Mike Manley Hits the Ground Running As Storm Clouds Gather Over FCA

mike manley hits the ground running as storm clouds gather over 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]

Comments
Join the conversation
2 of 17 comments
  • Carroll Prescott Carroll Prescott on Jul 25, 2018

    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.

  • TrailerTrash TrailerTrash on Jul 26, 2018

    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.

  • Bobbysirhan Sometimes it seems like GM has accepted that the customers they still have are never going to come to their senses and that there aren't any new dupes on the horizon, so they might as well milk their existing cows harder.
  • Buickman how about LowIQ?
  • Gemcitytm Corey: As a native SW Ohioan, Powel Crosley, Jr. has always been an object of fascination for me. While you're correct that he wanted most of all to build cars, the story of the company he created with his brother Lewis, The Crosley Corporation, is totally fascinating. In the early 20's, Crosley was the nation's leading manufacturer of radio receivers. In the 1930's, working from an idea brought to him by one of his engineers, Crosley pioneered the first refrigerator with shelves in the door (called, of course, the "Shelvador"). He was the first to sell modular steel kitchen cabinets (made for him by Auburn in Connersville). He brought out the "IcyBall" which was a non-electric refrigerator. He also pioneered in radio broadcasting with WLW Radio in Cincinnati (wags said the calls stood for either "Whole Lotta Watts" or "World's Lowest Wages"). WLW was one of the first 50,000 watt AM stations and in 1934, began transmitting with 500,000 watts - the most powerful station in the world, which Mr. Crosley dubbed "The Nation's Station". Crosley was early into TV as well. The reason the Crosley operation died was because Mr. Crosley sold the company in 1945 to the AVCO Corporation, which had no idea how to market consumer goods. Crosley radios and TVs were always built "to a price" and the price was low. But AVCO made the products too cheaply and their styling was a bit off the wall in some cases. The major parts of the Crosley empire died in 1957 when AVCO pulled the plug. For the full story of Crosley, read "Crosley: Two Brothers and a Business Empire That Transformed the Nation" by Rutsy McClure (a grandson of Lewis Crosley), David Stern and Michael A. Banks, Cincinnati: Clerisy Press, ISBN-13: 978-1-57860-291-9.
  • AndyinMA Well, will they actually make any? Wranglers appear to be black only at this point, but I do admit to seeing a few Gladiators in other colors. A few.
  • Garrett The only way to send a message is to pull out of the transaction when the fee is disclosed unless the dealer pays for it...or just walk out regardless.If this happens enough, eventually someone will get the message.
Next