Is Sergio plotting to have a starved Chrysler whacked?
Looks like it to me
AutomotiveNews - Larry P. Vellequette - May 30, 2018
Tea leaves are notoriously imprecise when it comes to divining the future, but as Fiat Chrysler Automobiles CEO Sergio Marchionne has left us no other signs about what the next five years hold for the automaker he is about to leave, tea leaves will have to do.
And here's what they tell me: I think Marchionne plans to announce on Friday at FCA's investor day in Balocco, Italy, that the long-starved Chrysler brand will soon follow Maxwell and DeSoto and Plymouth into oblivion.
A source told a European colleague that such an announcement could come Friday, but the rumor is officially unconfirmed. Yet, Marchionne may have tipped his hand in January at the Detroit auto show when he answered a question about FCA's 2016 move away from cars in favor of SUVs and pickups in North America.
Read his quote, and see if you can tell what's missing: "Our commitment [to passenger cars] continues to be quite strong, especially when it comes to Dodge. We have found a way to play in the passenger car side with Dodge in a very clear way, and we're very uniquely positioned. I don't think we're going to abandon that market, especially given [Tim] Kuniskis' attachments to V-8s. I think he has one in his bedroom."
If you guessed, "any mention of a future for the Chrysler brand," then chances are your Marchionne decoder ring is set correctly.
It's more than a tad ironic that FCA is named after two of the automaker's weakest brands, especially in the U.S. (Note: I'm purposely leaving Lancia out of the discussion. It's not here, and it's not really much of anything Over There, either.) But while the Fiat brand has never really worked in the U.S., Chrysler did. Chrysler has a storied history stretching back to founder Walter P. Chrysler, and even within FCA, the brand had a brightly planned future as recently as 2014.
You see, at the last one of these investor dog and pony shows, in May 2014 in Auburn Hills, Mich., Marchionne and his crew laid out a plan to transform Chrysler into a ubiquitous brand to compete with Chevrolet and Ford across 65 percent of the segment spectrum. In a presentation titled "Our Time Has Come," Chrysler, investors were told, would have eight vehicles in its lineup by 2018, including two plug-in electrics.
Using the same accounting measures as FCA did then, Chrysler has just three vehicles: an ancient Chrysler 300 sedan that's old enough to vote, the Pacifica minivan and its plug-in electric hybrid variant.
Plans change, and the consumer shift away from sedans stuck an early fork in the future of the Chrysler 200, a planned compact sedan that was to be the Chrysler 100 and any plan to invest further in the 300 sedan. But those swings in consumer preferences don't explain what happened to the other portions of Chrysler's planned product portfolio: a midsize crossover that would share a platform with the 200 sedan and a full-size unibody crossover -- plus accompanying plug-in hybrid version -- that would have shared the Pacifica platform.
Those products should have been on dealership lots by now, according to the 2014 product plan. But they're not, and Chrysler is worse off for it.
If FCA's leadership team opts to whack Chrysler on Friday, it will no doubt have ample justification for doing so. Brands cost money to operate, and when you have a bunch of them, it seems reasonable to cull the herd of the weakest members.
But let's remember this: Chrysler isn't weak because consumers abandoned it.
It's weak because FCA did.
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Marchionne's grand finale said to entail expanding Jeep, shrinking Fiat
Europe.AutoNews.com - Tommaso Ebhardt, Bloomberg - May 30, 2018
MILAN -- Sergio Marchionne's last hurrah as CEO of Fiat Chrysler Automobiles entails betting the carmaker's future on Jeeps and Maserati luxury cars while downsizing its namesake brands, according to people familiar with the matter.
Under the plan, the company is considering ending sales of Fiat cars in North America and China in the coming years, while mostly confining Chrysler to the U.S., said the people, who asked not to be identified before Marchionne unveils the strategy on Friday at the Balocco test track outside Turin. FCA declined to comment ahead of the presentation.
The closely watched briefing will be something of a victory lap for the 65-year-old CEO, who is set to retire next year, taking place at the site where he laid out his survival strategy for Fiat in 2004. The presentation "will be the last major event for Sergio Marchionne as CEO and a potential catalyst for a rerating" of the stock, Giulio Pescatore, an analyst with HSBC in London, said in a note to clients.
Marchionne's successor will be appointed by FCA's general meeting in April 2019.
Expansion will be underpinned by rolling out brawny Jeep and Ram vehicles globally. The carmaker is also considering combining Alfa Romeo and Maserati into a single division in FCA's financial reports, the people said. Combining the upscale Italian brands would be seen by investors as a first step to an eventual spinoff.
The presentation represents an important signal for the post-Marchionne era and comes on the executive's 14th anniversary at the helm after leading the carmaker back from the brink of bankruptcy and boosting the group's value more than 10 times. After the CEO steps down in 2019, Fiat's controlling shareholders are expected to evaluate long-term strategic options, including a potential merger with a larger rival
Marchionne's final plan focuses FCA's resources on promising niches rather than competing head-to-head with auto giants such as Volkswagen Group and Toyota Motor Corp. in the mass-market car business. Amid a looming transition in the way vehicles are powered, driven and sold, Marchionne has voiced concerns about the risks of mainstream autos becoming "commoditized." Prioritizing a few sharply defined brands could also make the Italian-American automaker more digestible in the event of a deal.
Jeep -- which accounts for more than 70 percent of profits, according to analysts' estimates -- will increasingly become the focal point of the group. Marchionne is set to target doubling the brand's sales volume by 2022 from about 1.4 million vehicles last year. The growth is based on expanding Jeep's presence in Asia, Brazil and Europe as well as widening its product offering with hybrid variants starting next year. Marchionne has already indicated that he sees chances to double the group's profit in the coming five years on booming Jeep sales.
As part of the strategy, which will include details on a new dividend policy, the carmaker will likely announce its intention to set up its own captive finance unit in the U.S., following similar structures of its American competitors, the people said.
The plan could attract criticism in Italy, just as the carmaker's historical home suffers through a new round of political turmoil. After moving its headquarters outside Italy, the company is ready to abandon making mass-market cars in the country, people familiar with the matter said earlier this month, retooling Western European factories for premium cars with a global appeal, they said.
As a consequence, the Fiat brand is set to be reduced to the 500 and Panda families, with sales limited to Europe, Brazil and some emerging markets. That could mean a withdrawal from the U.S., where it sought to make inroads on the heels of the Chrysler merger. The timing of that process may be complicated by dealer contracts. In China, local Fiat models failed to gain traction and are set to be halted, the people said.
Italian unions have voiced concern about the lack of new models, including a decision to ditch production of no-frills cars in the country. The hard-line Fiom Cgil union will host a "workers day" in downtown Turin on Thursday, a day before the investors meeting.
"The pledge for full employment in Italy is again not respected this year," said Federico Bellono, the union's Turin chief. "We are not convinced that this will happen just by building premium cars in Italy as volumes are lower."
Along with shrewd dealmaking and spinoffs, Fiat's shift to crossovers from cars in the U.S. has paid off. The company reported wider profit margins than Ford Motor Co. in the first quarter, and Marchionne has set his sights on surpassing General Motors Co. in profitability before he steps down next year. A successor has yet to be named, but Marchionne has said it will be an internal candidate. CFO Richard Palmer, Europe head Alfredo Altavilla and Jeep chief Mike Manley are seen as the leading candidates.
Marchionne will likely take the stage for his final act with unprecedented ceremony: wearing a tie. The iconoclastic executive has vowed to don neckwear if he's ready to declare victory in his bid to rid Fiat Chrysler of net industrial debt. The goal is key to showing that the carmaker he pulled back from the brink is ready to weather the next crisis. Chairman John Elkann, the head of the Agnelli family that controls the company, has the tie waiting in his drawer.