On Wednesday, Fiat Chrysler Automobiles CEO Sergio Marchionne will update investors on his long-term plans and fourth-quarter profits — namely, how many Jeeps it sold — during his scheduled earnings conference call.
It’s widely expected that Sergio will address the near-certainty that Jeep will build a pickup based on the Wrangler, as well as the future for the Jeep Compass that’ll likely survive from the Patriot/Compass twin billing, and Jeep’s potential to keep afloat fledgling FCA brands such as Maserati and Alfa Romeo.
Analysts say FCA’s ambitious target of $5 billion profit by 2018 would be almost unattainable at this point.
“‘Ambitious’ is not really an adequate word to describe it, ‘fantasyland’ might be more appropriate,” Bernstein’s Max Warburton told Automotive News.
Automotive News correctly points out FCA’s missteps in BRIC territories that could haunt them. (Although not having a manufacturing presence in Russia could have saved them enormous cash for the time being.)
Profits in Latin American countries are way, way down, according to the Wall Street Journal, and FCA’s belated big bet on Brazil with Jeep and luxury cars could compound their headache to catch up to Ford and General Motors in the region. FCA’s operating profit in Brazil fell by 83 percent over the last two years, according to WSJ.
More than 95 percent of FCA’s sales in Brazil were from its Fiat brand, including compact and subcompact models that comprise nearly 60 percent of new car sales in Brazil. The Jeep Renegade was built specifically with emerging markets in mind — including Brazil-only powertrains — and has been slow to catch on.
“Selling the Renegade in Brazil presumes the middle class will grow and will ask for different cars than the small ones that dominate now,” Monica Bosio, an analyst with Intesa Sanpaolo, told WSJ. “It’s not a given that will happen.”
Only last year Jeep returned to China to build cars, starting with the Cherokee.
Those fledgling attempts in growing markets could increase pressure on FCA to maximize profits Stateside, which has been fairly limited to Jeep so far.
Although Marchionne ruled out a possible merger with General Motors — or any other similarly sized automaker — last year, analysts still say that FCA would need to court an alliance with another manufacturer to remain viable or sustain any type of global economic downturn.