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]