DBRS confirms Fiat Finance Canada Ltd. at A (low), Trend changed to Negative

Fiat Finance Canada Ltd. - Confirms at A (low), Trend Changed to
Negative

June 26, 2001

Kam Hon / David Schroeder
(416) 593-5577 x243/x232
e-mail: khon@dbrs.com <mailto:khon@dbrs.com>


Rating	      Trend	Rating Action		       Debt Rated
A (low)	      Negative 	Confirmed/Trend Change	       Corporate Rating


DBRS is confirming the corporate rating of Fiat Finance Canada Ltd.,
based on its parent and guarantor, Fiat S.p.A. ("Fiat" or "the Company")
at A (low) but is changing the trend to Negative from Stable. The trend
change reflects declining profitability and increased leverage. Although
the Company has implemented a number of initiatives to restore its
financial position, weakening market conditions could hamper the
recovery efforts.

Fiat's profitability, excluding non-recurring items, has been in decline
the last three years. Fiat Auto, its automobile business, has suffered
operating losses in 1998 and 1999 impacted by market share loss and
intensified competition in Italy, its major market, financial crisis in
Brazil and unfavourable product mix. Although benefits from aggressive
restructuring actions and improving conditions in Brazil have stabilized
Fiat Auto's performance, the Company's overall profitability remained
weak in 2000 due to a sharp drop in earnings at its equipment business,
CNH Global, which was hampered by integration related problems and
depressed conditions in the agricultural sector. In addition, aggressive
acquisitions since 1998 have raised debt levels at its industrial
operations significantly and further weakened debt protection measures.

The Company has taken actions to right-size its operations to the
declining market conditions and formed alliances to reduce cost. Fiat
also has a strong line-up of new products to expand offering and to
improve mix. In addition, the Company has implemented programs to
improve asset utilization to lessen capital needs and to actively divest
non-core assets to raise cash for debt reduction. Benefits from these
initiatives, if fully realized, would help restore Fiat's credit profile
to be compatible with the current rating. However, weak market
conditions, intense competition and high debt levels have complicated
the task and increased the risk of a full recovery at CNH. The recent
signs of slowing economic activities in Fiat's major markets further add
to the challenge.


Dominion Bond Rating Service Limited (DBRS) will publish a full report
shortly that will provide additional analytical detail on this rating
action. If you are interested in purchasing this report, please contact
us at: info@dbrs.com

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