“Fiat Chrysler Will Be A Top Performer,” CEO Sergio Marchionne Promises

Sergio Marchionne, CEO of Fiat Chrysler Automobiles, and Ralph Gilles, FCA Global Head of Design, talk after the debut of the new 2019 Jeep Cherokee at the 2018 North American International Auto Show January 16, 2018 in Detroit, Michigan.

Fiat Chrysler CEO Sergio Marchionne was able to say something on Thursday that perhaps no chief of the company once known as Chrysler ever has been able to say: “FCA is positioned to be a top performer,” he told a conference call with financial analysts.

It’s been a difficult slog for Marchionne to get to that point, and it may be even harder for him and his successor–he plans to retire early next year–to say that in the future. But the sweater-clad Italian leader has made a career lately of surprising observers on the up side.

Propelled by strong sales of its Jeep and Ram vehicles, FCA nearly doubled its earnings in the latest quarter as it strives to meet stretch targets, surpassing profitability at Ford. He got a jump on the industry by abandoning sedan production, which now looms as an option for Ford. And he has abandoned his glum talk of a couple of years ago about the need for the auto industry to consolidate because of overcapacity.

“The biggest question and challenge for Fiat Chrysler is how it will deal with the coming transformation of the auto industry.”

“The fact that Chrysler is still here is Marchionne’s legacy,” said Michelle Krebs, analyst for AutoTrader.com. “It came extremely close to extinction. He promises its debt will be gone this year, possibly by June. FCA has a strong product line of trucks and SUVs. He looks brilliant–and he got really lucky–eliminating most of the car models.”

Marchionne said he expects FCA to meet its 2018 financial targets and continue to outperform under his successor. He hasn’t named an heir apparent, but at the North American International Auto Show recently he told journalists that the candidates are internal, and they’re all male. The company’s new strategic direction, which he plans to reveal on June 1, will bear the successor’s imprint, Marchionne said.

A leader who likes to create waves, at the Detroit auto show, he openly critiqued Ford’s strategy for doubling its investment in electric vehicles while the market for EVs remains minuscule. “Is that a wise economic thing to say?” Marchionne said to reporters. “The answer is probably ‘no.’”

Marchionne’s knock on Ford presumably stemmed partly from the fact that FCA has barely participated so far in the EV revolution. But if challenges such as cost, charging infrastructure and driving range are overcome, Krebs said, “What will FCA do then? Will it be behind or will it be able to be a close follower?” Marchionne’s strategy faces risks.

It’s similar to the approach that he took initially at least to autonomous-driving technology, where FCA moved deliberately slowly. Only in 2016 did Marchionne do a bit of an about-face when FCA signed up as partner with Alphabet’s Waymo automotive unit in fielding a fleet of driverless Pacifica Hybrid minivans.

“The biggest question and challenge for Fiat Chrysler is how it will deal with the coming transformation of the auto industry,” Krebs said. “For now, it has opted to partner with companies like Waymo. Will that be the right strategy for the future? Will that strategy be evolved? We will have to see.”

Dale Buss
Dale Buss is a long-time contributor to Chief Executive, Forbes, The Wall Street Journal and other top-flight business publications. He lives in Michigan.

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