By on April 24, 2016

sergio-marchionne

Sergio Marchionne, CEO of Fiat Chrysler Automobiles, could shed light on the company’s uncertain future this Tuesday when the company reports earnings. However, as the Detroit Free Press reports, Marchionne may not take the opportunity to clear the air, which would leave employees at FCA plants wondering about their futures for months to come.

The sweatered one has already stated in no uncertain terms that the Chrysler 200 and Dodge Dart will get the axe. Just when that will happen, and what product will fill freed-up plant capacity and dealer lots, remains a guessing game.

A number of challenges lay ahead as FCA tries to shore up its financials. One main issue is that FCA has more debt than cash on hand. In order to fix that problem, Marchionne wants to ditch products that aren’t high-margin trucks and SUVs. That plan could leave FCA vulnerable to fluctuations in the price of fuel and, should gas prices go up at the pump, FCA’s two brightest assets — Jeep and Ram — could quickly turn into liabilities.

This coming Tuesday could be telling of how FCA looks to alleviate the fears of company stakeholders, how it plans to shore up its financials, and where it plans to position itself to either acquire or be acquired by another automaker.

Keep an eye on this space. Tuesday might be a wild ride.

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43 Comments on “Tuesday Could Shed Light on Marchionne’s Master Plan, or Not...”


  • avatar
    thornmark

    >>The sweatered one has already stated in no uncertain terms that the Chrysler 200 and Dodge Dart will get the axe.<<

    Which enhances their desirability immeasurably.

    It's a pity Chrysler was placed in such hands. Fiat is a turd and Alfa will never happen. He should snap out of it or be gone.

    • 0 avatar
      highdesertcat

      Sergio recognized a good thing in the Daimler-developed 300, Grand Cherokee and RAM when he succumbed to the $1.3B bribe offered by the US gov’t to take Chrysler’s carcass off the tax payers’ hands. Plus Sergio could use the money to prop us Fiat and he wanted to assume total control of Chrysler, which the US gov’t agreed to.

      No one else wanted these losers (GM and Chrysler).

      America is lucky to be rid of Chrysler.

      • 0 avatar
        Big Al from Oz

        highdesertcat,
        I agree with you.

        There is no place for welfare in a supposed free market country like the US.

        Selective welfare to industry should never occur. How many p!ss poor burger joints, restaurants and other small businesses get welfare, like these large socialised unionised corporations? None.

        Imagine if social welfare like unemployment, seniors was dished out according to who’s pocket you lined in Washington. There would be an uproar in the US.

        But, unions and industry can corrupt the government while the poor slob on the street takes it up the ass.

        Industrial socialism is unfair. I say let the sh!t businesses go under, why support business models that make a loss?

        Let us see industry, unions and governments be transparent.

        • 0 avatar
          highdesertcat

          There were analysts who cautioned that Sergio’s acquisition of ye olde Chrysler would not solve all of Fiat’s problems.

          So here we see a “vuja de” of Sergio trying to make ends meet by shopping for a merger-partner, restructuring Ferrari, cutting back on loss leaders like the 200, and now plotting a bold new strategy (maybe).

          What Sergio and Fiatsler need is a huge infusion of cash, and a way to mitigate over-capacity in the global auto market.

          To me, Asia seems the place Sergio should be shopping for a M&A. That’s the future of cars and trucks.

          • 0 avatar
            Big Al from Oz

            highdesertcat,
            It seems to me Mitsubishi would be the answer to all of his prayers.

            Mistubishi and Chrysler did/do have a working relationship.

            Mistubishi also is partnered with Nissan globally outside of the US.

            So, maybe FCA can get it’s hand on some new and better platforms at a good price.

            Mitsubishi shares have dropped 40% over the past week since it’s FEgate.

          • 0 avatar
            highdesertcat

            Ghosn and Marchionne in a joint venture? Two Alpha males trying to work toward a common goal?

            Not a likely merger, and an even more unlikely acquisition.

      • 0 avatar
        Victor

        This is a notion that usually gets lost in the US auto press. Chrysler was dead, Fiat rescued it from the morgue. But people still pretend like Jeep could make it on its own and that somehow it is keeping FCA from bankruptcy.

        Jeep is a great brand and it is quite strong in the US, but come on…

        • 0 avatar
          highdesertcat

          The notion is not lost. It’s just that far left liberal Democrat UAW supporters pretend that it never happened.

          You know, as in the taxpayer-funded bailouts made it all better.

          I would like to see a Jeep+Subaru merger. Yes I would! Those two brands would be dynamite together.

          But, alas, that will never happen.

          • 0 avatar
            Lou_BC

            You do realize that the whole bailout process started with George Dubya and the Republicans?
            We’ve seen more corporate welfare from the right side of the isle than from the left.

            Who was in power for NAFTA?

            Any UAW executives in favour of that deal?

          • 0 avatar
            highdesertcat

            Yes, I remember. It was wrong then, for those 90 days, and it went completely off the rails after that when the gov’t nationalized GM and Chrysler.

            Read Rattner’s book! I did. It is now required reading for many MBA students.

            Corporate welfare is bad, no matter who dishes it out.

            The concept of selectively boosting some at the expense of others does not promote social trust in the system and it creates tax cheats among individuals and businesses.

            NAFTA was ultimately signed by Bill Clinton, IIRC. The UAW stood to gain jobs initially but then the crash of 2009 happened.

            After NAFTA was signed, domestic automakers and other producers found that the provisions of NAFTA allowed for the tax-free import of NAFTA-zone-made goods, produced at a lower cost than stateside. So that’s where the jobs went.

            Unintended consequences, for sure.

      • 0 avatar
        tresmonos

        Except Chrysler is one of Michigan’s biggest employers, allowing for middle class wages so that kids can pay for their college education rather than relying on their magnanimous grandfather HDC to shower them with God’s blessings earned through his superior life style choices.

        Your priorities are whack. You’ve been polluting this space since Farago days, it’s high time you go.

  • avatar
    Firestorm 500

    Got to save Jeep and RAM. Everything else is expendable.

    • 0 avatar
      highdesertcat

      I agree, and would like to add save the 300, as well.

      The 300 is a damn great sedan, better than the Crown Vic/Grand Marquis class ever was, with tighter handling and a smoother, more competent ride.

      Lots of old people I know who used to drive the Crown Vic Class are switching over to the 300 PentaStar.

      And they love the 300!

      • 0 avatar
        JohnTaurus_3.0_AX4N

        You mean a car that was first introduced in 1979 is somehow out of date? A body-on-frame car with a solid rear axle doesnt handle as well as a modern unibody with IRS? Wow, you may be on to something! Better tell Ford right away.

        Its like saying, yeah the Ford Escape drives/handles better on-road than the Land Rover Defender 90. Ummm..DUH!

        • 0 avatar
          Lou_BC

          I thought FCA went after the BOF large car market by putting air bags and coil springs on the Ram 1500.

          There is irony in the comment “lots of old people I know” since that was the only Crown Vic market outside of police and rental fleets.

          • 0 avatar
            Big Al from Oz

            Lou_BC,
            You obviously thought wrong.

            Ram has increased sales far greater than Ford has with it’s F-150 proportionally.

            FCA/Ram has realised that the large US pickup is mainly a car and made vehicles to suit this demand.

            I’m awaiting your usual bullsh!t blurb on load and tow on vehicles that will hardly ever see work.

            Why not devote your energy to Corollas, Camrys, Altimas and every other small car/CUV that is much easier over loaded with tiny brakes and a less than stellar drivetrain in comparison to a pickup.

            Hmmmm ………… Frods are great ….. mate!

        • 0 avatar
          highdesertcat

          JohnTaurus_3.0_AX4N, the 300 is a great sedan. I’ve taken some long-distance trips in a 300 and I haven’t a bad thing to say about it. My #2 son had one in the Lake Tahoe mountain area, albeit with a 5.7L in it.

          The fact that the 300 is still around, and that people still buy them in spite of their mature Daimler architecture, speaks volumes. It’s a ride that people prefer, if they can afford it.

          If I had to buy a sedan today, I would choose the 300 over the Taurus.

          And in my area, a lot of people that are forced to give up their Crown Vic/Grand Marquis because it is economically unfeasible to repair them, are doing the very same thing; choosing a 300 instead.

          Lou_BC, old people choose ingress/egress, comfort and ride over sportiness, handling characteristics and blazing acceleration. And the 300 does not look bad. Kinda classic in its own way.

          • 0 avatar
            Lou_BC

            highdesertcat – I agree. The same characteristics tend to be prized by police and taxi fleets. That is what sold the Crown Vic to the elderly demographic and to fleets.
            Incidentally, as the market has moved away from large BOF sedans, car companies realized that by adding an extra seat and 2 doors to 1/2 ton pickups they were also able to fill that void. Buyers where unwilling to give up V8’s so pickups met that desire as well.
            FCA chose to target the “pickup as BOF sedan” replacement market. It works to a degree but those who still need a truck to function as a truck usually choose an alternative brand.
            I have a Ford for that very reason and that is a reason why you have a Tundra. Durability is another factor. FCA is still back of the pack. Tundra is consistently near the top. Ford and GM durability is usually dependant upon the age of the platform/body style. New stuff tends to rate poorly whereas an end of run model rates better.

      • 0 avatar
        el scotto

        The Chrysler 300! It’s pimptastic! and readily available at BHPH lots.

  • avatar
    Joss

    Why do I see some Kim Jong Un in that Marchionne shot? Is it the hairstyles or the dark clothing?

  • avatar
    Big Al from Oz

    If I was Sergio I would not discuss the direction of the business to the workers.

    It might be an area of concern for the workers, but is it an area of influence?

    The area of influence that the worker has is to be more productive. Do they need to be told this?

    The only information I would tell the workers is the need to save much needed resources to keep FCA afloat. Other than that most just punch in everyday to get paid.

    The worker does not own the business and they should be grateful they have a reasonably paid job.

    • 0 avatar
      highdesertcat

      Way back when, Sergio marginalized the influence of the UAW by completely bypassing them. Even the other non-American unions have toned down their rhetoric and wage&benefits-related hate-speech.

      I can’t imagine anything worse than piping up about higher wages and more benefits to Sergio and then going on welfare because your Fiatsler job just went to Brazil, Mexico, or (GASP!) India and China.

    • 0 avatar
      Lou_BC

      @BARFO – wow. You need to take some courses on psychology and the management of groups of people.

      You aren’t going to get maximum productivity or even quality productivity out of someone who is afraid of loosing their job or thinks management does not care about them.

      The “floggings will continue until moral improves” style of management never works.

      You ignore your workers at your own peril.

      Here is a management rule that is one of the best rules out there, ” The further away you are from the product you make or the service you provide, the less valuable you are.”

  • avatar

    This is what happens when you put a fool in charge.

    • 0 avatar
      Lorenzo

      Sergio is no fool. He’s a pretty crafty dealmaker, give him that, and was put in charge to make the deals that allow the founding Fiat company family to exit the car business with a load of cash. Sergio’s spinoffs of various Fiat conglomerate components, giving the family a chunk of ownership, has been brilliant.

      What he and the Fiat auto management can’t do is run a car company in a way that enhances value, making his attempt to rid the family of the core auto business extremely difficult. The use of third tier suppliers with large tolerances in parts makes any attempt to assemble cars with a shred of precision impossible, and the quality of those third tier parts makes reliability a hope, not a certainty.

      A look at the balance sheet as reconstructed by Yahoo shows assets of 105 billion Euros (including 11.5 billion in goodwill) in assets and 88 billion Euros in liabilities. That’s 17 billion Euros net book value, 4.5 billion excluding goodwill. The market cap is barely over $10 billion dollars (9.1 billion Euros). At least two analysts guesstimate that Jeep is worth about $8 billion in a spinoff, so excluding goodwill, the rest of the company has negative value.

      The time is coming when Sergio will have to consider parting out the company. He’s running a company that would be close to a chapter 11 filing if it weren’t for the volume of money, his ego and the Agnelli family fortune involved.

  • avatar
    05lgt

    Ditching everything but Ram and Jeep seems profitable, until you figure in all the costs of CAFE non-compliance.

  • avatar
    ajla

    The 300 is nice enough, but in a fading segment and it is getting old. I think the original idea was to move the 300/Charger/Challenger to an Alfa platform, but who knows the status of that. I also think “sporting up” the big FCA cars might actually hurt sales becuase part of their appeal is that they aren’t canyon carvers.

    I do think the 5.7L V8 is likely toast in the next 24 months though, to be replaced by a turbo V6. The high-output 6.4L and 6.2SC would live on in the SRTs/Hellcats while the “truck” 6.4L would be offered on the RAM 1500 and Grand Wagoneer as a pricey option upgrade.

    • 0 avatar
      Lou_BC

      ajla – I agree that the 5.7 will most likely be replaced by a turbo V6. Ford has proven unequivocally that people care more about power characteristics than they do about number of cylinders or how they are arranged.

      • 0 avatar
        DenverMike

        “Ford has proven…”

        At the same time, FCA is proving their own buyers are more than happy without turbos replacing cubic inches. They’re happy with good ol’ pushrod V8s too. Same with GM shoppers.

        Over all, most consumers are less concerned with under-hood wizardry.

        Ford does prove when you offer more choices, buyer have to choose.

        • 0 avatar
          Lou_BC

          @Denver – It is a fallacy, a myth, a legend of days past.
          Modern pushrod V8’s are just as complex as overhead cam turbocharged engines. Read an article explaining GM’s “cam in cam” system allowing for variable valve lift or look at the complexity of cylinder deactivation in their SBC’s.

          Ford took a chance on turbo V6’s. That is why they had the 6.2 as an offering. If the EB 3.5 fell on its face in the market they would of put much more R&D into the 6.2.
          What happened?
          Ford dropped the 6.2.
          Even Tresmonos pointed out that the marketplace has spoken.

          There is a core group of buyers that like V8’s. Those are typically the loud pipes modified brodozer types or “old guy” types that believe that only a V8 is the way to go.

          We don’t really have “big” V8’s anymore. All of them with perhaps the exception of Ford’s 6.2 are small block engines. Even Ford’s 6.2 isn’t a true “big block”.

          • 0 avatar
            DenverMike

            Some would say Ford is “Moving forward”, but it’s more like “sideways”. Yeah, if Ford is throwing every thing they have at wheezy, otherwise cheesy engines, and marketing does the rest, more power to them.

            Turbos have always been a selling point historically, in sports cars, exotics and other specialties.

            Since the 6.2 offers little over the Coyote V8, why have it? Ford has been steering buyers away from it and into Eco Boosts for a while now.

            Although if Ford offers an Eco Boost 5.0 V8, I’d be all over it.

            In the meantime, it’s interesting to me how far pushrod V8 “tech” can go.

          • 0 avatar
            ajla

            I agree with Mike here.

            It doesn’t look good for GM and FCA to go competing head-on with Ecoboost copycats. Ford has had more time to improve on the EB lineup (so they’ll be playing catch-up initially) and it makes FMC look like market leaders/innovators.

            I highly doubt that a hypothetical GM or FCA turbo-6 option will be as successful in the market as what Ford has experienced just because it’ll be a “me too” offering. And, from what I understand, the current GM V8s are still much cheaper to produce than their turbo V6s, even with the added features for the V8 in this generation.

            If FCA is going to die I’d rather see it on the V8 hill.

          • 0 avatar
            seanx37

            Lou, you are right about V8s. Except the Hemi still has an iron block, weighing at least 100lbs more than a Chevy pushrod.

      • 0 avatar
        Dan

        “ajla – I agree that the 5.7 will most likely be replaced by a turbo V6. Ford has proven unequivocally that people care more about power characteristics than they do about number of cylinders or how they are arranged.”

        I wouldn’t draw that conclusion. Ford’s turbo V6 is a better truck motor than the 5.0 by virtually every objective measurement, they hamstrung the V8 from the beginning by making it 500cc smaller than it should have been, they hobble it further with an EPA special 3.31 rear end unless you special order otherwise, they mark up the V8 such that the complex turbo is actually cheaper to buy, and after all of that not so subtle discouragement a full third of buyers go for the dinosaur anyway. That’s 200,000 trucks this year.

        In the face of Obama’s CAFE laws it’s hardly a bold prediction that the V8 is on its way out but we’re not so ready to let it go as all that.

  • avatar
    dwford

    We are nearing the end of another boom/bust cycle for Chrysler. The only question is who will save them this time.

    The solution is pretty simple: Kill Fiat and Chrysler, sell Maserati to the Chinese (or to Ferrari), and fold Ram back into Dodge. Then you have 3 brands to deal with: Dodge, Alfa, and Jeep. Dodge and Alfa can share platforms for the cars. All 3 brands hare a similar adventure/sport ethos, while Fiat and Chrysler basically have no brand equity left in them anywhere in the world.

    Then buy the FWD platforms from Mazda (same brand image as Dodge and Alfa) and make the next generation of sedans and crossovers. Mazda could use the cash and economies of scale.

    • 0 avatar
      el scotto

      I rather doubt John Elkann would ever sell FIAT with its world-wide presence and btw, FIAT owns Maserati and Ferrari. No reason to sell Alfas as rebranded Dodges, just call them Alfas. With MOPAR’s bad rep, it might help. Let Lancia die. Kill Dodge and call what few SUVs Dodge has Rams. Let Jeep keep pumping out money. There are still plenty of FIATs buzzing around Europe and Brazil. Dodge has ZERO brand equity outside NA.

      • 0 avatar
        dwford

        Looking at Fiat and Alfa’s European websites, there are no hidden gems for Sergio to build the brands on. Fiat already brings pretty much every European model hear to the US in one form or another. I totally forgot about Lancia, which just goes to show that it has no place in this world also. The logic of selling Dodges that are based on Alfa’s is the same as every other automakers – economies of scale.

  • avatar
    Jeff S

    Contract the Chrysler 200 and Dodge Dart out to the Chinese. Cheaper labor. The Chrysler 200 is a good car but it is in a crowded field. Cheaper manufacturing would lower the price of the Dart and 200 and at least give them a competitive advantage on price. The worst that could happen is that Chrysler would discontinue both and rebadge a competitors brand.

    Chrysler needs to put any additional develop costs into a new Ram and newer Jeeps that are not based on Fiats. Since Chrysler has already spent the costs to develop new Alfas at least use the platform on any new midsize and compact cars and crossovers with the Chrysler and Dodge nameplates even if Chrysler outsources the production of these vehicles.

  • avatar
    Jeff S

    Eventually Chrysler will stop making the full size rear wheel drive 300’s and Chargers. Like the Crown Victoria, Grand Marquis,and Town Car they will fade away as the prior generation stops buying them. FCA is making money on them now with few changes but eventually they will fade away. Most of the law enforcement agencies around where I live have gone to Explorers with few of the police packaged Tauruses and few Chargers. You still see a few police and taxi Crown Victorias but they are becoming less common. Crossovers have been eating away at the sales of cars and will continue to do so.

    Chrysler needs to keep some small and midsize cars in their lineup to meet fleet fuel standards and also in case sales of big pickups and suvs take a nose dive when fuel prices go up. Having said that FCA doesn’t have to manufacture these vehicles themselves.

  • avatar
    matt3319

    I have a great idea. And it’s a simple one. Invite all the shuttered nameplate to become one big company. Pontiac, SAAB, Plymouth, Saturn, Hummer, Mercury and even Merkur. That company could be golden. Then they can go buy FCA.

    On a serious side, I don’t get why people aren’t buying chrylsers. I owned a 2015 200S V6 AWD and loved it. It was sleek super fast and reliable in the 18 mo the I owned it. No really wanted a 300S but it was just out of my budget. I did trade it because I needed a SUV. I bought a Jeep Cherokee Trailhawk. These products are state of the art and are high quality for the price. Yes I had a bunch of cash on the hood for both cars and that matters. But the quality is great IMO. Love the UConnect and the 3.2L V6.

  • avatar
    Lou_BC

    “I don’t get why people aren’t buying chrylsers”

    “reliable in the 18 mo the I owned it”

    You kinda answered your own question there.

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