracts exceeded the revenues expected to be realized. A provision for fines related to certain regulatory emission requirements that could be settled with cash fines was recognized at the time vehicles were sold based on the estimated cost to settle the obligation, measured as the sum of the cost of regulatory credits previously purchased plus the amount, if any, of the fine expected to be paid in cash. The cash outflow for the non-current portion of the Commercial risks provision was primarily expected within a period through 2023.

On July 12, 2019, the U.S. Department of Transportation’s National Highway Traffic Safety Administration (“NHTSA”) announced a final rule that retained the current fine rate applicable to automobile manufacturers that fail to meet Corporate Average Fuel Economy (“CAFE”) standards through achievement of the targeted fleet fuel efficiency or remittance of CAFE credits. Prior to this final rule, FCA recorded a provision for estimated CAFE civil fines relating to 2019 model year vehicles for which CAFE credits were not expected to be available at the previously announced civil fine rate. As a result of the announced final rule, under IAS 37, the reduction of the civil fine rate resulted in a change in the estimated provision of €158 million relating to 2019 model year vehicles sold prior to March 31, 2019, which was recognized as a reduction to Cost of revenues within the Consolidated Income Statement for the year ended December 31, 2019.

Restructuring costs

During the year ended December 31, 2020, a total provision for €66 million was recognized primarily for workforce restructuring costs, of which €18 million was recognized within LATAM, €6 million within EMEA and €32 million within North America (refer to Note 28, Segment reporting).

Other risks

Other risks included, among other items: provisions for disputes with suppliers related to supply contracts or other matters that were not subject to legal proceedings, provisions for product liabilities arising from personal injuries including wrongful death and potential exemplary or punitive damages alleged to be the result of product defects, disputes with other parties relating to contracts or other matters not subject to legal proceedings and management's best estimate of the FCA Group’s probable environmental obligations, which also included costs related to claims on environmental matters. The cash outflow for the non-current portion of the Other risks provision was primarily expected within a period through 2023.

Debt

12 Months Ended

Dec. 31, 2020

Financial Instruments [Abstract]

Debt

Debt classified within current liabilities included short-term borrowings from banks and other financing with an original maturity date falling within twelve months, as well as the current portion of long-term debt. Debt classified within non-current liabilities included borrowings from banks and other financing with maturity dates greater than twelve months (long-term debt), net of the current portion.

The following table summarizes the FCA Group's current and non-current Debt by maturity date (amounts include accrued interest):


	At December 31,
	2020										2019
	Due within one year (current)		Due between one and five years		Due beyond five years		Total (non-current)		Total Debt		Due within one year (current)		Due between one and five years		Due beyond five years		Total (non-current)		Total Debt
	(€ million)
Notes	€	1,131	€	5,073	€	2,250	€	7,323	€	8,454	€	1,450	€	4,942	—		€	4,942	€	6,392
Borrowings from banks	1,842		8,288		40		8,328		10,170		2,097		1,511		88		1,599		3,696
Asset-backed financing (Note 15)	41		—		—		—		41		151		—		—		—		151
Lease liabilities	355		664		674		1,338		1,693		360		705		575		1,280		1,640
Other debt(1)	712		46		1		47		759		818		204		—		204		1,022
Total Debt	€	4,081	€	14,071	€	2,965	€	17,036	€	21,117	€	4,876	€	7,362	€	663	€	8,025	€	12,901

________________________________________________________________________________________________________________________________________________

(1) Debt at December 31, 2020, excludes €74 million of debt included within Liabilities held for sale. Refer to Note 3, Scope of consolidation.

Notes

The following table summarizes the notes outstanding at December 31, 2020 and 2019:


					At December 31,
	Currency	Face value of outstanding notes (million)	Coupon %	Maturity	2020		2019
Medium Term Note Programme:					(€ million)


Fiat Chrysler Finance Europe SENC(1)	EUR	1,000	4.750	March 22, 2021	1,000		1,000
Fiat Chrysler Finance Europe SENC(1)	EUR	1,350	4.750	July 15, 2022	1,350		1,350
FCA NV(1)	EUR	1,250	3.375	July 7, 2023	1,250		—
FCA NV(1)	EUR	1,250	3.750	March 29, 2024	1,250		1,250
FCA NV(1)	EUR	1,250	3.875	January 5, 2026	1,250		—
FCA NV(1)	EUR	1,000	4.500	July 7, 2028	1,000		—
Other(2)	EUR	7			7		7
Total Medium Term Note Programme					7,107		3,607

Other Notes:
FCA NV(1)	U.S.$	1,500	4.500	April 15, 2020	—		1,335
FCA NV(1)	U.S.$	1,500	5.250	April 15, 2023	1,223		1,335
Total Other Notes					1,223		2,670
Hedging effect, accrued interest and amortized cost valuation					124		115
Total Notes					€	8,454	€	6,392

______________________________________________________________________________________________________________________________

(1) Listing on the Irish Stock Exchange was obtained.

(2) Medium Term Notes with amounts outstanding equal to or less than the equivalent of €50 million.

Notes Issued Through the Medium Term Note Programme

Certain notes issued by the FCA Group were governed by the terms and conditions of the Medium Term Note (“MTN”) Programme (previously known as the Global Medium Term Note Programme, or “GMTN” Programme). A maximum of €20 billion may be used under this programme, of which notes of €7,107 million were outstanding at December 31, 2020 (€3,607 million at December 31, 2019). Notes under the MTN Programme are issued, or otherwise guaranteed, by FCA NV. From time to time, FCA may buy back notes in the market that have been issued. Such buybacks, if made, depend upon market conditions, the Group's financial situation and other factors which could affect such decisions.

Changes in notes issued under the MTN Programme during the year ended December 31, 2020 were due to the issuance in July 2020 of Notes with principal amount totaling €3,500 million.

On July 1, 2020, FCA confirmed pricing of an offering of €3.5 billion of notes under the Medium Term Note Programme, with settlement on July 7, 2020. The offering comprised (i) €1.25 billion in principal amount of 3.375% notes due July 2023, (ii) €1.25 billion in principal amount of 3.875% notes due January 2026, and (iii) €1.0 billion in principal amount of 4.500% notes due July 2028, each at an issue price of 100% of the applicable principal amount. The issuance replaced in full the €3.5 billion Bridge Credit Facility, which was previously fully undrawn and was fully cancelled on July 7, 2020, in connection with the settlement of the notes offering.

Changes in notes issued under the MTN Programme during the year ended December 31, 2019 were due to the repayment at maturity:

•in September 2019 of a note with a principal amount of CHF 250 million; and

•in October 2019 of a note with a principal amount of €1,250 million.

Notes issued under the MTN Programme imposed covenants on the issuer and, in certain cases, on FCA NV as guarantor, which include: (i) negative pledge clauses which require that in the case that any security interest upon assets of the issuer and/or FCA NV is granted in connection with other notes or debt securities having the same ranking, such a security should be equally and ratably extended to the outstanding notes; (ii) pari passu clauses, under which the notes rank and will rank pari passu with all other present and future unsubordinated and unsecured obligations of the issuer and/or FCA NV; (iii) periodic disclosure obligations; (iv) cross-default clauses which require immediate repayment of the notes under certain events of default on other financial instruments issued by FCA's main entities; and (v) other clauses that are generally applicable to securities of a similar type. A breach of these covenants may require the early repayment of the notes. As of December 31, 2020, FCA was in compliance with the covenants under the MTN Programme.

Other Notes

In 2015, FCA NV issued U.S.$1.5 billion (€1.4 billion) principal amount of 4.5 percent unsecured senior debt securities due April 15, 2020 (the “2020 Notes”) and U.S.$1.5 billion (€1.4 billion) principal amount of 5.25 percent unsecured senior debt securities due April 15, 2023 (the “2023 Notes”) at an issue price of 100 percent of their principal amount. The 2020 Notes and the 2023 Notes, collectively referred to as the “Notes”, rank pari passu in right of payment with respect to all of FCA NV's existing and future senior unsecured indebtedness and senior in right of payment to any of FCA NV's future subordinated indebtedness and existing indebtedness, which is by its terms subordinated in right of payment to the Notes. Interest on the 2023 Notes is payable semi-annually in April and October.

On April 15, 2020, the FCA NV repaid in full at maturity U.S.$1.5 billion of the 4.5 percent unsecured notes issued in April 2015.

The Notes imposed covenants on FCA NV including: (i) negative pledge clauses which require that in the case that any security interest upon assets of FCA NV is granted in connection with other notes or debt securities having the same ranking, such a security should be equally and ratably extended to the outstanding Notes; (ii) pari passu clauses, under which the Notes rank and will rank pari passu with all other present and future unsubordinated and unsecured obligations of FCA NV; (iii) periodic disclosure obligations; (iv) cross-default clauses which require immediate repayment of the Notes under certain events of default on other financial instruments issued by FCA’s main entities; and (v) other clauses that are generally applicable to securities of a similar type. A breach of these covenants may require the early repayment of the Notes. As of December 31, 2020, FCA was in compliance with the covenants of the Notes.

Borrowings from banks

European Investment Bank Borrowings

FCA had financing agreements with the European Investment Bank (“EIB”) for a total of €1.2 billion outstanding at December 31, 2020 (€0.4 billion outstanding at December 31, 2019), which included the residual debt due under the following facilities:

•€500 million (amortizing in installments up to June 2021), entered into in May 2011 (guaranteed by SACE and the Serbian Authorities) for an investment program relating to the modernization and expansion of production capacity of an automotive plant in Serbia; and

•€420 million (maturing in June 2022), entered into in June 2018 to support research and development projects to be implemented by FCA during the period 2018-2020.

On March 18, 2020, FCA announced that it entered into an agreement for a €300 million five-year loan with the European Investment Bank (“EIB”) to support specific investments to be implemented by FCA through 2021. The investments are primarily to support the manufacturing deployment of the advanced vehicle powertrain electrification technologies and, in particular, the setup of production lines for the manufacturing of PHEV vehicles at FCA’s production plant in Melfi (Italy) and the manufacturing of battery electric vehicles (“BEV”) at the production plant in Mirafiori (Italy). The loan was fully drawn on March 26, 2020.

On September 18, 2020, FCA announced that it entered into an agreement for a €485 million five-year loan with the EIB to support production of PHEVs at the Pomigliano plant in Campania (Italy). The additional borrowings also support research, development and innovation for electrification, connectivity and self-driving technologies mainly conducted at FCA's laboratories in Turin (Italy). The loan was fully drawn on September 30, 2020.

Brazil

FCA’s Brazilian subsidiaries have access to various local bank facilities in order to fund investments and operations. Total debt outstanding under those facilities amounted to a principal amount of €1.3 billion at December 31, 2020 (€1.8 billion at December 31, 2019). The loans primarily include subsidized loans granted by public financing institutions, such as Banco Nacional do Desenvolvimento (“BNDES”), with the aim to support industrial projects in certain areas. This provided the FCA Group with the opportunity to fund large investments in Brazil with loans of sizeable amounts at attractive rates. At December 31, 2020, outstanding subsidized loans amounted to €0.6 billion (€1.1 billion at December 31, 2019), of which approximately €0.4 billion (€0.8 billion at December 31, 2019) related to the construction of the plant in Pernambuco (Brazil), which was supported by subsidized credit lines totaling Brazilian Real (“BRL”) 6.5 billion (€1.5 billion). Approximately €0.1 billion (€0.1 billion at December 31, 2019) of committed credit lines contracted to fund scheduled investments in the area were undrawn at December 31, 2020.

Incremental Bridge Credit Facility

On March 26, 2020, FCA announced that it had entered into a new €3.5 billion credit facility (the “Bridge Credit Facility”). The Bridge Credit Facility, initially entered into with two banks and then successfully syndicated to thirteen banks, including the two original underwriting banks, was available for general corporate purposes and for working capital needs of the group and was structured as a bridge facility to capital markets. On July 7, 2020, the Bridge Credit Facility was cancelled. Refer to Notes Issued Through the Medium Term Note Programme above for further information.

Intesa Sanpaolo Credit Facility

On June 24, 2020, FCA Italy S.p.A., a wholly-owned subsidiary of Fiat Chrysler Automobiles N.V., and other Italian companies in the FCA Group entered into a facility agreement with Intesa Sanpaolo for borrowings of up to €6.3 billion to finance FCA’s activities in Italy. The facility is unsecured and guaranteed by FCA N.V., subsequently Stellantis N.V., and will mature in March 2023, amortizing in five equal quarterly installments with the first such installment due on March 31, 2022. SACE (Italy’s export credit agency) will guarantee 80 percent of the borrowings under that facility pursuant to the recently enacted Italian Liquidity Decree. The facility and borrowings under the facility are at interest rates within a range that could be obtained in the market.

The covenants of the credit facility include financial covenants which apply under certain conditions, as well as negative pledge, pari passu, cross-default and change of control clauses. Failure to comply with these covenants, and in certain cases if not suitably remedied, can lead to the requirement of early repayment of any outstanding amounts.

In connection with SACE’s guarantee, the FCA Group provided the following industrial commitments applicable while any loans are outstanding under the facility: (i) to continue to carry out certain Italian investment projects currently underway and previously announced; (ii) not to delocalize outside Italy production of vehicles under such investment projects; and (iii) to pursue the goal of reducing temporary layoffs for employees engaged under such investment projects in Italy to nil by the end of 2023, each with agreed milestones for implementation. If the industrial commitments previously described are not implemented by the agreed milestones, the FCA Group, subsequently the Stellantis Group, may at its option: (i) implement those industrial commitments within an additional six-month period following the milestones; (ii) negotiate and agree alternative milestones and/or commitments with the Italian government; or (iii) repay the loan at any time within 18 months (including a 6 months negotiation period) from the point of non-compliance.

In addition, while loans under the facility are outstanding, FCA N.V. has committed not to approve or pay dividends or other shareholder distributions in the 2020 calendar year (except dividends related to the merger with Peugeot S.A.), and the Italian subsidiaries of the FCA Group have committed not to distribute dividends or to make other shareholder distributions until May 26, 2021.

During the year ended December 31, 2020, €6.3 billion of the facility was drawn down.

Revolving Credit Facilities

On March 26, 2020, the tenor of the three-year Tranche A of FCA’s €6.25 billion revolving credit facility (as amended, the “RCF”), for €3.125 billion, was extended by one year to April 27, 2023, with the Tranche B maturity unchanged at March 2024. On April 21, 2020, FCA announced that, in light of the continuing uncertainty relating to the impacts of COVID-19, it had drawn down its €6.25 billion revolving credit facility originally signed in June 2015 and last amended in March 2019. The €6.25 billion draw down was subsequently repaid by December 31, 2020, with the RCF being fully available as of December 31, 2020.

In March 2019, the FCA Group amended its syndicated revolving credit facility originally signed in June 2015 and previously amended in March 2017 and March 2018. The amendment extended the RCF’s final maturity to March 2024. The RCF is available for general corporate purposes and for the working capital needs of the FCA Group and 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. This amendment was accounted for as a debt modification and, as a result, the new costs associated with the March 2019 amendment as well as the remaining unamortized debt issuance costs related to the original €5.0 billion RCF and the previous March 2017 and March 2018 amendments are amortized over the life of the amended RCF.

The covenants of the RCF include financial covenants as well as negative pledge, pari passu, cross-default and change of control clauses. Failure to comply with these covenants, and in certain cases if not suitably remedied, can lead to the requirement of early repayment of any outstanding amounts. As of December 31, 2020, FCA was in compliance with the covenants of the RCF.

At December 31, 2020, undrawn committed credit lines totaling €7.3 billion, including the €6.25 billion RCF and approximately €1.1 billion of other revolving lines of credit. At December 31, 2019, undrawn committed credit lines totaling €7.6 billion included the €6.25 billion RCF and approximately €1.3 billion of other revolving credit facilities.

Mexico Bank Loan

FCA Mexico, S.A. de C.V. (“FCA Mexico”), FCA’s principal operating subsidiary in Mexico, had a non-revolving loan agreement (“Mexico Bank Loan”) maturing on March 20, 2022 and bears interest at one-month LIBOR plus 3.35 percent per annum. At December 31, 2020, the Mexico Bank Loan had an outstanding balance of €0.2 billion (€0.2 billion at December 31, 2019). As of December 31, 2020, FCA could prepay all or any portion of the loan without premium or penalty. The Mexico Bank Loan requires FCA Mexico to maintain certain fixed assets as collateral and comply with certain covenants, including, but not limited to, financial maintenance covenants, limitations on liens, incurrence of debt and asset sales. As of December 31, 2020, FCA Mexico was in compliance with the covenants under the Mexico Bank Loan.

Asset-backed financing

Asset-backed financing represented the amount of financing received through factoring transactions which do not meet the IFRS 9 derecognition requirements and are recognized with assets of the same amount of €41 million at December 31, 2020 (€151 million at December 31, 2019) within Trade and other receivables in the Consolidated Statement of Financial Position (Note 15, Trade, other receivables and tax receivables).

Other debt

Other debt also includes funds raised from financial services companies, primarily in Latin America, and deposits from dealers in Brazil and China.

Lease liabilities

The following table summarizes the FCA Group's current and non-current lease liabilities:

Lease liabilities included in the Statement of Financial Position


	At December 31,
	2020		2019
	(€ million)
Long-term debt (non-current)	€	1,338	€	1,280
Short-term debt and current portion of long-term debt (current)	€	355	€	360

Maturity analysis - contractual undiscounted cash flows


	At December 31, 2020
	(€ million)
Due within one year	€	419
Due between one and five years	868
Due beyond five years	993
Total undiscounted lease liabilities	€	2,280

In addition, FCA entered into commitments relating to leases not yet commenced of €171 million, of which the most significant related to the investments in manufacturing facilities in Michigan, USA. In addition to the above, FCA entered into non-cancellable short term leases, which have not been classified as lease liabilities, of €18 million which is expected to be settled within the next 12 months.

Debt secured by assets

At December 31, 2020, debt secured by assets of the FCA Group amounted to €464 million (€674 million at December 31, 2019), excluding the Lease liabilities as described above, mainly related to subsidized financing in Latin America, Mexico and India.

The total carrying amount of assets acting as security for loans for the FCA Group amounted to €1,108 million, excluding the Right-of-use assets as described in Note 11, Property, plant and equipment, at December 31, 2020 (€1,637 million at December 31, 2019).

Other liabilities and tax payable

12 Months Ended

Dec. 31, 2020

Subclassifications of assets, liabilities and equities [abstract]

Other liabilities and Tax payable

Other liabilities consisted of the following:


	At December 31,
	2020						2019
	Current		Non-current		Total		Current		Non-current		Total
	(€ million)
Payables for GDP and buy-back agreements	€	1,181	€	—	€	1,181	€	2,210	€	—	€	2,210
Accrued expenses and deferred income	569		535		1,104		769		674		1,443
Indirect tax payables	701		92		793		501		14		515
Payables to personnel	898		1		899		1,008		15		1,023
Social security payables	279		6		285		258		4		262
Construction contract liabilities (Note 14)	35		—		35		83		—		83
Service contract liability	603		1,400		2,003		621		1,530		2,151
Other	1,483		95		1,578		1,338		189		1,527
Total Other liabilities	€	5,749	€	2,129	€	7,878	€	6,788	€	2,426	€	9,214

Other liabilities (excluding Accrued expenses, Deferred income and Service contract liability) by due date were as follows:


	At December 31,
	2020										2019
	Total due within one year (Current)		Due between one and five years		Due beyond five years		Total due after one year (Non-Current)		Total		Total due within one year (Current)		Due between one and five years		Due beyond five years		Total due after one year (Non-Current)		Total
	(€ million)
Other liabilities (excluding Accrued expenses, deferred income and service contract liability)	€	4,577	€	179	€	15	€	194	€	4,771	€	5,398	€	201	€	21	€	222	€	5,620

Payables for GDP and buy-back agreements relate to buy-back agreements entered into by the FCA Group and includes the price received for the product, recognized as an advance at the date of the sale and, subsequently, the repurchase price and the remaining lease installments yet to be recognized. The decrease in the Payables for GDP and buy-back agreements during the year ended December 31, 2020 as compared to the year ended December 31, 2019 relates primarily to the decrease in vehicle sales.

Accrued expenses and deferred income includes the remaining portion of government grants that will be recognized as income in the Consolidated Income Statement over the same periods as the related costs which they are intended to offset.

On March 15, 2017, the Brazilian Supreme Court ruled that state value added tax should be excluded from the basis for calculating a federal tax on revenue. At June 30, 2017, the FCA Group determined that the likelihood of economic outflow related to such indirect taxes was no longer probable and the total liability of €895 million that FCA had accrued but not paid for such taxes for the period from 2007 to 2014 was reversed. Due to the materiality of this item and its effect on FCA’s results, the amount was presented separately in the line Reversal of a Brazilian indirect tax liability in the Consolidated Income Statement for the year ended December 31, 2017, and was composed of €547 million, originally recognized as a reduction to Net revenues, and €348 million, originally recognized within Net financial expenses. The Brazilian Supreme Court issued summary written minutes of its ruling on September 29, 2017 and Trial Minutes on October 2, 2017. On October 19, 2017, the Brazilian government filed its appeal against the PIS/COFINS over ICMS decision. At December 31, 2017, due to the uncertainty of scope of the application of the Supreme Court ruling taking into account the government’s appeal and request for modulation, and due to Brazil’s current heightened political and economic uncertainty, management believed a risk of economic outflow was still greater than remote. On August 18, 2018, the litigation concerning PIS over ICMS had its final and definitive favorable decision. At September 30, 2018, the FCA Group determined that the likelihood of economic outflow related to such indirect taxes was no longer probable and the total liability of €54 million accrued and paid would be recovered.

In March 2019, a final and definitive favorable decision was made in respect of the COFINS over ICMS element of the litigation, relating to amounts previously paid but not recovered for the period between May 2004 to December 2014. During the year ended December 31, 2019, total credits and the related receivable of €164 million were recognized, which were excluded from Adjusted EBIT (refer to Note 28, Segment reporting). On December 17, 2019, the Brazilian courts indicated that it would render a decision on the Brazilian government’s appeal regarding the 2017 Supreme Court’s decision with respect to the calculation of the state value added tax in the basis for federal tax on revenue on April 1, 2020, which has been subsequently postponed to an undetermined date. We continue to believe our position is supported by both the facts and the receipt of final and definitive rulings from the courts. However, due to the uncertainty of the Supreme Court’s application of the government’s appeal and request for modulation, and due to Brazil’s current heightened political and economic uncertainty, we continue to believe that the risk of economic outflow is greater than remote.

Service contract liability

The service contract liability was mainly comprised of maintenance plans and extended warranties. Changes in the FCA Group's service contract liability for the year ended December 31, 2020, were as follows:


	At January 1, 2020		Advances received from customers		Amounts recognized within revenue		Transfers to Assets/(Liabilities) held for sale		Other Changes		At December 31, 2020
	(€ million)
Service contract liability	€	2,151	€	723	€	(640)	€	—	€	(231)	€	2,003

Of the total Service contract liability at December 31, 2020, the FCA Group expected to recognize approximately €545 million in 2021, €492 million in 2022, €382 million in 2023 and €584 million thereafter.

Tax liabilities

Tax liabilities by due date were as follows:


	At December 31,
	2020										2019
	Total due within one year (Current)		Due between one and five years		Due beyond five years		Total due after one year (Non-Current)		Total		Total due within one year (Current)		Due between one and five years		Due beyond five years		Total due after one year (Non-Current)		Total
	(€ million)
Tax liabilities	€	228	€	246	€	2	€	248	€	476	€	122	€	276	€	2	€	278	€	400

Fair value measurements

12 Months Ended

Dec. 31, 2020

Fair Value Measurement [Abstract]

Fair value measurements

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 measured at fair value on a recurring basis:


		At December 31,
		2020								2019
	Note	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
		(€ million)
Debt securities and equity instruments measured at FVOCI	13	€	66	€	16	€	13	€	95	€	3	€	21	€	13	€	37
Debt securities and equity instruments measured at FVPL	13	275		—		15		290		277		—		15		292
Derivative financial assets	16	—		629		—		629		—		98		—		98
Collateral deposits	13	32		—		—		32		42		—		—		42
Receivables from financing activities	15	—		—		473		473		—		—		580		580
Trade receivables	15	—		12		—		12		—		19		—		19
Other receivables	15	—		—		63		63		—		—		69		69

Money market securities	17	7,802		—		—		7,802		2,293		—		—		2,293
Total Assets		€	8,175	€	657	€	564	€	9,396	€	2,615	€	138	€	677	€	3,430
Derivative financial liabilities	16	—		633		—		633		—		318		—		318
Total Liabilities		€	—	€	633	€	—	€	633	€	—	€	318	€	—	€	318

During the year ended December 31, 2020, derivative financial assets increased €531 million primarily due to the decrease in U.S. dollar against Euro and to decrease in the Brazilian Real against the U.S dollar. During the year ended December 31, 2020, derivative financial liabilities increased €315 million primarily due to fair value losses for interest-rate swaps entered into to hedge interest rates on future bond issuances.

During the year ended December 31, 2020, money market securities increased €5,509 million, reflecting higher overall cash and cash equivalents resulting from cash flows from operations during the second half of the 2020 and the draw down of borrowings.

The fair value of derivative financial assets and liabilities was 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, swaps and options hedging currency risk was determined by using valuation techniques common in the financial markets and taking market parameters at the balance sheet date (in particular, exchange rates, interest rates and volatility rates);

•the fair value of interest rate swaps and forward rate agreements was 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 was 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 was determined by using valuation techniques common in the financial markets 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 was also based on available market quotations. Where appropriate, the fair value of cash equivalents was 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, was estimated using discounted cash flow models. The most significant inputs used in this measurement were market discount rates that reflected 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 fair value of Other receivables, which relates to the contingent consideration receivable from the sale of Magneti Marelli (refer to Note 3, Scope of consolidation), is classified in Level 3 of the fair value hierarchy and was estimated using discounted cash flow models. The most significant inputs used in this measurement were market discount rates.

For assets and liabilities recognized in the financial statements at fair value on a recurring basis, the FCA Group determined whether transfers occurred between levels in the hierarchy by re-assessing categorization at the end of each reporting period. In 2020, there were no transfers between levels in the fair value hierarchy.

The following table provides a reconciliation of the changes in items measured at fair value and categorized within Level 3:


	Receivables from financing activities		Debt securities and equity instruments		Derivative financial assets/(liabilities)		Other receivables
	(€ million)
At January 1, 2020	€	580	€	28	€	—	€	69
Gains/(Losses) recognized in Consolidated Income Statement	—		—		—		(6)
Losses recognized in Other comprehensive income/(loss)	—		—		—		—
Issues/Settlements	(107)		—		—		—
Purchases/Sales	—		—		—		—

Transfers from Level 3	—		—		—		—
At December 31, 2020	€	473	€	28	€	—	€	63


	Receivables from financing activities		Debt securities and equity instruments		Derivative financial assets/(liabilities)		Other receivables
	(€ million)
At January 1, 2019	€	973	€	16	€	39	€	—
Gains/(Losses) recognized in Consolidated Income Statement	—		1		56		(1)
Gains recognized in Other comprehensive income/(loss)	—		—		(15)		—
Issues/Settlements	(393)		—		(66)		70
Purchases/Sales	—		11		—		—

Transfers from Level 3	—		—		(14)		—
At December 31, 2019	€	580	€	28	€	—	€	69

The gains/(losses) included in the Consolidated Income Statements were recognized within Cost of revenues. Of the total gains/(losses) recognized in Other comprehensive income, no amounts were recognized within Cash flow reserves and no amounts were recognized within Currency translation differences.

Assets and liabilities not measured at fair value on recurring basis

The carrying value of debt securities measured at amortized cost, financial receivables, current receivables and payables was a reasonable approximation of fair value as the present value of future cash flows did not differ significantly from the carrying amount.

The carrying value of Cash at banks and Other cash equivalents usually approximated fair value due to the short maturity of these instruments (refer to Note 17, Cash and cash equivalents).

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


		At December 31,
		2020				2019
	Note	Carrying amount		Fair Value		Carrying amount		Fair Value
		(€ million)
Dealer financing		€	1,065	€	1,065	€	1,737	€	1,736
Retail financing		512		504		613		608
Finance lease		6		6		3		3
Other receivables from financing activities		360		360		222		222
Total Receivables from financing activities(1)	15	€	1,943	€	1,935	€	2,575	€	2,569

Asset backed financing		€	41	€	41	€	151	€	151
Notes		8,454		9,314		6,392		6,900
Borrowings from banks & Other debt		10,929		11,194		4,718		4,724

Total Debt, excluding Lease liabilities(2)	21	€	19,424	€	20,549	€	11,261	€	11,775

______________________________________________________________________________________________________________________________

(1) Amount excludes receivables measured at FVPL

(2) Total Debt as at December 31, 2020 and 2019 included Lease liabilities with a carrying value of €1,693 million and €1,640 million, respectively. Disclosure of fair value for lease liabilities is not required by IFRS 7.

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

Notes that were traded in active markets for which close or last trade pricing was available are classified within Level 1 of the fair value hierarchy. Notes for which such prices were not available were 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 categorized as Level 2. At December 31, 2020, €9,307 million and €7 million of notes were classified within Level 1 and Level 2, respectively. At December 31, 2019, €6,893 million and €7 million of notes were classified within Level 1 and Level 2, respectively.

The fair value of Other debt included in Level 2 of the fair value hierarchy was estimated using discounted cash flow models. The main inputs used were year-end market interest rates, adjusted for market expectations of the FCA Group’s non-performance risk implied in quoted prices of traded securities issued by the FCA Group and existing credit derivatives on FCA Group liabilities. The fair value of Other debt that requires significant adjustment using unobservable inputs is categorized within Level 3. At December 31, 2020, €10,597 million and €597 million of Other Debt was classified within Level 2 and Level 3, respectively. At December 31, 2019, €3,865 million and €859 million of Other Debt was classified within Level 2 and Level 3, respectively.

Related party transactions

12 Months Ended

Dec. 31, 2020

Related Party [Abstract]

Related party transactions

In accordance with IAS 24 - Related Party Disclosures, the related parties of the FCA Group were determined as those entities and individuals capable of exercising control, joint control or significant influence over the FCA Group and its subsidiaries. Related parties included companies belonging to Exor N.V. (“Exor”, the largest shareholder of FCA through its 28.54 percent common shares shareholding interest and 44.40 percent voting power at December 31, 2020), which included Ferrari N.V. and CNH Industrial N.V. (“CNHI”). Related parties also included associates, joint ventures and unconsolidated subsidiaries of the FCA Group, members of the FCA Board of Directors, executives with strategic responsibilities and certain members of their families.

Transactions carried out by the FCA Group with its related parties are on commercial terms that are normal in the respective markets, considering the characteristics of the goods or services involved, and primarily relate to:

•the purchase of engines and engine components for Maserati vehicles from Ferrari N.V.;

•the purchase of powertrain systems for light commercial vehicles from CNHI;

•the sale of powertrain and other components to the companies of CNHI;

•the provision of services (accounting, payroll, tax administration, information technology and security) to the companies of CNHI;

•the sale of vehicles to the leasing and renting subsidiaries of the joint ventures FCA Bank and Koç Fiat Kredi;

•the sale of engines, other components and production systems to and the purchase of light commercial vehicles from Sevel S.p.A., a 50 percent owned joint operation with Groupe PSA, based in Atessa, Italy;

•the purchase of light commercial vehicles and passenger cars from the joint venture Tofas;

•the provision of services and the sale of goods to the GAC FCA JV;

•the purchase of vehicles from, the provision of services and the sale of goods to the joint operation Fiat India Automobiles Private Limited;

•the Jeep brand sponsorship of Juventus Football Club (a subsidiary of Exor); and

•the sale of automotive lighting and automotive components, which was included within discontinued operations, to Ferrari N.V.

The most significant financial transactions with related parties generated Receivables from financing activities of the FCA Group’s financial services companies from joint ventures and Asset-backed financing relating to amounts due to FCA Bank for the sale of receivables, which did not qualify for derecognition under IFRS 9 – Financial Instruments.

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


	Years ended December 31,
	2020								2019								2018
	Net Revenues		Cost of revenues		Selling, general and other costs, net		Net Financial expenses/(income)		Net Revenues		Cost of revenues		Selling, general and other costs, net		Net Financial expenses/(income)		Net Revenues		Cost of revenues		Selling, general and other costs, net		Net Financial expenses
	(€ million)
Tofas	€	938	€	1,326	€	6	€	—	€	728	€	2,086	€	9	€	—	€	926	€	2,572	€	7	€	—
Sevel S.p.A.	196		1		5		—		205		1		5		—		402		1		4		—
FCA Bank	1,375		22		(8)		32		1,686		23		(19)		52		1,611		28		(21)		56
GAC FCA JV	97		—		(17)		(1)		151		—		(36)		—		419		11		(49)		—
Fiat India Automobiles Limited	2		—		—		—		2		—		—		—		2		—		—		—
Other	1		—		—		—		2		—		—		(1)		27		6		(4)		1
Total joint arrangements	2,609		1,349		(14)		31		2,774		2,110		(41)		51		3,387		2,618		(63)		57
Total associates	2		123		1		(1)		17		186		(1)		—		30		229		(2)		(1)
CNHI	284		269		—		—		357		332		11		—		501		326		6		—
Ferrari N.V.	22		98		—		—		30		144		1		—		64		218		4		—
Directors and Key Management	—		—		100		—		—		—		82		—		—		—		77		—
Other	—		—		48		—		5		—		37		—		2		—		26		—
Total CNHI, Ferrari, Directors and other	306		367		148		—		392		476		131		—		567		544		113		—
Total unconsolidated subsidiaries	7		3		2		(1)		6		7		4		—		7		8		4		1
Total transactions with related parties	€	2,924	€	1,842	€	137	€	29	€	3,189	€	2,779	€	93	€	51	€	3,991	€	3,399	€	52	€	57

Total for the FCA Group	€	86,676	€	75,962	€	5,501	€	988	€	108,187	€	93,164	€	6,455	€	1,005	€	110,412	€	95,011	€	7,318	€	1,056

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


	At December 31,
	2020										2019
	Trade and other receivables		Trade payables		Other liabilities		Asset- backed financing		Debt(1)		Trade and other receivables		Trade payables		Other liabilities		Asset- backed financing		Debt (1)
	(€ million)
Tofas	€	73	€	347	€	35	€	—	€	—	€	18	€	171	€	39	€	—	€	—
Sevel S.p.A.	15		—		1		—		7		28		—		1		—		13
FCA Bank	264		88		37		29		61		278		139		151		141		181
GAC FCA JV	123		2		—		—		—		62		11		—		—		—
Fiat India Automobiles Limited	1		—		6		—		—		1		—		8		—		—
Other	—		—		—		—		—		0		—		—		—		—
Total joint arrangements	476		437		79		29		68		387		321		199		141		194
Total associates	43		32		6		—		—		45		41		8		—		—
CNHI	44		75		2		—		—		49		87		11		—		—
Ferrari N.V.	8		38		—		—		—		12		49		—		—		—
Other	1		2		1		—		—		4		13		—		—		—
Total CNHI, Ferrari N.V. and other	53		115		3		—		—		65		149		11		—		—
Total unconsolidated subsidiaries	25		15		1		—		26		16		9		1		—		22
Total originating from related parties	€	597	€	599	€	89	€	29	€	94	€	513	€	520	€	219	€	141	€	216

Total for the FCA Group	€	7,266	€	20,576	€	7,878	€	41	€	21,076	€	9,004	€	21,616	€	9,214	€	151	€	12,750

______________________________________________________________________________________________________________________________

(1) Relating to Debt excluding Asset-backed financing, refer to Note, 21 Debt.

Commitments and Guarantees

As of December 31, 2020, the FCA Group had a take-or-pay commitment with Tofas with future minimum expected obligations as follows:


	(€ million)
2021	€	217
2022	€	177
2023	€	94
2024	€	94

FCA provided guarantees to FCA Bank related to certain dealer financing arrangements FCA Bank had with dealers. The amount of the guarantees outstanding at December 31, 2020 was approximately €5 million. The fair value of these guarantees was immaterial due to the value of vehicles in the dealers' stock pledged to FCA.

Compensation to Directors and Key Management

The fees of the Directors of the FCA Group for carrying out their respective functions, including those in other consolidated companies, were as follows:


	Years ended December 31,
	2020		2019		2018
	(€ thousand)
Directors(1)	€	19,097	€	23,050	€	18,830
Total Compensation	€	19,097	€	23,050	€	18,830

______________________________________________________________________________________________________________________________

(1) Including the notional compensation cost arising from long-term share-based compensation granted to the Chairman, the Chief Executive Officer and the Chief Financial Officer.

Refer to Note 18, Share-based compensation, for information related to the PSU and RSU awards granted to certain key employees.

The aggregate compensation expense for remaining executives with strategic responsibilities was approximately €81 million for 2020 (€59 million in 2019 and €58 million in 2018), which, in addition to base compensation, included:

•€62 million in 2020 (€30 million in 2019 and €28 million in 2018) for share-based compensation expense;

•€6 million in 2020 (€6 million in 2019 and €7 million in 2018) for short-term employee benefits; and

•€4 million in 2020 (€7 million in 2019 and €10 million in 2018) for pension and similar benefits.

Guarantees granted, commitments and contingent liabilities

12 Months Ended

Dec. 31, 2020

Other Provisions, Contingent Liabilities And Contingent Assets [Abstract]

Guarantees granted, commitments and contingent liabilities

Guarantees granted

At December 31, 2020, the FCA Group had pledged guarantees on the debt or commitments of third parties totaling €12 million (€8 million at December 31, 2019), as well as guarantees of €1 million on related party debt (€3 million at December 31, 2019).

SCUSA Private-label financing agreement

In February 2013, FCA US entered into a private-label financing agreement (the “SCUSA Agreement”) with Santander Consumer USA Inc. (“SCUSA”), an affiliate of Banco Santander, which launched on May 1, 2013. Under the SCUSA Agreement, SCUSA provides a wide range of wholesale and retail financing services to FCA US's dealers and consumers in accordance with its usual and customary lending standards, under the Chrysler Capital brand name.

The SCUSA Agreement has a ten-year term expiring in April 2023, subject to early termination in certain circumstances, including the failure by a party to comply with certain of its ongoing obligations under the SCUSA Agreement. In accordance with the terms of the agreement, SCUSA provided an upfront, non-refundable payment of €109 million (U.S.$150 million) in May 2013, which was recognized as deferred revenue and is amortized over ten years. At December 31, 2020, €29 million (U.S.$35 million) remained in deferred revenue.

On June 28, 2019, FCA US entered into an amendment (the “Amendment”) to the SCUSA Agreement. The Amendment modified certain terms of the agreement, with the remaining term unchanged through to April 2023, and in connection with its execution, SCUSA made a one-time, nonrefundable, non-contingent, cash payment of U.S.$60 million (€53 million) to FCA US as part of a negotiated resolution of open matters. The amount was recognized within Selling, general and other costs in the Consolidated Income Statement for the year ended December 31, 2019. The duration of the agreement remained unchanged.

From time to time, FCA US worked with certain lenders to subsidize interest rates or cash payments at the inception of a financing arrangement to incentivize customers to purchase its vehicles, a practice known as “subvention”. FCA US has provided SCUSA with limited exclusivity rights to participate in specified minimum percentages of certain of its retail financing rate subvention programs. SCUSA has committed to certain revenue sharing arrangements, as well as to consider future revenue sharing opportunities. SCUSA bears the risk of loss on loans contemplated by the SCUSA Agreement. The parties share in any residual gains and losses in respect of consumer leases, subject to specific provisions in the SCUSA Agreement, including limitations on FCA US participation in gains and losses.

Other repurchase obligations

In accordance with the terms of other wholesale financing arrangements in Mexico, FCA Mexico was required to repurchase dealer inventory financed under these arrangements, upon certain triggering events and with certain exceptions, including in the event of an actual or constructive termination of a dealer’s franchise agreement. These obligations exclude certain vehicles including, but not limited to, vehicles that have been damaged or altered, that are missing equipment or that have excessive mileage or an original invoice date that is more than one year prior to the repurchase date. In December 2015, FCA Mexico entered into a ten-year private label financing agreement with FC Financial, S.A De C.V., Sofom, E.R., Grupo Financiaro Inbursa (“FC Financial”), a wholly owned subsidiary of Banco Inbursa, under which FC Financial provides a wide range of financial wholesale and retail financial services to FCA Mexico's dealers and retail customers under the FCA Financial Mexico brand name. The wholesale repurchase obligation under the new agreement will be limited to wholesale purchases in case of actual or constructive termination of a dealer's franchise agreement.

At December 31, 2020, the maximum potential amount of future payments required to be made in accordance with these wholesale financing arrangements was approximately €121 million (U.S.$149 million) and was based on the aggregate repurchase value of eligible vehicles financed through such arrangements in the respective dealer's stock. If vehicles are required to be repurchased through such arrangements, the total exposure would be reduced to the extent the vehicles can be resold to another dealer. The fair value of the guarantee was nil at December 31, 2020.

Arrangements with key suppliers

From time to time and in the ordinary course of business, the FCA Group entered into various arrangements with key third party suppliers in order to establish strategic and technological advantages. A limited number of these arrangements contained unconditional purchase obligations to purchase a fixed or minimum quantity of goods and/or services with fixed and determinable price provisions. Future minimum purchase obligations under these arrangements at December 31, 2020 were as follows for the FCA Group's continuing operations:


	(€ million)
2021	€	562
2022	€	243
2023	€	135
2024	€	152
2025	€	16
2026 and thereafter	€	27

Other commitments, arrangements and contractual rights

Regulatory emission credits

During the year ended December 31, 2019, FCA entered into multi-year non-cancellable agreements for purchases of regulatory emissions credits in various jurisdictions. At December 31, 2020, these agreements represent total commitments of €0.4 billion after fulfillment of commitments during the years ended December 31, 2020 and 2019, as well as the reduction in the commitments due to the CAFE civil fine rate recorded during the year ended December 31, 2019 (refer to Note 20, Provisions). The purchased credits are expected to be used for compliance years through 2023.

FCA Bank joint venture agreement

On July 19, 2019, FCA and Crédit Agricole Consumer Finance agreed to extend their 50:50 joint venture, FCA Bank, until December 31, 2024. The agreement will be automatically renewed unless notice of non-renewal is provided no later than three years before end of the term. A notice of non-renewal would trigger certain put and call rights.

UAW Labor Agreement

In December 2019, the UAW-represented workforce ratified a new four-year collective bargaining agreement that builds on the company’s commitment to grow its U.S. manufacturing operations by providing for total investments of U.S.$9 billion and the creation of 7,900 new or secured jobs. The provisions of the agreement continued certain opportunities for success-based compensation upon meeting certain quality and financial performance metrics. The agreement, which covers about 49,200 employees, included a ratification bonus of U.S.$9,000 for “Traditional” and “In-progression” employees and U.S.$3,500 for temporary employees, as well as lump-sum payments, both of which are in lieu of further wage increases, totaling U.S.$499 million (€446 million) that were paid to UAW members on December 27, 2019. Lump sum payments made in lieu of future wage increases are being amortized over the contract period.

Italian labor agreement

In March 2019, the FCA Group renewed its labor agreement with Italian trade unions for Italian employees, which had previously expired on December 31, 2018. The agreement is valid for the period 2019-2022 and applies to the FCA Group's 66,000 employees in Italy, primarily providing for a 2 percent annual increase in contractual compensation and an enhancement of the annual performance-based bonus linked to the achievement of productivity and efficiency targets forming part of the World Class Manufacturing (“WCM”) program.

In April 2015, the previous four-year compensation agreement was signed by FCA companies within the automobiles business in Italy. The compensation agreement was subsequently included into the labor agreement and was extended to all FCA companies in Italy on July 7, 2015.

The compensation arrangement was effective retrospectively from January 1, 2015 through December 31, 2018 and incentivized all employees toward achievement of the productivity, quality and profitability targets established in the 2015-2018 period of the 2014-2018 business plan developed in May 2014 by adding two variable additional elements to base pay:

•an annual bonus, calculated on the basis of production efficiencies achieved and the plant’s World Class Manufacturing audit status; and

•a component linked to achievement of the financial targets established in the 2015-2018 period of the 2014-2018 business plan for the EMEA region, including the activities of the premium brands Alfa Romeo and Maserati.

A total of €93 million, €75 million and €72 million related to the additional variable elements above was recorded as an expense included within Net profit from continuing operations for the years ended December 31, 2020, 2019 and 2018, respectively.

Canada labor agreement

In September 2020, the four-year collective bargaining agreement that was entered into in September 2016 with Unifor in Canada expired. FCA entered into a three-year labor agreement with Unifor in Canada that was ratified on October 19, 2020. The terms of this agreement provides a $7,250 Canadian dollars (“CAD$”) lump sum payment for all active employees, CAD$500 for all eligible temporary part-time employees, up-front lump sum payments of CAD$7,250 to all employees on indefinite layoff and lump sum retirement allowance of CAD$3,625 for employees who retired during 2020. The total ratification bonus of approximately CAD$59 million (€38 million) was paid on November 20, 2020. The agreement covers more than 9,200 employees and expires October 2023. The lump sum payments, which were made in lieu of future wage increases, are being amortized ratably over three-year contract period

Contingent liabilities

In connection with significant asset divestitures carried out in prior years, the FCA Group provided indemnities to purchasers with the maximum amount of potential liability under these contracts generally capped at a percentage of the purchase price. These liabilities refer principally to potential liabilities arising from possible breaches of representations and warranties provided in the contracts and, in certain instances, environmental or tax matters, generally for a limited period of time. Potential obligations with respect to these indemnities were approximately €5 million and a total of €5 million has been recognized within Provisions related to these obligations as of December 31, 2020 (€5 million and €3 million as of December 31, 2019, respectively). The FCA Group provided certain other indemnifications that do not limit potential payment and as such, it was not possible to estimate the maximum amount of potential future payments that could result from claims made under these indemnities.

Takata airbag inflators

Putative class action lawsuits were 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. We are vigorously defending against this action and at this stage of the proceedings, we are unable to reliably evaluate the likelihood that a loss will be incurred or estimate a range of possible loss.

Emissions Matters

On January 10, 2019, we announced that FCA US had reached final settlements on civil environmental and consumer claims with the U.S. Environmental Protection Agency (“EPA”), the Civil Division of the U.S. Department of Justice (“DoJ”), the California Air Resources Board, the State of California, 49 other States and U.S. Customs and Border Protection, for which we accrued €748 million during the year ended December 31, 2018. Approximately €350 million of the accrual was related to civil penalties to resolve differences over diesel emissions requirements. A portion of the accrual was attributable to settlement of a putative class action on behalf of consumers in connection with which FCA US agreed to pay an average of $2,800 per vehicle to eligible customers affected by the recall. That settlement received final court approval on May 3, 2019. Nevertheless, we continue to defend individual claims from approximately 3,200 consumers that have exercised their right to opt out of the class action settlement and pursue their own individual claims against us (the “Opt-Out Litigation”). We have engaged in further discovery in the Opt-Out Litigation and participated in court-sponsored settlement conferences, but have reached settlement agreements with less than 100 of these remaining plaintiffs. As of December 31, 2020, our best estimate of a probable loss is reflected in the amount previously accrued.

In the U.S., we remain subject to a diesel emissions-related investigation by the DoJ, Criminal Division. In September 2019, the DoJ filed criminal charges against an employee of FCA US for, among other things, fraud, conspiracy, false statements and violations of the Clean Air Act primarily in connection with efforts to obtain regulatory approval of the vehicles that were the subject of the civil settlements described above. We have continued discussions with the DoJ, Criminal Division to determine whether we can reach an appropriate resolution of their investigation as it relates to FCA US, which may involve the payment of penalties and other non-financial sanctions. At this time, we estimate a range of probable loss. While the outcome of these discussions is uncertain and we cannot predict whether or when any settlement may be reached with the DoJ, Criminal Division, or the ultimate outcome of its investigation, we accrued approximately €200 million during the three months ended September 30, 2020 as our best estimate of probable loss with regard to matters under discussion. We also remain subject to a number of related private lawsuits (the “Non Opt-Out Litigation”). In September 2020, we settled the diesel emissions-related investigation with the U.S. Securities and Exchange Commission (the “SEC”) for an amount that is not material to the Group and which had been accrued during the three months ended June 30, 2020.

We have also received inquiries from other regulatory authorities in a number of jurisdictions as they examine the on-road tailpipe emissions of several automakers’ vehicles and, when jurisdictionally appropriate, we continue to cooperate with these governmental agencies and authorities

In Europe, we are working with the Italian Ministry of Transport (“MIT”) and the Dutch Vehicle Regulator (“RDW”), the authorities that certified FCA diesel vehicles for sale in the European Union, and the UK Driver and Vehicle Standards Agency in connection with their review of several of our vehicles.

We also initially responded to inquiries from the German authority, the Kraftfahrt-Bundesamt (“KBA”), regarding emissions test results for our vehicles, and we discussed the KBA reported test results, our emission control calibrations and the features of the vehicles in question. After these initial discussions, the MIT, which has sole authority for regulatory compliance of the vehicles it has certified, asserted its exclusive jurisdiction over the matters raised by the KBA, tested the vehicles, determined that the vehicles complied with applicable European regulations and informed the KBA of its determination. Thereafter, mediations have been held under European Commission (“EC”) rules, between the MIT and the German Ministry of Transport and Digital Infrastructure, which oversees the KBA, in an effort to resolve their differences. The mediation was concluded with no action being taken with respect to FCA. In May 2017, the EC announced its intention to open an infringement procedure against Italy regarding Italy's alleged failure to respond to EC's concerns regarding certain FCA emission control calibrations. The MIT has responded to the EC's allegations by confirming that the vehicles' approval process was properly performed.

In December 2019, the MIT notified us that the Dutch Ministry of Infrastructure and Water Management (“I&W”) had been communicating with the MIT regarding certain irregularities allegedly found by the RDW and the Dutch Center of Research TNO in the emission levels of certain Jeep Grand Cherokee Euro 5 models and a vehicle model of another OEM that contains a Euro 6 diesel engine supplied by us. In January 2020, the Dutch Parliament published a letter from the I&W summarizing the conclusions of the RDW regarding those vehicles and engines and indicating an intention to order a recall and report their findings to the Public Prosecutor, the EC and other Member States. We have engaged with the RDW to present our positions and cooperate to reach an appropriate resolution of this matter. We have proposed certain updates to the relevant vehicles that have been tested and approved by the RDW and are now being implemented. Nevertheless, this matter is still pending. In addition, at the request of the French Consumer Protection Agency, the Juge d’Instruction du Tribunal de Grande Instance of Paris is investigating diesel vehicles of a number of automakers including FCA, regarding whether the sale of those vehicles violated French consumer protection laws.

In July 2020, unannounced inspections took place at several of our sites in Germany, Italy and the UK at the initiative of the Public Prosecutors of Frankfurt am Main and of Turin, as part of their investigations of potential violations of diesel emissions regulations and consumer protection laws. We are cooperating with the investigations. Several FCA companies and our Dutch dealers were recently served with a purported class action filed in the Netherlands by a Dutch foundation seeking monetary damages and vehicle buybacks in connection with alleged emissions non-compliance of certain FCA E5 and E6 diesel vehicles. A similar claim has been announced in the UK but not yet served on the Company. We are also defending a number of individual consumer claims alleging emissions non-compliance of certain of our vehicles in Germany.

In December 2018, the Korean Ministry of Environment (“MOE”) announced its determination that approximately 2,400 FCA vehicles imported into Korea during 2015, 2016 and 2017 were not emissions compliant and that the vehicles with a subsequent update of the emission control calibrations voluntarily performed by FCA, although compliant, would have required re-homologation of the vehicles concerned. In May 2019, the MOE revoked certification of the above-referenced vehicles and announced an administrative fine for an amount not material to the Group. We have appealed the MOE’s decision. Our subsidiary in Seoul, Korea is also cooperating with local criminal authorities in connection with their review of this matter, with the Korean Fair Trade Commission regarding a purported breach of the Act on Fair Labeling and Advertisement in connection with the subject vehicles and with the MOE in connection with their review of other FCA vehicles.

The results of the unresolved governmental inquiries and private litigation cannot be predicted at this time and these inquiries and litigation may lead to further enforcement actions, penalties or damage awards, any of which may have a material adverse effect on our business, financial condition and results of operations. It is also possible that these matters and their ultimate resolution may adversely affect our reputation with consumers, which may negatively impact demand for our vehicles and consequently could have a material adverse effect on our business, financial condition and results of operations. At this stage, we are unable to evaluate the likelihood that a loss will be incurred with regard to the unresolved inquiries and Non Opt-Out Litigation or estimate a range of possible loss.

U.S. Sales Reporting Investigations

On September 27, 2019, the SEC announced the resolution of its investigation into our reporting of vehicle sales to end customers in the U.S. which included our agreement to pay an amount that is not material to the Group. We have also cooperated with a DoJ investigation into the same issues, the outcome of which remains uncertain. Any resolution of that matter may involve the payment of penalties and other sanctions. At this time, we are unable to reliably evaluate the likelihood that a loss will be incurred or estimate a range of possible loss in connection with that investigation.

As previously reported, two putative securities class action lawsuits were filed against us in the U.S. District Court for the Eastern District of Michigan making allegations with regard to our reporting of vehicle unit sales to end consumers in the U.S. These lawsuits were consolidated into a single action and on October 4, 2018, we entered into an agreement in principle to settle the consolidated litigation, subject to court approval, for an amount that is not material to the Group. On June 5, 2019, the Court granted final approval to this settlement.

National Training Center

On January 27, 2021, FCA US announced that it reached an agreement with the U.S. Attorney’s Office for the Eastern District of Michigan to resolve its investigation into past misconduct of certain former FCA US employees involving the UAW-Chrysler National Training Center (“NTC”). Pursuant to the agreement, which remains subject to court approval, FCA US agreed to plead guilty to a single count of conspiracy to violate the Labor Management Relations Act and the payment of a fine in an amount that is not material to the financial statements and which had previously been accrued during the quarter ended September 30, 2020. FCA US also agreed to implement an independent compliance monitor for three years with respect to the dissolution of the NTC and internal controls as they relate to the trusts being implemented to replace the NTC.

Several putative class action lawsuits have been filed against FCA US in U.S. federal court alleging harm to UAW workers as a result of these acts. Those actions have been dismissed both at the trial court stage and on appeal. Three plaintiffs in these lawsuits also filed charges alleging unfair labor practices with the U.S. National Labor Relations Board (the “Board”). The Board issued a complaint regarding these allegations and is seeking a cease and desist order as well as the posting of a notification with respect to the alleged practices.

On July 20, 2020, a group of employees in our Toledo, Ohio Jeep plant filed a lawsuit in U.S. District Court for the Northern District of Ohio against FCA US, the UAW and certain individuals claiming violations of the Racketeer Influenced and Corrupt Organizations (RICO) Act and civil conspiracy. On October 20, 2020, FCA US filed a motion to dismiss and the plaintiffs filed a motion for leave to file a second amended complaint on December 13, 2020. At this stage, we are unable to reliably evaluate the likelihood that a loss will be incurred or estimate a range of possible loss.

On October 16, 2020, a group of current and former employees in our Trenton Engine Complex filed a lawsuit in U.S. District Court for the Eastern District of Michigan, making similar claims. At this stage, we are unable to reliably evaluate the likelihood that a loss will be incurred or estimate a range of possible loss.

General Motors Litigation

On November 20, 2019, General Motors LLC and General Motors Company (collectively, “GM”) filed a lawsuit in the U.S. District Court for the Eastern District of Michigan against FCA US, FCA NV and certain individuals, claiming violations of the RICO Act, unfair competition and civil conspiracy in connection with allegations that FCA US paid bribes to UAW officials that corrupted the bargaining process with the UAW and as a result FCA US enjoyed unfair labor costs and operational advantages that caused harm to GM. GM also claimed that FCA US had made concessions to the UAW in collective bargaining that the UAW was then able to extract from GM through pattern bargaining which increased costs to GM and that this was done by FCA US in an effort to force a merger between GM and FCA NV.

On July 8, 2020, the court dismissed GM’s lawsuit with prejudice. On August 3, 2020, GM filed a motion requesting that the court amend or alter its judgement, which the court denied. GM has appealed the dismissal to the U.S. Court of Appeals for the Sixth Circuit and oral argument on that appeal is scheduled for March 4, 2021. Following dismissal of its Federal court case, GM also filed an action against FCA US and FCA NV in Michigan state court, making substantially the same claims as it made in the federal litigation. On November 24, 2020, FCA US and FCA NV filed a motion for summary disposition in the state court case and GM filed a motion to compel discovery on December 16, 2020. Oral arguments on FCA’s motion for summary disposition and GM’s motion for expedited discovery were held on February 26, 2021 and were adjourned to be continued on March 5, 2021. At this stage, we are unable to reliably evaluate the likelihood that a loss will be incurred or estimate a range of possible loss.

Tigershark Engine - EPA Matter

In connection with internal testing, we determined that approximately 935,000 vehicles equipped with the 2.4L Tigershark engine may have excess tailpipe emissions. We have discussed this issue and reviewed our proposed solution with the EPA. We intend to initiate a recall campaign to implement this solution, and as a result we have increased our warranty campaign provision by approximately €200 million.

Tigershark Engine - Litigation

In addition, putative class action lawsuits have been filed against FCA US and consolidated into a single action in U.S. District court in Michigan asserting claims under federal and state laws claiming manufacturing and design defects in certain vehicles equipped with the 2.4L Tigershark engine, which has been installed in approximately 1.6 million vehicles sold in the U.S. The claims allege excessive oil consumption and related excess emissions. We are evaluating and defending against these actions while we work to assess the claims and, if appropriate, any mitigating action we could take. 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.

Other matters

Corporate Average Fuel Economy (“CAFE”) standards

On August 31, 2020, the U.S. Court of Appeals for the Second Circuit vacated a final rule published by the National Highway Traffic Safety Administration (“NHTSA”) in July 2019 that had reversed NHTSA’s 2016 increase to the base rate of the CAFE penalty from $5.50 to $14.00. The base rate applies to each tenth of a mile per gallon (“MPG”) that a manufacturer’s fleet-wide average MPG is below the CAFE standard, and is multiplied by the number of vehicles in the manufacturer’s fleet to arrive at an aggregate penalty. On January 14, 2021, NHTSA published an interim final rule with immediate effect, the result of which would be to apply the increased fine rate that resulted from the Second Circuit’s ruling to future model years. In particular, NHTSA’s new rule imposes a CAFE penalty base rate of $5.50 through 2021 Model Year and increases the CAFE penalty base rate to $14.00 prospectively from the 2022 Model Year. We have accrued estimated amounts for any probable CAFE penalty based on the $5.50 rate for Model Years 2021 and earlier. Several non-governmental organizations and state attorneys general have initiated litigation to overturn NHTSA’s interim final rule. If the litigation is successful in overturning the interim final rule, we may need to accrue additional amounts due to increased CAFE penalties and additional amounts we may owe under certain agreements for the purchase of regulatory emissions credits. The amounts that we may accrue could be up to €550 million depending on, among other things, our ability to implement future product actions or other actions to modify the utilization of credits.

U.S. Import Duties

Historically, we have paid a 2.5 percent duty on Ram ProMaster City vehicles imported into the U.S. as passenger vehicles rather than the 25 percent duty applicable to vehicles that are imported into the U.S. as cargo vans. The vast majority of these vehicles are converted into cargo vans after importation. In litigation between a competitor and U.S. Customs and Border Protection (“CBP”) involving similar vehicles, the U.S. Court of Appeals for the Federal Circuit ruled in June 2019 that vehicles previously imported by the competitor are subject to the 25 percent duty. The competitor sought to appeal the matter to the U.S. Supreme Court, but in June 2020, the U.S. Supreme Court declined to hear the competitor’s case.

We believe there are facts that distinguish our case from that of the competitor. However, CBP may seek to recover increased duties for our prior imports, plus interest, and may assert a claim for penalties. At this stage, we are unable to reliably evaluate the likelihood that a loss will be incurred or estimate a range of possible loss.

Equity

12 Months Ended

Dec. 31, 2020

Share Capital, Reserves And Other Equity Interest [Abstract]

Equity

Share capital

At December 31, 2020, 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 December 31, 2020, fully paid-up share capital of FCA amounted to €20 million (€20 million at December 31, 2019) and consisted of 1,574,714,499 common shares and of 449,618,514 special voting shares, all with a par value of €0.01 each (1,567,519,274 common shares and 408,941,767 special voting shares, all with a par value of €0.01 each at December 31, 2019).

On March 2, 2020 a total of 73,606,222 FCA Special Voting Shares were delivered to Exor N.V. as a result of an equivalent number of Common Shares being registered in the Loyalty Register for an uninterrupted period of three years in accordance with clause 5.1 of the Special Voting Shares Terms and Conditions. The related Common Shares became Qualifying Common Shares. Of the shares delivered, 32,937,489 were Special Voting Shares held by the Company and 40,668,733 were additional Special Voting Shares issued. On November 13, 2020, an additional 8,014 special voting shares were issued as a result of an equivalent number of Common Shares being registered in the Loyalty Register for an uninterrupted period of three years in accordance with clause 5.1 of the Special Voting Shares Terms and Conditions.

The following table summarizes the changes in the number of outstanding common shares and special voting shares of FCA during the year ended December 31, 2020:


	Common Shares	Special Voting Shares	Total
Balance at January 1, 2020	1,567,519,274	408,941,767	1,976,461,041
Shares issued to Key management	7,195,225	—	7,195,225
Shares registered in the Loyalty Register	—	40,676,747	40,676,747
Balance at December 31, 2020	1,574,714,499	449,618,514	2,024,333,013

Long Term Incentive Plans

On October 29, 2014, the Board of Directors of FCA (“Board of Directors”) resolved to authorize the issuance of up to a maximum of 90 million common shares under the equity incentive plan and the long-term incentive program which had been adopted before the closing of the 2014 Merger and under which equity awards can be granted to eligible individuals. Any issuance of shares during the period from 2014 to 2018 are subject to the satisfaction of certain performance/retention requirements and any issuances to directors are subject to FCA shareholders' approval (refer to Note 18, Share-based compensation).

On December 19, 2018, the Board of Directors resolved to allocate up to a maximum of 50 million common shares under the 2019 - 2021 LTIP (refer to Note 18, Share-based compensation), under which equity awards can be granted to eligible individuals. Any issuance of shares during the period from 2019 to 2021 is subject to the satisfaction of certain performance and retention requirements and any issuances to directors are subject to FCA shareholders' approval (refer to Note 18, Share-based compensation).

Pursuant to the Articles of Association, the Board of Directors is irrevocably authorized to issue shares (common and special voting shares) and to grant rights to subscribe for shares in the capital of the Company. This authorization is up to a maximum aggregate amount of shares as set out in the Articles of Association, as amended from time to time, and limits or excludes the right of pre-emption with respect to common shares. The Board of Directors' authorization was for a period of five years from October 12, 2014 and expired on October 11, 2019.

On April 12, 2019, the FCA Annual General Meeting of Shareholders (“AGM”) resolved to authorize, under certain conditions, the Board of Directors to issue common and special voting shares, to grant rights to subscribe for common and special voting shares, and to limit or exclude pre-emptive rights for common shares. This authorization is for a period of eighteen months up to and including October 11, 2020, starting from the date on which the current authorization expired, October 12, 2019.

Furthermore, the AGM renewed the existing authorization of the Board of Directors, for a period of eighteen months from the date of the AGM, to repurchase up to a maximum of 10 percent of the Company’s common shares issued as of the date of the AGM. Pursuant to the authorization, which does not entail any obligation for the Company but is designed to provide additional flexibility, the Board of Directors may repurchase common shares in compliance with applicable regulations, subject to certain maximum and minimum price thresholds.

Other reserves:

Other reserves comprised the following:

•legal reserves of €13,598 million at December 31, 2020 (€14,206 million at December 31, 2019) determined in accordance with Dutch law and primarily relating to development expenditures capitalized by subsidiaries and their earnings, subject to certain restrictions on distributions to FCA;

•capital reserves of €6,094 million at December 31, 2020 (€6,034 million at December 31, 2019);

•retained earnings, after the separation of the legal reserve, of positive €8,051 million (positive €2,286 million at December 31, 2019); and

•profit attributable to owners of the parent of €29 million for the year ended December 31, 2020 (€6,622 million for the year ended December 31, 2019).

Other comprehensive income

Other comprehensive income was as follows:


	Years ended December 31,
	2020		2019		2018
	(€ million)
Items that will not be reclassified to the Consolidated Income Statement in subsequent periods:
(Losses)/gains on remeasurement of defined benefit plans	€	(110)	€	(63)	€	317
Losses on debt instruments measured at FVOCI	(1)		—		—
Share of gains/(losses) on remeasurement of defined benefit plans for equity method investees	—		(5)		—
Gains/(losses) on equity instruments measured at fair value through other comprehensive income	(5)		6		(4)
Items relating to discontinued operations	—		(9)		1
Total Items that will not be reclassified to the Consolidated Income Statement (B1)	(116)		(71)		314

Items that may be reclassified to the Consolidated Income Statement in subsequent periods:
Gains/(Losses) on net investment hedging instruments	—		—		—
Gains/(losses) on cash flow hedging instruments arising during the period	121		(269)		99
Gains/(losses) on cash flow hedging instruments reclassified to the Consolidated Income Statement	(143)		78		(108)
Total Gains/(losses) on cash flow hedging instruments	(22)		(191)		(9)
Foreign exchange gains/(losses)	(2,696)		268		126
Share of Other comprehensive income/(loss) for equity method investees arising during the period	(81)		(16)		(77)
Share of Other comprehensive income/(loss) for equity method investees reclassified to the Consolidated Income Statement	(23)		1		(26)
Total Share of Other comprehensive (loss)/income for equity method investees	(104)		(15)		(103)
Items relating to discontinued operations	—		9		(91)
Total Items that may be reclassified to the Consolidated Income Statement (B2)	(2,822)		71		(77)

Total Other comprehensive income (B1)+(B2)=(B)	(2,938)		—		237
Tax effect	28		57		(82)
Tax effect - discontinued operations	—		—		1
Total Other comprehensive income, net of tax	€	(2,910)	€	57	€	156

Gains and losses arising from the remeasurement of defined benefit plans primarily include actuarial gains and losses arising during the period, the return on plan assets (net of interest income recognized in the Consolidated Income Statement) and any changes in the effect of the asset ceiling. These gains and losses are offset against the related defined benefit plan's net liabilities or assets (Note 19, Employee benefits liabilities).

The following table summarizes the tax effect relating to Other comprehensive income:


	Years ended December 31,
	2020						2019						2018
	Pre-tax balance		Tax income/ (expense)		Net balance		Pre-tax balance		Tax income/ (expense)		Net balance		Pre-tax balance		Tax income/ (expense)		Net balance
	(€ million)
(Losses)/gains on remeasurement of defined benefit plans	€	(110)	€	21	€	(89)	€	(63)	€	7	€	(56)	€	317	€	(76)	€	241

Losses on debt instruments measured at FVOCI	(1)		—		(1)		—		—		—		—		—		—
Gains/(Losses) on cash flow hedging instruments	(22)		7		(15)		(191)		50		(141)		(9)		(6)		(15)
Gains/(losses) on equity instruments measured at fair value through other comprehensive income	(5)		—		(5)		6		—		6		(4)		—		(4)
Foreign exchange (losses)/gains	(2,696)		—		(2,696)		268		—		268		126		—		126
Share of Other comprehensive income/(loss) for equity method investees	(104)		—		(104)		(20)		—		(20)		(103)		—		(103)
Items relating to discontinued operations	—		—		—		—		—		—		(90)		1		(89)
Total Other comprehensive income	€	(2,938)	€	28	€	(2,910)	€	—	€	57	€	57	€	237	€	(81)	€	156

Policies and processes for managing capital

The objectives identified by the FCA Group for managing capital were to create value for shareholders as a whole, safeguard business continuity and support the growth of the FCA Group. As a result, the FCA Group endeavored to maintain an adequate level of capital that, at the same time, enables it to obtain a satisfactory economic return for its shareholders and guarantee economic access to external sources of funds, including by means of achieving an adequate credit rating.

The FCA Group constantly monitored the ratio between debt and equity, particularly the level of net debt and the generation of cash from its industrial activities. In order to reach these objectives, the FCA Group continued to aim for improvement in the profitability of its operations. Furthermore, the FCA Group could sell part of its assets to reduce the level of its debt, while the Board of Directors may make proposals to FCA shareholders at a general meeting of FCA shareholders to reduce or increase share capital or, where permitted by law, to distribute reserves. The FCA Group may also make purchases of treasury shares, without exceeding the limits authorized at a general meeting of FCA shareholders, under the same logic of creating value, compatible with the objectives of achieving financial equilibrium and an improvement in the FCA Group's rating.

Dividends proposed, declared and paid

In accordance with the combination agreement, on January 4, 2021, FCA declared a conditional special cash distribution of €1.84 per common share corresponding to a total distribution of approximately €2.9 billion, payable to holders of FCA common shares of record as of the close of business on Friday, January 15, 2021. The cash distribution was paid on January 29, 2021.

In addition, the combination agreement contemplated that the Board of Directors would review a potential cash distribution of €1 billion following completion of the merger. On March 2, 2021, the Board of Directors resolved to propose to the AGM the approval of a special cash distribution of €0.32 per common share corresponding to a total distribution of approximately €1 billion. The distribution will be subject to approval by the AGM, which is scheduled to be held on April 15, 2021.

The FCA Board of Directors intended to recommend to the Annual General Meeting of Shareholders an annual ordinary dividend distribution to holders of FCA common shares of €0.70 per common share. On May 13, 2020, the board of directors of Fiat Chrysler Automobiles N.V. announced the decision to not distribute an ordinary dividend in 2020 related to financial year 2019, in light of the impact from the COVID-19 crisis.

The FCA loyalty voting structure

The purpose of the loyalty voting structure is to reward long-term ownership of FCA common shares and to promote stability of the FCA shareholder base by granting long-term FCA shareholders with special voting shares to which one voting right is attached in addition to the one granted by each FCA common share that they hold. In connection with the 2014 Merger, FCA issued 449,618,514 special voting shares with a nominal value of €0.01 each to those eligible shareholders of Fiat S.p.A. who had elected to participate in the loyalty voting structure upon completion of the 2014 Merger in addition to FCA common shares. In addition, an FCA shareholder may, at any time, elect to participate in the loyalty voting structure by requesting that FCA register all or some of the number of FCA common shares held by such an FCA shareholder in the Loyalty Register. Only a minimal dividend accrues to the special voting shares, which is allocated to a separate special dividend reserve, and they shall not carry any entitlement to any other reserve of FCA. Having only immaterial economic entitlements, the special voting shares do not impact earnings per share.

Earnings per share

12 Months Ended

Dec. 31, 2020

Earnings per share [abstract]

Earnings per share

Basic earnings per share

Basic earnings per share for the years ended December 31, 2020, 2019 and 2018 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 tables provide the amounts used in the calculation of basic earnings per share:


		Years ended December 31,
		2020		2019		2018
Net profit attributable to owners of the parent	million	€	29	€	6,622	€	3,608
Weighted average number of shares outstanding	thousand	1,572,020		1,564,114		1,548,439
Basic earnings per share	€	€	0.02	€	4.23	€	2.33


		Years ended December 31,
		2020		2019		2018
Net profit from continuing operations attributable to owners of the parent	million	€	29	€	2,694	€	3,323
Weighted average number of shares outstanding	thousand	1,572,020		1,564,114		1,548,439
Basic earnings per share from continuing operations	€	€	0.02	€	1.72	€	2.15


		Years ended December 31,
		2020		2019		2018
Net profit from discontinued operations attributable to owners of the parent	million	€	—	€	3,928	€	285
Weighted average number of shares outstanding	thousand	1,572,020		1,564,114		1,548,439
Basic earnings per share from discontinued operations	€	€	—	€	2.51	€	0.18

Diluted earnings per share

In order to calculate the diluted earnings per share, the weighted average number of shares outstanding was increased to take into consideration the theoretical effect of potential common shares that would be issued for the restricted and performance share units outstanding and unvested at December 31, 2020, 2019 and 2018 (Note 18, Share-based compensation), as determined using the treasury stock method.

For the year ended December 31, 2020, the theoretical effect that would arise if some of the PSU TSR awards granted in 2018 and some of the PSU Adjusted EBIT awards granted in 2019 (refer to Note 18, Share-based compensation) were exercised was not taken into consideration in the calculation of diluted earnings per share as this would have had an anti-dilutive effect.

For the year ended December 31, 2019, the theoretical effect that would arise if some of the RSU awards granted in 2018 and some of the PSU TSR awards granted in 2019 (refer to Note 18, Share-based compensation) were exercised was not taken into consideration in the calculation of diluted earnings per share as this would have had an anti-dilutive effect.

There were no instruments excluded from the calculation of diluted earnings per share because of an anti-dilutive impact for the year ended December 31, 2018.

The following tables provide the amounts used in the calculation of diluted earnings per share:


		Years ended December 31,
		2020		2019		2018
Net profit attributable to owners of the parent	million	€	29	€	6,622	€	3,608
Weighted average number of shares outstanding	thousand	1,572,020		1,564,114		1,548,439
Number of shares deployable for share-based compensation	thousand	5,293		6,736		19,400
Weighted average number of shares outstanding for diluted earnings per share	thousand	1,577,313		1,570,850		1,567,839
Diluted earnings per share	€	€	0.02	€	4.22	€	2.30


		Years ended December 31,
		2020		2019		2018
Net profit from continuing operations attributable to owners of the parent	million	€	29	€	2,694	€	3,323
Weighted average number of shares outstanding for diluted earnings per share	thousand	1,577,313		1,570,850		1,567,839
Diluted earnings per share from continuing operations	€	€	0.02	€	1.71	€	2.12


		Years ended December 31,
		2020		2019		2018
Net profit from discontinued operations attributable to owners of the parent	million	€	—	€	3,928	€	285
Weighted average number of shares outstanding for diluted earnings per share	thousand	1,577,313		1,570,850		1,567,839
Diluted earnings per share from discontinued operations	€	€	—	€	2.50	€	0.18

Segment reporting

12 Months Ended

Dec. 31, 2020

Operating segments [Abstract]

Segment reporting

Reportable segments reflect the operating segments of the FCA Group that are regularly reviewed by the Chief Executive Officer (the “chief operating decision maker” as defined under IFRS 8 – Operating Segments) for making strategic decisions, allocating resources and assessing performance and that exceed the quantitative thresholds provided in IFRS 8, or whose information is considered useful for the users of the financial statements. The FCA Group's reportable segments include the four regional mass-market vehicle operating segments (North America, LATAM, APAC and EMEA) and the Maserati global luxury brand operating segment, which are described as follows:

•North America designed, engineered, developed, manufactured and distributes vehicles. North America mainly earned its revenues from the sale of vehicles under the Chrysler, Jeep, Dodge, Ram, Fiat and Alfa Romeo brand names and from sales of the related parts and accessories in the United States, Canada, Mexico and Caribbean islands.

•LATAM designed, engineered, developed, manufactured and distributed vehicles. LATAM mainly earned its revenues from the sale of passenger cars and light commercial vehicles and related spare parts under the Fiat and Jeep brand names in South and Central America as well as from the distribution of the Chrysler, Dodge and Ram brand cars in the same region. In addition, the segment provides financial services to the dealer network in Brazil and to the dealer network and retail customers in Argentina.

•APAC mainly earned its revenues from the distribution and sale of cars and related spare parts under the Abarth, Alfa Romeo, Chrysler, Dodge, Fiat and Jeep brands mostly in China, Japan, Australia, South Korea and India. These activities were carried out through both subsidiaries and joint ventures. In addition, the segment provided financial services to the dealer network and retail customers in China.

•EMEA designed, engineered, developed, manufactured and distributed vehicles. EMEA mainly earned its revenues from the sale of passenger cars and light commercial vehicles under the Fiat, Alfa Romeo, Lancia, Abarth, Jeep and Fiat Professional brand names, the sale of the related spare parts in Europe, Middle East and Africa, and from the distribution of the Chrysler, Dodge and Ram brand vehicles in these areas. In addition, the segment provided financial services related to the sale of cars and light commercial vehicles in Europe, primarily through the FCA Bank joint venture and Fidis S.p.A., a fully owned captive finance company that was mainly involved in the factoring business.

•Maserati designed, engineered, developed, manufactured and distributed vehicles. Maserati earned its revenues from the sale of luxury vehicles under the Maserati brand.

Transactions among the mass-market vehicle segments generally were presented on a “where-sold” basis, which reflected the profit/(loss) on the ultimate sale to third party customer within the segment. This presentation generally eliminated the effect of the legal entity transfer price within the segments. Revenues of the other segments, aside from the mass-market vehicle segments, were those directly generated by or attributable to the segment as the result of its usual business activities and included revenues from transactions with third parties as well as those arising from transactions with segments, recognized at normal market prices.

The results of the Magneti Marelli business were previously reported within the Components segment along with FCA’s industrial automation systems design and production business and its cast iron and aluminum components business. Following the classification of Magneti Marelli as a discontinued operation (refer to Note 3, Scope of consolidation), during 2018 the remaining activities within Components segment were no longer considered a separate reportable segment as defined by IFRS 8 and were reported within “Other activities” below.

Other activities included the results of FCA’s industrial automation systems design and production business and cast iron and aluminum components business, as well as the activities and businesses that were not operating segments under IFRS 8 – Operating Segments. Refer to Note 3, Scope of consolidation for detail on the announced sale of Teksid's cast iron automotive components business). In addition, Unallocated items and eliminations included consolidation adjustments, eliminations, as well as costs related to the launch of the Alfa Romeo Giulia platform which were not allocated to the mass-market vehicle segments due to the limited number of shipments. Financial income and expenses and income taxes were not attributable to the performance of the segments as they did not fall under the scope of their operational responsibilities.

Adjusted Earnings Before Interest and Taxes (“Adjusted EBIT”) was the measure used by the chief operating decision maker to assess performance, allocate resources to the FCA Group's operating segments and to view operating trends, perform analytical comparisons and benchmark performance between periods and among the segments. Adjusted EBIT excluded certain adjustments from Net profit from continuing operations 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 from continuing operations, which was the most directly comparable measure included in the Consolidated Income Statement, to Adjusted EBIT. Operating assets were 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 years ended December 31, 2020, 2019 and 2018:


	Mass-Market Vehicles
2020	North America		LATAM		APAC		EMEA		Maserati		Other activities		Unallocated items & eliminations		FCA
	(€ million)
Revenues	€	60,322	€	5,305	€	2,381	€	16,284	€	1,384	€	2,188	€	(1,188)	€	86,676
Revenues from transactions with other segments	(15)		(8)		(64)		(93)		(2)		(1,006)		1,188		—
Revenues from third party customers	€	60,307	€	5,297	€	2,317	€	16,191	€	1,382	€	1,182	€	—	€	86,676

Net profit from continuing operations															€	24
Tax expense															€	1,332
Net financial expenses															€	988
Adjustments:
Impairment expense and supplier obligations(1)	€	154	€	161	€	—	€	266	€	297	€	5	€	44	€	927
Provision for U.S. investigation matters(2)	€	—	€	—	€	—	€	—	€	—	€	—	€	222	€	222
Restructuring costs, net of reversals	€	32	€	18	€	—	€	6	€	3	€	14	€	—	€	73






Gains on disposal of investments	€	—	€	—	€	—	€	—	€	—	€	(4)	€	—	€	(4)


Other(3)	€	10	€	—	€	—	€	(28)	€	4	€	130	€	64	€	180
Adjusted EBIT	€	5,351	€	6	€	(116)	€	(918)	€	(232)	€	(283)	€	(66)	€	3,742

Share of profit of equity method investees	€	—	€	—	€	(160)	€	333	€	—	€	10	€	1	€	184

______________________________________________________________________________________________________________________________

(1) Impairment expense and supplier obligations in Maserati, EMEA, LATAM and North America (refer to Note 2, Use of estimates - Recoverability of non-current assets with definite useful lives).

(2) Provision recognized for estimated probable loss to settle matters under investigation by the U.S. Department of Justice, primarily related to criminal investigations associated with U.S. diesel emissions matters (refer to Note 25 - Guarantees granted, commitments and contingent liabilities).

(3) Other costs, primarily including costs incurred for the FCA-PSA merger and for litigation proceedings (refer to Note 25, Guarantees granted,commitments and contingent liabilities, for further details).


	Mass-Market Vehicles
2019	North America		LATAM		APAC		EMEA		Maserati		Other activities		Unallocated items & eliminations		FCA
	(€ million)
Revenues	€	73,357	€	8,461	€	2,814	€	20,571	€	1,603	€	3,009	€	(1,628)	€	108,187
Revenues from transactions with other segments	(20)		(12)		(52)		(105)		(11)		(1,428)		1,628		—
Revenues from third party customers	€	73,337	€	8,449	€	2,762	€	20,466	€	1,592	€	1,581	€	—	€	108,187

Net profit from continuing operations															€	2,700
Tax expense															€	1,321
Net financial expenses															€	1,005
Adjustments:
Impairment expense and supplier obligations(1)(5)	€	98	€	—	€	—	€	441	€	210	€	—	€	793	€	1,542
Restructuring costs, net of reversal(2)(5)	€	23	€	127	€	—	€	(9)	€	3	€	—	€	10	€	154
Gains on disposal of investments	€	—	€	—	€	—	€	—	€	—	€	(15)	€	—	€	(15)
Brazilian indirect tax – reversal of liability/recognition of credits(3)	€	—	€	(164)	€	—	€	—	€	—	€	—	€	—	€	(164)
Other(4)(5)	€	45	€	4	€	(4)	€	(7)	€	8	€	7	€	72	€	125
Adjusted EBIT	€	6,690	€	501	€	(36)	€	(6)	€	(199)	€	(173)	€	(109)	€	6,668

Share of profit of equity method investees	€	—	€	—	€	(126)	€	318	€	—	€	15	€	1	€	208

______________________________________________________________________________________________________________________________

(1) Impairment expense recognized in the year ended December 31, 2019 for EMEA, Maserati and also not allocated to a specific region. Additionally, impairment expense recognized in previous quarters in North America and Maserati, as well as supplier obligations of €6 million in EMEA.

(2) Restructuring costs, mainly related to LATAM, EMEA and North America, primarily includes €76 million of write-down of Property, plant and equipment and €118 million related to the recognition of provisions for restructuring, partially offset by the reversal of previously recorded provisions, primarily €46 million in EMEA.

(3) Gains in relation to the recognition of credits for amounts paid in prior years in relation to indirect taxes in Brazil (refer to Note 15, Trade and other receivables in the Consolidated Financial Statements).

(4) Other costs, primarily relating to litigation proceedings (refer to Note 25, Guarantees granted, commitments and contingent liabilities in the Consolidated Financial Statements).

(5) During the year ended December 31, 2019 impairment charges of €1,589 million were recorded, classified within Impairment expense and supplier obligations, Restructuring costs, net of reversals and Other above. These comprised €636 million of Property, plant and equipment (refer to Note 11, Property, plant and equipment in the Consolidated Financial Statements included elsewhere in this report) and €953 million of Other intangible assets (refer to Note 10, Other intangible assets in the Consolidated Financial Statements included elsewhere in this report).


	Mass-Market Vehicles
2018	North America		LATAM		APAC		EMEA		Maserati		Other activities		Unallocated items & eliminations		FCA
	(€ million)
Revenues	€	72,384	€	8,152	€	2,703	€	22,815	€	2,663	€	2,888	€	(1,193)	€	110,412
Revenues from transactions with other segments	(31)		(10)		(57)		(101)		(18)		(976)		1,193		—
Revenues from third party customers	€	72,353	€	8,142	€	2,646	€	22,714	€	2,645	€	1,912	€	—	€	110,412

Net profit from continuing operations															€	3,330
Tax expense															€	778
Net financial expenses															€	1,056
Adjustments:
Charge recognized for U.S. diesel emission matters(1)	€	—	€	—	€	—	€	—	€	—	€	—	€	748	€	748
Impairment expense(2)	€	16	€	8	€	11	€	307	€	—	€	—	€	11	€	353
China inventory impairment(3)	€	—	€	—	€	129	€	—	€	—	€	—	€	—	€	129
Costs for recall, net of recovery - airbag inflators(4)	€	114	€	—	€	—	€	—	€	—	€	—	€	—	€	114
U.S. special bonus payment(5)	€	109	€	—	€	—	€	—	€	—	€	2	€	—	€	111
Restructuring costs, net of reversal(6)	€	—	€	(28)	€	—	€	123	€	—	€	8	€	—	€	103
Employee benefits settlement losses(7)	€	92	€	—	€	—	€	—	€	—	€	—	€	—	€	92
Port of Savona (Italy) fire and flood(8)	€	—	€	—	€	—	€	2	€	11	€	30	€	—	€	43
(Recovery of)/costs for recall - contested with supplier(9)	€	(50)	€	—	€	—	€	—	€	—	€	—	€	—	€	(50)
North America Capacity realignment(10)	€	(60)	€	—	€	—	€	—	€	—	€	—	€	—	€	(60)
Brazilian indirect tax – reversal of liability/recognition of credits(11)	€	—	€	(54)	€	—	€	—	€	—	€	(18)	€	—	€	(72)
Other	€	1	€	—	€	—	€	30	€	—	€	12	€	20	€	63
Adjusted EBIT	€	6,230	€	359	€	(296)	€	406	€	151	€	(40)	€	(72)	€	6,738

Share of profit of equity method investees	€	—	€	—	€	(67)	€	284	€	—	€	22	€	1	€	240

______________________________________________________________________________________________________________________________

(1) A provision of €748 million was recognized for costs related to final settlements reached on civil, environmental and consumer claims related to U.S. diesel emissions matters.

Refer to Note 25, Guarantees granted, commitments and contingent liabilities.

(2) Impairment expense of €297 million and supplier obligations of €56 million, primarily in EMEA, resulting from changes in product plans in connection with the 2018-2022

business plan.

(3) Impairment of inventory in connection with acceleration of new emissions standards in China and slower than expected sales.

(4) Accrual in relation to costs for recall campaigns related to Takata airbag inflators, net of recovery.

(5) Special bonus payment of $2,000 to approximately 60,000 employees in North America as a result of the U.S. Tax Cuts and Jobs Act.

(6) Restructuring costs primarily consisting of €123 million in EMEA, partially offset by the reversal of €28 million of previously recorded restructuring costs in LATAM.

(7) Charges arising on settlement of a portion of a supplemental retirement plan and an annuity buyout in North America. Refer to Note 19, Employee benefits liabilities.

(8) Costs in relation to the Port of Savona (Italy) flood and fire.

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

(10) Reduction of costs in relation to the North America capacity realignment which were accrued in 2015.

(11) Credits recognized related to indirect taxes in Brazil.

Information about geographical area

The following table summarizes the non-current assets (other than financial instruments, deferred tax assets and post-employment benefits assets) attributed to certain geographic areas:


	At December 31,
	2020		2019
	(€ million)
North America(1)	€	39,240	€	40,097
Italy	11,287		10,711
Brazil	2,811		4,064
Poland	531		684
Serbia	409		495
Other countries	1,007		1,320
Total Non-current assets (other than financial instruments, deferred tax assets and post-employment benefits assets)	€	55,285	€	57,371

______________________________________________________________________________________________________________________________

(1) Refers to the geographical area and not FCA’s North America reporting segment.

Explanatory notes to the consolidated statements of cash flows

12 Months Ended

Dec. 31, 2020

Statement of cash flows [abstract]

Explanatory notes to the Consolidated Statement of Cash Flows

Non-cash items

For the year ended December 31, 2020, Other non-cash items of €1,192 million primarily included €914 million impairment expense (refer to Note 2, Basis of preparation - Use of estimates) and €293 million costs recognized upon the utilization of regulatory credits, partially offset by €179 million related to the revaluation of investments accounted for by using the equity method and other amounts that were not individually material.

For the year ended December 31, 2019, Other non-cash items of €1,541 million primarily included €1,589 million impairment expense (refer to Note 2, Basis of preparation - Use of estimates).

For the year ended December 31, 2018, Other non-cash items of €129 million primarily included €297 million of impairments, partially offset by €240 million related to the revaluation of investments accounted for by using the equity method and other amounts that were not individually material.

Operating activities

For the year ended December 31, 2020, net cash from operating activities of €9,183 million was primarily the result of: (i) net profit from continuing operations of €24 million adjusted to: (1) add back €5,143 million for depreciation and amortization expense, (2) €914 million of impairments (refer to Note 2, Basis of preparation - Use of estimates), (3) a €894 million change in deferred taxes (refer to Note 7, Tax Expense), (4) a €434 million net decrease in provisions, primarily as a result of lower sales incentive due to the decrease in dealers stock in North America, (5) the positive effect of the change in working capital of €2,559 million, which was primarily driven by (i) a decrease of €983 million in inventories primarily in EMEA, North America and Maserati, (ii) an increase of €565 million in trade payables, primarily due to increased payables for production in LATAM and capital expenditures in North America, (iii) a decrease of €366 million in trade receivables, primarily in EMEA and (iv) an increase of €645 million in other payables net of other receivables, reflecting primarily higher indirect and payroll taxes in North America and EMEA as well as higher advances from customers in LATAM.

For the year ended December 31, 2019, net cash from operating activities of €10,462 million was primarily the result of: (i) net profit from continuing operations of €2,700 million adjusted to: (1) to add back €5,445 million for depreciation and amortization expense, (2) €1,589 million of impairments (refer to Note 2, Basis of preparation - Use of estimates), (3) a €864 million change in deferred taxes, (4) a €1,744 million net decrease in provisions, including €0.5 billion of payments for civil, environmental and consumer claims related to U.S. diesel emissions matters accrued in 2018, and warranty and incentive payments which exceeded the related accruals in North America, (5) €308 million of cash used by operating activities of discontinued operations and (6) for the positive effect of the change in working capital of €1,869 million, which was primarily driven by (i) an increase of €2,020 million in trade payables primarily in North America, largely due to capital expenditures, (ii) a decrease of €1,017 million in inventories primarily in EMEA and LATAM, which were partially offset by (iii) an increase of €1,268 million in other receivables net of other liabilities and payables, reflecting primarily higher indirect tax receivables in LATAM and lump sum payments of €446 million (U.S.$499 million) made in relation to the ratification of the UAW four-year collective bargaining agreement (refer to Note 25, Guarantees granted, commitments and contingent liabilities).

For the year ended December 31, 2018, net cash from operating activities of €9,948 million was primarily the result of: (i) net profit from continuing operations of €3,330 million adjusted to add back €5,507 million for depreciation and amortization expense; in addition to (ii) a net increase of €842 million in provisions primarily due to a provision of €748 million recognized for costs related to final settlements reached on civil, environmental and consumer claims related to U.S. diesel emissions matters; (iii) an increase of €457 million in net deferred tax assets, mainly due to increased deferred tax liabilities in North America; and (iv) cash flow from operating activities of discontinued operations for €484 million. These positive impacts were partially offset by negative effect of the change in working capital of €1,035 million primarily driven by (a) decrease in trade payables of €1,240 million related to lower production volumes in EMEA in December 2018 compared to the same month in 2017 in addition to lower capital expenditure, (b) decrease in other liabilities and payables net of receivables of €1,213 million mainly as a result of higher indirect tax receivable in LATAM, decreased income tax payable in North America and lower advances from customers in LATAM and EMEA, and (c) decrease in inventories of €1,399 million due to inventory management actions across all the regions.

Investing activities

For the year ended December 31, 2020, net cash used in investing activities of €7,915 million was primarily the result of (i) €8,600 million of capital expenditures, including €2,640 million of capitalized development expenditures, partially offset by (ii) a decrease in receivables from financing activities of €396 million reflecting lower volumes in LATAM and EMEA and (iii) a decrease of €207 million in securities primarily held by FCA’s captive insurance company in North America.

For the year ended December 31, 2019, net cash used in investing activities of €2,985 million was primarily the result of (i) €8,385 million of capital expenditures, including €2,889 million of capitalized development expenditures, and (ii) €155 million of cash flows used by discontinued operations. These were partially offset by (iii) €5,774 million proceeds from the disposal of Magneti Marelli, net of €426 million in cash and cash equivalents held by Magneti Marelli at the time of the disposal, and (iv) a decrease in receivables from financing activities of €336 million, mainly attributable to lower volumes of financing in EMEA partially offset by an increase in LATAM.

For the year ended December 31, 2018, net cash used in investing activities of €6,738 million was primarily the result of (i) €5,392 million of capital expenditures, including €2,079 million of capitalized development expenditures primarily related to North America and EMEA, that supported investments in existing and future products, including investments in electrification and autonomous driving, and (ii) a €676 million net increase in receivables from financing activities primarily related to the increase in the lending portfolio of the financial services activities in LATAM, EMEA and in APAC.

Financing activities

For the year ended December 31, 2020, net cash from financing activities of €9,087 million resulted primarily from the draw down of the €6.3 billion Intesa Sanpaolo Credit Facility, the issuance of €3.5 billion notes under Medium Term Note programme and the €0.8 billion of loans with the European Investment Bank announced on March 18, 2020 and September 18, 2020. These were partially offset by the repayment of notes at maturity as well as other long-term and short-term debt. During the first half of 2020 the Revolving Credit Facilities of €6.25 billion and bilateral credit facilities of €1.2 billion were fully drawn dawn and then repaid by December 31, 2020, the related amounts are reflected within Proceeds and Repayments of other long-term debt in the Cash Flows Statement. Refer to Note 21, Debt for further information.

For the year ended December 31, 2019, net cash used in financing activities of €5,827 million resulted primarily from dividends paid of €3,056 million, including the extraordinary dividend of €2,038 million related to the disposal of Magneti Marelli, the repayment of debt in Brazil of €684 million, and the repayment of notes at maturity with a principal amount of €1,480 million that were issued through the MTN Programme.

For the year ended December 31, 2018, net cash used in financing activities of €2,785 million was primarily the result of; (i) the voluntary prepayment in November 2018 of the outstanding principal and accrued interest of U.S.$1,009 million (€893 million) of FCA US's tranche B term loan maturing December 31, 2018 (the “Tranche B Term Loan due 2018”); and (ii) the repayment at maturity of two notes under the Medium Term Note Programme, one with a principal amount of €1,250 million and one with a principal amount of €600 million.

The following is a reconciliation of liabilities arising from financing activities for the year ended December 31, 2020 and 2019:


	Years ended December 31,
	2020		2019
	(€ million)
Total Debt at January 1(1)	€	12,901	€	15,597
Add: Derivative (assets)/liabilities and collateral at January 1	178		(151)
Total Liabilities from financing activities at January 1	€	13,079	€	15,446

Cash flows	9,087		(3,096)
Foreign exchange effects	(962)		9
Fair value changes	(48)		327
Changes in scope of consolidation	—		43
Transfer to (Assets)/Liabilities held for sale	—		(82)
Other changes(2)	(67)		432

Total Liabilities from financing activities at December 31	€	21,089	€	13,079
Less: Derivative (assets)/liabilities and collateral at December 31	(28)		178
Total Debt at December 31	€	21,117	€	12,901

______________________________________________________________________________________________________________________________

(1) Total debt at January 1, 2019 has been adjusted to include Lease liabilities of €1,069 million from the adoption of IFRS 16.

(2) Other changes above includes €622 million of non-cash movements relating to the recognition of additional lease liabilities in accordance with IFRS during the year ended December 31, 2019.

Interest expense and taxes paid

During the years ended December 31, 2020, 2019 and 2018, the FCA Group paid interest of €722 million and received interest of €178 million, €860 million and €325 million, and €1,024 million and €308 million, respectively. Amounts indicated are also inclusive of interest rate differentials paid or received on interest rate derivatives.

During the years ended December 31, 2020, 2019 and 2018, the FCA Group made income tax payments, net of refunds, totaling €120 million, €341 million and €750 million, respectively.

Amounts relating to IFRS 16 recognized in Consolidated Statement of Cash Flows

During the year ended December 31, 2020 and 2019, the total cash outflow for leases recognized in accordance with IFRS 16 was €496 million and €381 million, respectively, of which €389 million and €299 million, respectively, related to cash payments for the principal portion of lease liabilities (recognized within Cash flows from financing activities in the Consolidated Statement of cash flows) and €107 million and €82 million, respectively, related to cash payments for interest expense related to lease liabilities (recognized within Cash flows from operating activities in the Consolidated Statement of cash flows).

Qualitative and quantitative information on financial risk	12 Months Ended
	Dec. 31, 2020
Financial Instruments [Abstract]
Qualitative and quantitative information on financial risks	The FCA Group was historically exposed to the following financial risks connected with its operations: •credit risk, principally arising from its normal commercial relations with final customers and dealers, and its financing activities; •liquidity risk, with particular reference to the availability of funds and access to the credit market and to financial instruments in general; •financial market risk (principally relating to exchange rates, interest rates and commodity prices), since the FCA Group operated at an international level in different currencies and used financial instruments which generated interest. FCA was also exposed to the risk of changes in the price of certain commodities and of certain listed shares. These risks could significantly affect the FCA Group’s financial position and results and for this reason, the FCA Group systematically identified and monitored these risks in order to detect potential negative effects in advance and take the necessary action to mitigate them, primarily through its operating and financing activities and if required, through the use of derivative financial instruments in accordance with established risk management policies. Financial instruments held by the funds that managed FCA’s pension plan assets are not included in this analysis (refer to Note 19, Employee benefits liabilities). The following section provides qualitative and quantitative disclosures on the effect that these risks could have upon the FCA Group. The quantitative data reported in the following does not have any predictive value, in particular the sensitivity analysis on finance market risks does not reflect the complexity of the market or the reaction which may result from any changes that were assumed to take place. Credit risk Overall, the credit risk regarding the FCA Group’s trade receivables and receivables from financing activities was concentrated mainly in North America, EMEA and LATAM. The maximum credit risk to which the FCA Group was potentially exposed at December 31, 2020 is represented by the carrying amounts of financial assets in the financial statements discussed in Note 15, Trade, other receivables and Tax receivables and the nominal value of the guarantees provided on liabilities and commitments to third parties discussed in Note 25, Guarantees granted, commitments and contingent liabilities. The FCA Group’s exposure to credit risk was influenced mainly by the individual characteristics of each counterparty. FCA monitored these exposures and established credit lines with single or homogeneous categories of counterparties. Dealers and final customers for which the FCA Group provided financing were subject to specific assessments of their creditworthiness under a detailed scoring system. To mitigate this risk, the FCA Group could obtain financial and non-financial guarantees. These guarantees were further strengthened where possible by reserve of title clauses on financed vehicle sales to the sales network made by FCA Group financial service companies and on vehicles assigned under finance and operating lease agreements. For further information regarding the exposure to credit risk and ECLs of Trade receivables, other receivables and financial receivables at December 31, 2020 and 2019, refer to Note 15, Trade, other receivables and tax receivables. Even though FCA’s current securities and Cash and cash equivalents consisted of balances spread across various primary national and international banking institutions and money market funds that were measured at fair value, there was no exposure to sovereign debt securities at December 31, 2020 and 2019 which could lead to significant risk of repayment. Liquidity risk Liquidity risk represented the risk the FCA Group was unable to obtain the funds needed to carry out its operations and meet its obligations. Any actual or perceived limitations on FCA’s liquidity could affect the ability of counterparties to do business with the FCA Group or may require additional amounts of cash and cash equivalents to be allocated as collateral for outstanding obligations. The continuation of challenging economic conditions in the markets in which the FCA Group operated and the uncertainties that characterize the financial markets, necessitated special attention to the management of liquidity risk. In that sense, measures taken to generate funds through operations and to maintain a conservative level of available liquidity were important factors for ensuring operational flexibility and addressing strategic challenges over the next few years. The main factors that determined the FCA Group’s liquidity situation were the funds generated by or used in operating and investing activities, the debt lending period and its renewal features or the liquidity of the funds employed and market terms and conditions. The FCA Group adopted a series of policies and procedures whose purpose was to optimize the management of funds and to reduce liquidity risk as follows: •centralizing the management of receipts and payments where it may be economical in the context of the local civil, currency and fiscal regulations of the countries in which the FCA Group was present; •maintaining a conservative level of available liquidity; •diversifying the means by which funds were obtained and maintaining a continuous and active presence in the capital markets; •obtaining adequate credit lines; and •monitoring future liquidity on the basis of business planning. The FCA Group managed liquidity risk by monitoring cash flows and keeping an adequate level of funds at its disposal. The operating cash management and liquidity investment of the group were centrally coordinated in FCA’s treasury companies, with the objective of ensuring effective and efficient management of the FCA Group’s funds. These companies obtained funds in the financial markets from various funding sources. Certain notes issued by FCA and its treasury subsidiaries included covenants which could be affected by circumstances related to certain subsidiaries; in particular, there were cross-default clauses which could accelerate repayments in the event that such subsidiaries failed to pay certain of their debt obligations. Details of the repayment structure of the FCA Group’s financial assets and liabilities are provided in Note 15, Trade, other receivables and Tax receivables, Note 22, Other liabilities and Tax liabilities and in Note 21, Debt. Details of the repayment structure of derivative financial instruments are provided in Note 16, Derivative financial assets and liabilities. We believe that FCA’s total available liquidity, in addition to the funds that will be generated from operating and financing activities, will enable us to satisfy the requirements of its investing activities and working capital needs, fulfill its obligations to repay its debt at the natural due dates and ensure an appropriate level of operating and strategic flexibility. Financial market risks Due to the nature of FCA’s business, the group was exposed to a variety of market risks, including foreign currency exchange rate risk, interest rate risk and commodity price risk. The FCA Group’s exposure to foreign currency exchange rate risk arose both in connection with the geographical distribution of FCA’s industrial activities compared to the markets in which it sells its products, and in relation to the use of external borrowing denominated in foreign currencies. The FCA Group’s exposure to interest rate risk arose from the need to fund industrial and financial operating activities and the necessity to deploy surplus funds. Changes in market interest rates could have the effect of either increasing or decreasing the FCA Group’s Net profit, thereby indirectly affecting the costs and returns of financing and investing transactions. FCA’s exposure to commodity price risk arose from the risk of changes in the price of certain raw materials and energy used in production. Changes in the price of raw materials could have a significant effect on the FCA Group’s results by indirectly affecting costs and product margins. These risks could significantly affect the FCA Group’s financial position and results and for this reason, these risks were systematically identified and monitored, in order to detect potential negative effects in advance and take the necessary actions to mitigate them, primarily through its operating and financing activities and if required, through the use of derivative financial instruments in accordance with its established risk management policies. The FCA Group’s policy permitted derivatives to be used only for managing the exposure to fluctuations in foreign currency exchange rates and interest rates as well as commodities prices connected with future cash flows and assets and liabilities, and not for speculative purposes. The FCA Group utilized derivative financial instruments designated as fair value hedges mainly to hedge: •the foreign currency exchange rate risk on financial instruments denominated in foreign currency; and •the interest rate risk on fixed rate loans and borrowings. The instruments used for these hedges are mainly foreign currency forward contracts, interest rate swaps and combined interest rate and foreign currency financial instruments. The FCA Group used derivative financial instruments as cash flow hedges for the purpose of pre-determining: •the exchange rate at which forecasted transactions denominated in foreign currencies would be accounted for; •the interest paid on borrowings, both to match the fixed interest received on loans (customer financing activity), and to achieve a targeted mix of floating versus fixed rate funding structured loans; and •the price of certain commodities. The foreign currency exchange rate exposure on forecasted commercial flows was hedged by foreign currency swaps and forward contracts. Interest rate exposures were usually hedged by interest rate swaps and, in limited cases, by forward rate agreements. Exposure to changes in the price of commodities was generally hedged by using commodity swaps and commodity options. In addition, in order to manage the FCA Group’s foreign currency risk related to its investments in foreign operation, FCA entered into net investment hedges, in particular foreign currency swaps and forward contracts. Counterparties to these agreements were major financial institutions. Information on the fair value of derivative financial instruments held at the balance sheet date is provided in Note 16, Derivative financial assets and liabilities. Quantitative information on foreign currency exchange rate risk The FCA Group was exposed to risk resulting from changes in foreign currency exchange rates, which could affect its earnings and equity. In particular: •where an FCA Group company incurred costs in a currency different from that of its revenues, any change in exchange rates could affect the operating results of that company. •the principal exchange rates to which the FCA Group was exposed are: ◦EUR/U.S.$, relating to sales and purchases in U.S.$ made by Italian companies (primarily for Maserati and Alfa Romeo vehicles) and to sales and purchases in Euro made by FCA US; ◦U.S.$/CAD, primarily relating to FCA Canada's sales of U.S. produced vehicles, net of FCA US sales of Canadian produced vehicles; ◦CNY, in relation to sales in China originating from FCA US and from Italian companies (primarily for Maserati and Alfa Romeo vehicles); ◦GBP, AUD, MXN, CHF, and ARS in relation to sales in the UK, Australian, Mexican, Swiss and Argentinian markets; ◦PLN and TRY, relating to manufacturing costs incurred in Poland and Turkey; ◦JPY mainly in relation to purchase of parts from Japanese suppliers and sales of vehicles in Japan; and ◦U.S.$/BRL, EUR/BRL, relating to Brazilian manufacturing operations and the related import and export flows. The FCA Group’s policy was to use derivative financial instruments to hedge a percentage of certain exposures subject to foreign currency exchange rate risk for the upcoming 12 months (including such risk before or beyond that date where it is deemed appropriate in relation to the characteristics of the business) and to hedge the exposure resulting from firm commitments unless not deemed appropriate. FCA Group companies could have trade receivables or payables denominated in a currency different from their respective functional currency. In addition, in a limited number of cases, it could be convenient from an economic point of view, or it could be required under local market conditions, for FCA Group companies to obtain financing or use funds in a currency different from their respective functional currency. Changes in exchange rates could result in exchange gains or losses arising from these situations. The FCA Group’s policy was to hedge, whenever deemed appropriate, the exposure resulting from receivables, payables and securities denominated in foreign currencies different from the respective FCA Group companies' functional currency. Certain of the FCA Group’s companies were located in countries which are outside of the Eurozone, in particular the U.S., Brazil, Canada, Poland, Serbia, Turkey, Mexico, Argentina, the Czech Republic, India, China, Australia and South Africa. As the FCA Group's reporting currency was the Euro, the income statements of those entities that had a reporting currency other than the Euro were translated into Euro using the average exchange rate for the period. In addition, the assets and liabilities of those consolidated companies were translated into Euro at the period-end foreign exchange rate. The effects of these changes in foreign exchange rates were recognized directly in the Cumulative translation adjustments reserve included in Other comprehensive income. Changes in exchange rates could lead to effects on the translated balances of revenues, costs and assets and liabilities reported in Euro, even when corresponding items were unchanged in the respective local currency of these companies. The FCA Group monitored its principal exposure to conversion exchange risk and, in certain circumstances, entered into derivatives for the purpose of hedging the specific risk. There were no substantial changes in 2020 in the nature or structure of exposure to foreign currency exchange rate risk or in the FCA Group’s hedging policies. The potential loss in fair value of derivative financial instruments held for foreign currency exchange rate risk management (currency swaps/forwards) at December 31, 2020 resulting from a 10 percent change in the exchange rates would have been approximately €1,557 million (€991 million at December 31, 2019). This analysis assumes that a hypothetical, unfavorable 10 percent change in exchange rates as at year-end is applied in the measurement of the fair value of derivative financial instruments. Receivables, payables and future trade flows whose hedging transactions have been analyzed were not included in this analysis. It is reasonable to assume that changes in market exchange rates would produce the opposite effect, of an equal or greater amount, on the underlying transactions that have been hedged. Quantitative information on interest rate risk The manufacturing companies and treasuries of the FCA Group made use of external borrowings and invested in monetary and financial market instruments. In addition, FCA Group companies sold receivables resulting from their trading activities on a continuing basis. Changes in market interest rates could affect the cost of the various forms of financing, including the sale of receivables, or the return on investments and the employment of funds, thus negatively impacting the net financial expenses incurred by the FCA Group. In addition, the financial services companies provided loans (mainly to customers and dealers), financing themselves using various forms of direct debt or asset-backed financing (e.g. factoring of receivables). Where the characteristics of the variability of the interest rate applied to loans granted differed from those of the variability of the cost of the financing obtained, changes in the current level of interest rates could affect the operating result of those companies and the FCA Group as a whole. In order to manage these risks, the FCA Group used interest rate derivative financial instruments, mainly interest rate swaps and forward rate agreements, when available in the market, with the objective of mitigating, under economically acceptable conditions, the potential variability of interest rates on the FCA Group's Net profit. In assessing the potential impact of changes in interest rates, the FCA Group segregated fixed rate financial instruments (for which the impact was assessed in terms of fair value) from floating rate financial instruments (for which the impact was assessed in terms of cash flows). The fixed rate financial instruments used by the FCA Group consisted principally of part of the portfolio of the financial services companies (principally customer financing and financial leases) and part of debt (including subsidized loans and notes). The potential loss in fair value of fixed rate financial instruments (including the effect of interest rate derivative financial instruments) held at December 31, 2020, resulting from a hypothetical 10 percent change in market interest rates, would have been approximately €29 million (approximately €68 million at December 31, 2019). Floating rate financial instruments consisted principally of cash and cash equivalents, loans provided by the financial services companies to the sales network and part of debt. The effect of the sale of receivables was also considered in the sensitivity analysis as well as the effect of hedging derivative instruments. A hypothetical 10 percent change in short-term interest rates at December 31, 2020, applied to floating rate financial assets and liabilities, operations for the sale of receivables and derivative financial instruments, would have resulted in increased net financial expenses before taxes, on an annual basis, of approximately €12 million (€23 million at December 31, 2019). This analysis is based on the assumption that there is an unfavorable change of 10 percent proportionate to interest rate levels across homogeneous categories. A homogeneous category is defined on the basis of the currency in which the financial assets and liabilities are denominated. In addition, the sensitivity analysis applied to floating rate financial instruments assumes that cash and cash equivalents and other short-term financial assets and liabilities which expire during the projected 12-month period will be renewed or reinvested in similar instruments, bearing the hypothetical short-term interest rates. Quantitative information on commodity price risk The FCA Group entered into derivative contracts for certain commodities to hedge its exposure to commodity price risk associated with buying raw materials and energy used in its normal operations. In connection with the commodity price derivative contracts outstanding at December 31, 2020, a hypothetical 10 percent change in the price of the commodities at that date would have caused a fair value loss of €122 million (€55 million at December 31, 2019). Future trade flows whose hedging transactions have been analyzed were not considered in this analysis. It is reasonable to assume that changes in commodity prices would produce the opposite effect, of an equal or greater amount, on the underlying transactions that have been hedged.

Subsequent events

12 Months Ended

Dec. 31, 2020

Subequent events [Abstract]

Subsequent events

The Group has evaluated subsequent events through March 4, 2021, which is the date the financial statements were authorized for issuance.

Merger of Groupe PSA and FCA

Timeline of the merger and business combination date

On December 17, 2019, FCA and PSA entered into a combination agreement providing for the combination of FCA and PSA through a cross-border merger, with FCA as the surviving legal entity in the merger (“Stellantis”).

On September 14, 2020, FCA and PSA agreed to amend the combination agreement. According to the combination agreement amendment, the FCA Extraordinary Dividend, to be paid to former FCA shareholders was reduced to €2.9 billion, with PSA’s 46 percent stake in Faurecia planned to be distributed to all Stellantis shareholders promptly after closing following approval of the Stellantis board and shareholders.

On January 4, 2021, PSA and FCA held their respective extraordinary general shareholder meetings in order to, among other matters, approve the merger transaction. The respective shareholder meetings approved the merger. Following the respective shareholder approvals and receipt of the final regulatory clearances, FCA and PSA completed the legal merger. The conditions agreed to as part of the regulatory clearance do not have a material impact on the cash flows or financial positions for PSA.

On January 17, 2021, the combined company was renamed Stellantis, the board of directors was appointed and the Stellantis articles of association became effective. On this date, the Stellantis management and board of directors collectively obtained the power and the ability to control the assets, liabilities and operations of both FCA and PSA. As such, under IFRS 3, January 17, 2021 is the acquisition date for the business combination.

On January 29, 2021, the approximately €2.9 billion extraordinary dividend was paid to holders of FCA common shares of record as of the close of business on Friday, January 15, 2021.

Identification of the accounting acquirer

In 2021, the merger will be accounted for by Stellantis using the acquisition method of accounting in accordance with IFRS 3, which requires the identification of the acquirer and the acquiree for accounting purposes. Based on the assessment of the indicators under IFRS 3 and consideration of all pertinent facts and circumstances, FCA and PSA’s management determined that PSA is the acquirer for accounting purposes and as such, the merger will be accounted for as a reverse acquisition. In identifying PSA as the acquiring entity, notwithstanding that the merger was effected through an issuance of FCA shares, the most significant indicators were (i) the composition of the combined group’s board, which is composed of eleven directors, six of whom are to be nominated by PSA, PSA shareholders or PSA employees, or are current PSA executives, (ii) the combined group’s first CEO, who is vested with the full authority to individually represent the combined group, and was the president of the PSA Managing Board prior to the merger, and (iii) the payment of a premium by pre-merger shareholders of PSA.

Computation of the consideration transferred

PSA shareholders received 1.742 FCA common shares for each PSA ordinary share held immediately prior to the merger as consideration in connection with the merger, which represented 1,545,220,196 shares. However, as required by IFRS 3, the consideration transferred is calculated as if PSA, as the accounting acquirer, issued shares to the shareholders of the accounting acquiree, FCA. The value of the consideration transferred has been measured based on the closing price of PSA’s shares of €21.85 per share on January 15, 2021, which was the final share price of PSA prior to the acquisition date. The number of PSA shares that PSA is deemed to issue to FCA shareholders under reverse acquisition accounting provides the former FCA shareholders with the same ownership in the combined group as obtained in the merger. Based on the number of shares of FCA and PSA that are issued and outstanding as of January 16, 2021, the respective percentages of ownership of PSA and the former FCA shareholders are as follows:


	Number of shares issued and outstanding as of January 16, 2021		Exchange ratio	Adjusted number of shares on completion (i.e. Stellantis shares)			Exchange ratio	Deemed number of shares for consideration transferred calculation
	(a)		(b)	(c) = (a)*(b)			(d)	(e) = (c)/(d)
PSA	887,038,000	(1)	1.742	1,545,220,196	49.53	%	1.742	887,038,000	49.53	%
FCA	1,574,714,499	(2)	1	1,574,714,499	50.47	%	1.742	903,969,288	50.47	%
Total				3,119,934,695				1,791,007,288

________________________________________________________________________________________________________________________________________________

(1) Number of shares as of January 16, 2021, net of 7,790,213 treasury shares.

(2) The number of shares as of January 16, 2021 includes 7,195,225 shares that vested during 2020 in connection with FCA’s Equity Incentive Plan

In addition to the above, in line with the guidance in IFRS 2 - Share-based payment and IFRS 3 - Business combinations, included within consideration transferred is a portion of the fair value of the share-based awards to former FCA employees. As a result of the merger, each outstanding FCA PSU award and each outstanding FCA RSU award has been replaced by Stellantis RSU awards, which will continue to be governed by the same terms and conditions, including service-based vesting terms. Both the FCA PSU Adjusted EBIT and PSU TSR awards were deemed to be satisfied at target upon conversion to Stellantis RSU awards. The portion of the fair value of the share-based payment awards that is included in the consideration transferred has been determined by multiplying the fair value of the original FCA awards as of January 16, 2021 by the portion of the requisite service period that elapsed prior to the merger divided by the total service period.

The computation of the consideration transferred under reverse acquisition accounting is summarized as follows:


Number of shares of PSA deemed to be issued to FCA shareholders under reverse acquisition accounting	Number of shares	903,969,288
Market price of PSA shares as of January 15, 2021	€	€	21.85
Fair value of common shares deemed to be issued to FCA shareholders as of January 15, 2021	€ million	19,752
Additional consideration for share-based compensation	€ million	85
Consideration transferred	€ million	€	19,837

Purchase Accounting

The IFRS 3 acquisition method of accounting applies the fair value concepts defined in IFRS 13 - Fair Value Measurement (“IFRS 13”) and requires, among other things, most of the assets acquired and the liabilities assumed in a business combination to be recognized by the acquirer at their fair values as of the acquisition date. As a result, the acquisition method of accounting will be applied and the assets and liabilities of FCA will be recorded at their respective fair values, with limited exceptions as permitted by IFRS 3. Any excess of the consideration transferred over the fair value of FCA’s assets acquired and liabilities assumed will be recorded as goodwill. PSA’s assets and liabilities together with PSA’s operations will continue to be recorded at their pre-merger historical carrying values for all periods presented in the consolidated financial statements of Stellantis. Following the completion of the merger, the earnings of the combined group will reflect the impacts of purchase accounting adjustments, including any changes in amortization and depreciation expense for acquired assets.

The purchase price allocation process is still at a preliminary stage due to the proximity of the acquisition date to the date of the issuance of the financial statements, and as such, certain valuations and other studies have yet to commence or progress to a stage where there is sufficient information for these measurements to be made. The fair values, with limited exceptions as provided under IFRS 3, assigned to the assets acquired and liabilities assumed will be finalized during the one-year measurement period provided for by IFRS 3.

Faurecia distribution

Following agreement between FCA and PSA, PSA announced on October 29, 2020 the sale of approximately 9.7 million ordinary shares of Faurecia, representing approximately 7 percent of Faurecia’s outstanding share capital, with proceeds of approximately €308 million. This sale was recorded as an equity transaction. According to the combination agreement amendment, PSA’s 39.34 percent stake in Faurecia as well as the proceeds from the 7 percent sale are intended to be distributed to all Stellantis shareholders promptly after the closing of the merger. At December 31, 2020, Faurecia continues to be consolidated within continuing operations of PSA’s consolidated financial statements, as PSA concluded that Faurecia was not readily available for distribution until the merger was approved by PSA and FCA shareholders.

On January 12, 2021, PSA (i) converted the manner in which it holds its remaining Faurecia ordinary shares resulting in the loss of the double voting rights attached to such Faurecia ordinary shares and (ii) caused its representatives on the board of directors of Faurecia to resign effective January 11, 2021. As a result of its loss of control over Faurecia on January 12, 2021, PSA will discontinue the consolidation of Faurecia, will recognize a gain of approximately €0.5 billion before tax and Faurecia will be reported retrospectively as a discontinued operation in 2021 until Faurecia is distributed by Stellantis. The remaining 39.34 percent investment in Faurecia will be accounted for as an investment in a non-consolidated entity measured at fair value under IFRS 9.

On January 25, 2021, the extraordinary general meeting of shareholders (“EGM”) was convened, in order to approve the distribution by Stellantis to the holders of its common shares of up to 54,297,006 ordinary shares of Faurecia and up to €308 million which are the proceeds received by PSA from the sale of ordinary shares of Faurecia in November 2020. The EGM will be held on March 8, 2021.

Anti-dilution adjustments - PSU awards and RSU awards

In December 2020, the FCA Compensation Committee approved the methodology to calculate the conversion factor of 1.144605 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 as a result of the payment of an extraordinary cash distribution to holders of FCA common shares on January 29, 2021 (January 14, 2021 ex-dividend date). 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.

FCA/PSA Merger

Merger of Groupe PSA and FCA

Timeline of the merger and business combination date

On January 29, 2021, the approximately €2.9 billion extraordinary dividend was paid to holders of FCA common shares of record as of the close of business on Friday, January 15, 2021.

Identification of the accounting acquirer

Computation of the consideration transferred


	Number of shares issued and outstanding as of January 16, 2021		Exchange ratio	Adjusted number of shares on completion (i.e. Stellantis shares)			Exchange ratio	Deemed number of shares for consideration transferred calculation
	(a)		(b)	(c) = (a)*(b)			(d)	(e) = (c)/(d)
PSA	887,038,000	(1)	1.742	1,545,220,196	49.53	%	1.742	887,038,000	49.53	%
FCA	1,574,714,499	(2)	1	1,574,714,499	50.47	%	1.742	903,969,288	50.47	%
Total				3,119,934,695				1,791,007,288

________________________________________________________________________________________________________________________________________________

(1) Number of shares as of January 16, 2021, net of 7,790,213 treasury shares.

(2) The number of shares as of January 16, 2021 includes 7,195,225 shares that vested during 2020 in connection with FCA’s Equity Incentive Plan

The computation of the consideration transferred under reverse acquisition accounting is summarized as follows:


Number of shares of PSA deemed to be issued to FCA shareholders under reverse acquisition accounting	Number of shares	903,969,288
Market price of PSA shares as of January 15, 2021	€	€	21.85
Fair value of common shares deemed to be issued to FCA shareholders as of January 15, 2021	€ million	19,752
Additional consideration for share-based compensation	€ million	85
Consideration transferred	€ million	€	19,837

Purchase Accounting

Faurecia distribution

Additional information about share-based payment arrangements [text block]

Anti-dilution adjustments - PSU awards and RSU awards

Basis of presentation (Policies)

12 Months Ended

Dec. 31, 2020

Corporate Information And Statement Of IFRS Compliance [Abstract]

Statement of IFRS compliance

The Consolidated Financial Statements, together with the notes thereto, of FCA as of and for the year ended December 31, 2020 (“The Consolidated Financial Statements”) were authorized for issuance by the Stellantis Board of Directors on March 4, 2021 and have been prepared in accordance with the International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”), as well as IFRS as adopted by the European Union. There is no effect on these consolidated financial statements resulting from differences between IFRS as issued by the IASB and IFRS as adopted by the European Union. The designation “IFRS” includes International Accounting Standards (“IAS”) as well as all interpretations of the IFRS Interpretations Committee (“IFRIC”).

Basis of presentation

Basis of preparation

The Consolidated Financial Statements were prepared under the historical cost method, modified for the measurement of certain financial instruments as required, as well as on a going concern basis. In this respect, the Group’s assessment is that no material uncertainties (as defined in IAS 1 - Presentation of Financial Statements) exist about its ability to continue as a going concern.

For the presentation of the Consolidated Income Statement, FCA used a classification based on the function of expenses rather than based on their nature as it was considered more representative of the format historically used for internal reporting and management purposes and is consistent with international practice in the automotive sector.

COVID-19 Impacts

COVID-19 impacts

During the first half of 2020, the COVID-19 virus spread worldwide and was declared a pandemic by the World Health Organization on March 11, 2020. In response, many governments in affected jurisdictions imposed travel bans, quarantines and other emergency public safety measures. For example, governments imposed restrictions on travel and the movement and gathering of people, as well as restrictions on economic activity. At March 4, 2021, many of these measures are still in place as certain regions have experienced secondary waves of the pandemic, with increased cases in recent months.

As the severity of the COVID-19 pandemic became apparent, FCA leadership took actions to protect its employees and communities, as well as strengthen FCA’s financial position and limit the impact on FCA’s financial performance.

FCA implemented a temporary suspension of production across its facilities: in APAC starting with China on January 23, 2020; in EMEA, starting with Italy from March 11, 2020; in Maserati beginning March 12, 2020; in North America starting progressively from March 18, 2020; and in LATAM on March 23, 2020. The FCA Group also implemented remote working arrangements, where feasible, across all regions at various stages during the first quarter, and has restricted both domestic and international business travel since late February 2020. These arrangements were structured to ensure continuation of critical activities, including, but not limited to, appropriate functioning of FCA’s internal controls and financial reporting systems and processes.

FCA worked closely with all relevant stakeholders, including unions and dealer representatives, to develop and implement plans to restart production and vehicle sales once governments in various jurisdictions permitted, including the development of enhanced sanitizing and health and safety procedures. On February 19 and February 24, 2020, production restarted at the GAC Fiat Chrysler Automobiles Co. joint venture plants in Guangzhou and Changsha, China, respectively. Production restarted in all North American plants by June 1, 2020; in India on May 18, 2020; Latin America by May 20, 2020; on April 27, 2020 production restarted at the Sevel joint operation in Atessa, Italy, increasing progressively at other plants in the EMEA region and achieving pre-COVID shift patterns during the third quarter. Return to work procedures for offices and other facilities were also phased in with continued widespread use of remote working practices.

On April 3, 2020, FCA announced that the Annual General Meeting of the Company’s shareholders (“AGM”) scheduled for April 16, 2020 would be postponed to late June 2020, including the postponement of the resolution on the proposed 2019 €1.1 billion ordinary dividend. Further to the planned 50/50 merger of their businesses announced in December 2019, on May 13, 2020, the board of directors of Fiat Chrysler Automobiles N.V. and the managing board of Peugeot S.A. announced the decision by each company to not distribute an ordinary dividend in 2020 related to financial year 2019, in light of the impact from the COVID-19 crisis. The postponed AGM was held on June 26, 2020.

Amendment to the FCA PSA combination agreement

On September 14, 2020, FCA and PSA announced an amendment to the combination agreement entered into in December 2019 in order to address the liquidity impact on the automotive industry of the COVID-19 pandemic while preserving the economic value and fundamental balance of the original agreement. Specifically, the special dividend to be paid to FCA’s shareholders was set at €2.9 billion (previously €5.5 billion) with PSA's 46% stake in Faurecia to be distributed to all Stellantis shareholders promptly after closing following approval by the Stellantis Board and shareholders. As announced on October 28, 2020, FCA and PSA agreed to permit PSA to dispose of, prior to closing, a portion of its interest in Faurecia not to exceed 7 percent of Faurecia's outstanding share capital with the proceeds of this disposal, along with the remainder of PSA’s current 46% stake in Faurecia, to be distributed to all Stellantis shareholders. The amendment was unanimously approved by the Boards of both companies with the strong support of their reference shareholders.

Additionally, it was also agreed that the Boards of both PSA and FCA would consider a potential distribution of €500 million to the shareholders of each company before closing or, alternatively, a distribution of €1 billion to be paid following the closing to all Stellantis shareholders. Refer to Note 26, Equity within the Consolidated Financial Statements included elsewhere in this report for additional detail on the proposed special cash distribution to holders of Stellantis common shares.

The COVID-19 pandemic had significant negative impacts on FCA's results for the year ended December 31, 2020. The contraction of global demand, temporary suspensions of production in all regions and closures of a majority of dealerships during the first and second quarter significantly contributed to reduced consolidated shipments.

Refer to the following disclosures for further information regarding the impacts to the consolidated financial statements:

•Note 7, Tax expense for detail on the write-down of deferred tax assets in Italy and Brazil;

•Note 9, Goodwill and intangible assets with indefinite useful lives for detail on assessment of, and impairment testing on, goodwill allocated to the EMEA and LATAM operating segments;

•Note 10, Other intangible assets and Note 11, Property, plant and equipment for detail on assessment of cash generating units (“CGUs”) in North America, EMEA, LATAM and Maserati operating segments and impairments recognized for CGUs in EMEA, LATAM and Maserati operating segments; and

•Note 21, Debt for detail on changes in the FCA Group's liquidity and financial position

Subsidiaries

All intra-group balances and transactions, and any unrealized gains and losses arising from intra-group transactions, were eliminated in preparing the Consolidated Financial Statements.

Interest in joint ventures and associates

Interests in Joint Ventures and Associates

A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement.

The FCA Group discontinued the use of the equity method from the date the investment ceased to be an associate or a joint venture, or when it was classified as available-for-sale.

Interests in joint operations

Interests in Joint Operations

Assets held for sale, Assets held for distribution and Discontinued Operations

Functional currency

Foreign currency

Foreign currency translation

Foreign currency

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


	2020		2019		2018
	Average	At December 31	Average	At December 31	Average	At December 31
U.S. Dollar (U.S.$)	1.142	1.227	1.119	1.123	1.181	1.145
Brazilian Real (BRL)	5.894	6.374	4.413	4.516	4.308	4.444
Chinese Renminbi (CNY)	7.875	8.023	7.735	7.821	7.808	7.875
Canadian Dollar (CAD)	1.530	1.563	1.485	1.460	1.529	1.561
Mexican Peso (MXN)	24.519	24.416	21.557	21.220	22.705	22.492
Polish Zloty (PLN)	4.443	4.560	4.298	4.257	4.261	4.301
Argentine Peso (ARS)(1)	103.043	103.043	67.258	67.258	43.074	43.074
Pound Sterling (GBP)	0.890	0.899	0.878	0.851	0.885	0.895
Swiss Franc (CHF)	1.071	1.080	1.112	1.085	1.155	1.127

______________________________________________________________________________________________________________________________

Intangible assets

Goodwill

Intangible assets with indefinite useful lives

Development expenditures

Property, plant and equipment

Cost

Depreciation

During the years ended December 31, 2020, 2019 and 2018, assets depreciated on a straight-line basis over their estimated useful lives used the following depreciation rates:


			Depreciation rates
Buildings			3% - 10%
Plant, machinery and equipment			3% - 33%
Other assets			5% - 33%

Borrowing costs

Borrowing Costs

Leases

As a Lessee

This policy was applied to contracts entered into, or modified, on or after January 1, 2019.

Right-of-use asset

Lease liability

Lease payments used to measure the lease liability included the following, if appropriate:

•fixed payments, including in-substance fixed payments;

•variable lease payments that depended on an index or a rate, initially measured using the index or rate applicable as at the commencement date;

•amounts expected to be payable under a residual value guarantee;

•if reasonably certain to exercise, the exercise price under a purchase option, or lease payments in an optional renewal period; and

•penalties for early termination of a lease unless the FCA Group was reasonably certain not to terminate early.

As a Lessor

When the FCA Group acted as a lessor, it determined at lease inception whether each lease was a finance lease or an operating lease.

Impairment of long-lived assets

Financial assets and liabilities

Financial liabilities primarily consisted of debt, derivative financial instruments, trade payables and other liabilities.

Classification and measurement


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