By on July 25, 2018

Image: FCA

Former Jeep and Ram boss Mike Manley was a top choice among the candidates competing to succeed Sergio Marchionne, but no one could have expected his ascension to the CEO’s chair would occur in such a sudden, tragic manner.

During his first earning call, Manley was forced to address not just his predecessor’s death — which occurred mere hours before investors, analysts, and journalists picked up the phone — but also the automaker’s slipping grasp on the Chinese market. FCA’s revenue and net income took a haircut in the second quarter of 2018. The company’s share price plunged in the wake of news of Marchionne’s death. And, last but not least, there’s tariffs flying left and right, cutting into the automaker’s earnings — indeed, the company has already readjusted its earnings forecast downward.

Some first week on the job.

Marchionne’s passing took top billing during the earnings call. According to Automotive News, an emotional Manley said he spent “the last nine years of my life” interacting with Marchionne on a daily basis. The former CEO’s death was “heartbreaking,” he said. “There’s no doubt that he was a unique man, and he will be sorely missed.”

After a moment of silence, Manley dived into the pressing issues. While second-quarter revenue rose 4 percent to $33.91 billion, net income fell 35 percent to $881.9 million. Marchionne had warned him that Q2 numbers wouldn’t be great, Manley said.

Headwinds in China are growing, with the automaker reporting a Q2 loss of $115 million in the Asia market. China, the world’s largest car market, has a big bullseye on it for FCA’s Jeep brand. In light of this information, FCA altered its expected 2018 revenue from $146.2 billion to somewhere between $134.5 billion and $138.9 billion.

That said, there was a tidbit of good news. The $1.53 billion in net industrial debt FCA recorded at the end of Q1 is now $533 million in net cash.

Seeking to reassure investors, Manley said the five-year plan unveiled by Marchionne in June is still a go. “Fundamentally, my mandate is to deliver that five year plan,” he said. “My intention is to deliver that plan as a strong, independent FCA, and my team is focused on that as well.”

In the U.S., sales of FCA vehicles are up 5 percent over the first half of 2018, but Ram sales are down 7 percent. Blame the slow rollout of 2019 Ram 1500 models, and especially the missing-in-action mild-hybrid V6 and V8 engines slated to bolster the standard 5.7-liter Hemi. The old model (“Classic”) continues in production, helping overall Ram volume.

Manley claims production of the “DT” (next-gen) pickup has reached 85 percent, with full production expected in the fourth quarter. The 48-volt eTorque engines will be available by that time. Another $300 million was spent in Q2 to smooth the production hurdles, he added.

In China, the addition of the three-row Jeep Grand Commander and a new marketing campaign will help sales somewhat, Manley said, though he admitted these factors aren’t likely to solve all of the brand’s problems.

[Image: Fiat Chrysler Automobiles]

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17 Comments on “Mike Manley Hits the Ground Running As Storm Clouds Gather Over FCA...”

  • avatar

    “Strong, independent?” Does that mean FCA has abandoned (or will abandon) it’s hopes of a shotgun wedding with another manufacturer?

  • avatar

    JK inventory is increasing much quicker than sales. This is a problem I’m not hearing anything about.

    • 0 avatar

      Probably won’t hear anything about that since JL sales are on fire and it’s out of production.

      • 0 avatar

        People prefer the newer, more expensive product. That must be a tough problem to have.

        • 0 avatar

          The JKs aren’t coming down in price fast enough, inventory around my area is getting pretty low and now the JL prices and JK prices are converging.

          I’m interested because I like the JK’s soft top better and the basic combo of soft top + auto + AC commands stupid prices with the public.

  • avatar

    RAM sales are down not due to lack of available 2019 or “hybrids”. RAM buyers have no issues buying a Hemi and there are plenty of trucks available. Majority of RAM buyers are choosing the old style truck after driving the new one. 2019 is nicer inside though lower cost and exterior styling is selling the previous generation. Also, GM is taking sales from RAM with very high incentives. GM is outspending everyone on incentives on full size trucks.

    • 0 avatar

      I was at the local FCA dealer this weekend and finally had the chance to see the newest Ram up close.

      I think they missed the exterior styling on the new one by a mile. It is so blandtacular that it belongs in a Honda Insight commercial. Being parked next to the old version only makes the downgrade more noticeable.

      • 0 avatar

        I have a Ram and I lol’ed when the DT came out.

        But the same styling trends seem to work for GM and Toyota so, I guess the money paying customer matters most.

  • avatar

    At any rate I wish him well.

    Can anyone list how Manley’s tenure at Jeep is directly responsible for it’s current success?

    As Deming said: “Any manager can do well in an expanding market.”

    • 0 avatar

      No idea but I doubt the board chose him if he didn’t perform at Jeep.

    • 0 avatar

      Was he chosen due to his leadership and management performance at Jeep? or was he chosen because the board believed that the public saw him as a competent leader and operations manager?

      I think it’s the latter. Jeep is on fire. If you choose someone else, the market groans and starts selling. Sergio’s first day not on the job is the day of the hostile takeover, in that scenario.

      Exor did what was necessary to keep the wolves at bay.

  • avatar
    Big Al from Oz

    Competition vs perception vs reality.

    FCA faces huge headwinds, which might be to strong for its current business and line up.

    FCA competes on price and outside of the US FCA has really stiff competition of products similar in pricing, but of better quality and value ….. discounting future Chinese competition.

    The US keeps FCA afloat with Ram and Jeep. Ram is of little value in a global market and Jeep has only a couple of vehicle that are worthy, the rest are sh!t.

    Manely has a huge task at hand.

  • avatar
    Carroll Prescott

    Why should FCA worry about China? There must already be a dozen ripoffs of Jeeps on the market that the stupid chinese consumer will buy.

  • avatar

    For all the praise given in the Sergio requiem awhile back, I didn’t like the FCM business plan during his reign.

    It was the American taxpayer that saved Chrysler, not Sergio. In fact, I think he got away with robbery when purchasing.

    Nothing motor wise was really accomplished.
    The ram is still their big engine. What real changes have been made to this motor in all these decades?
    The cars are still the same crap they took over from Merc many years ago.
    The 200 was a mess.
    And has anybody seen or driven the new e-systems promised on their truck and hopefully jeeps???
    I have seen on display at the shows but never seen one reviewed.
    Even the Jeeps are really largely the same as a decade ago.
    Most companies would never have their main powerhouses stay so old.

    The only vehicle I would consider and do is the Pacifica. That was a well-done improvement.

    Not sure if the new team even has any R&D money to make the changes.

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