Fiat Auto's operating losses improved to £196mn in the third quarter of 2003, compared to £233m last year, but were worse than anticipated. Fiat put its poor performance down to “aggressive price competition and the impact of upcoming model introductions on customer orders”.

However, the manufacturer is adamant that profit margins and its market share will improve this year, despite the bigger than expected losses.

“We will see an improvement in market share in Italy and the rest of Europe. The new models will have a very significant impact on the operating margin,” says Fiat Auto chief executive, Giuseppe Morchio.

He also states his turnaround plan is on track and that the new Fiat Panda, the Idea MPV (on sale next February) and Lancia Ypsilon, launched in mainland Europe in September, would have a positive impact on profits.