The manufacturer's net industrial debt of €1,773m at the end of 2006 turned into a net cash position of €355m at the end of last year.

Fiat attributed a large part of its 2007 boost to the successful launch of new models and strong sales.

Last year the company sold 2.234m units - its highest level since 2000.

At €3,233m, full-year trading profit was €1.3 billion higher than in 2006 - an increase of 65.7 per cent.

Fiat said the turnaround was driven by significant improvements across all businesses.

Trading profit for Fiat Group Automobiles nearly tripled to €803m - up €512m over 2006 figures – as the figures yielded a return on sales of 3 per cent up from 1.2 per cent in 2006.

Fiat said its other automobiles businesses, Maserati and Ferrari, contributed an additional €290m, bringing full-year results to €1.1bn.

Despite the improved performance, Fiat's chief executive Sergio Marchionne said he was disappointed at the reaction of ratings agency Moody's, which yesterday confirmed its same sub-investment grade rating.

Moody's said it may upgrade the rating over the next six to 12 months.