Fiat Chrysler CEO Sergio Marchionne wants his recently merged nine-brand automaker to more than double vehicle sales and operating profit by 2018, but financial analysts doubt there will be enough cash available to fund double-digit - and in some cases triple-digit – volume growth at eight of the marques over the next five years. They believe Marchionne will need a leaner portfolio for his plan to work.
"If it was not for Brazil, where it is the No. 1 brand, Marchionne should simply kill the Fiat brand," Philippe Houchois, a London-based auto analyst at UBS told Automotive News Europe. Said Arndt Ellinghorst of consultancy International Strategy & Investment in London: "I still think it could be Dodge or Chrysler, but not Dodge and Chrysler."
Marchionne and his team unveiled Fiat Chrysler's five-year plan last month. The key targets for 2018 include: boosting sales 60 percent to 7 million; increasing revenue to about 132 billion euros from 93 billion euros expected this year; and improving operating profit to a range of 8.7 billion euros to 9.8 billion euros from a 2014 goal of 3.6 billion euros to 4.0 billion euros. Analysts consider all three goals beyond Fiat Chrysler's reach, especially since it will carry a net debt of more than 10 billion euros until at least the end of 2016. Fiat Chrysler also must cover costs associated with 55 billion euros of self-financed investments during the plan period.
Marchionne expects to reach the lofty 2018 goals by: more than doubling of Jeep’s global sales to 1.9 million; boosting sales in China fivefold; and turning struggling Alfa Romeo into a sought-after global premium brand with eight new models and annual sales of 400,000 – up from 74,000 last year. Marchionne is betting 5 billion euros on his fourth relaunch bid for Alfa, which has failed to turn a profit during his 10-year tenure at Fiat.
‘Bottom of the pile’
Said Harald Hendrikse, a London-based analyst with Nomura Holdings: “The problem is PowerPoint presentations are a lot easier than real life. These brands need a huge amount of work to get where they need to be. The world changes very slowly and you have brands at the bottom of the pile in many regions. It’s not going to happen overnight.”
When questioned by analysts last month about the plan, Marchionne was asked whether he thinks his volume and profit expectations could actually sustain Fiat Chrysler’s nine brands over the long term. The CEO said that Fiat Chrysler’s advantage is that “we now have brands in the marketplace that are not butting heads.” He added that the new plan already eliminated two brands: Lancia and SRT.
NEW E-MAGAZINE
This story is from the current issue of the Automotive News Europe monthly e-magazine, which is also available to read on our iPhone and iPad apps.You can download the new issue as well as past issues by clicking here.
Lancia era ends
Lancia will sell its one car, the Ypsilon, only in Italy until the 3-year-old model is discontinued, likely by the end of the decade. SRT will be downgraded to a subbrand of Dodge. Marchionne said the automaker’s leadership “debated heavily” whether to merge Chrysler and Dodge. “Co-mingling Dodge and Chrysler would have cost us a lot of share,” the CEO said. He didn’t believe that it would have been possible to satisfy all customer needs with a combined Dodge and Chrysler. “That combination doesn’t work in our view,” he said. Instead, Marchionne wants to double the Chrysler brand’s lineup to six models by the end of 2018 and eliminate two Dodge nameplates – the Avenger sedan and Grand Caravan minivan – to settle what he called a long-running “internal turf war” between the brands. Chrysler will be positioned as the company’s “mainstream North American brand” and challenge Ford, Chevrolet, Hyundai and others. USB’s Houchois fears that Dodge will take a harder-than-expected hit when it stops making a large minivan. “It is a bold move indeed,” he said.
Marchionne promised that Fiat Chrysler would continue to emphasize brand differentiation to avoid making a mistake he sees in the current marketplace. “Depending where you travel, I’ve seen cars that start with an R having a D in front of them,” he said, referring to Dacia models re-badged as Renaults in countries such as Russia and outside of Europe. “The cross mixing of brands is going to destroy the fabric of the brand. A brand is a precious thing,” Marchionne added. His words and passion for brand preservation come too late for Lancia. The 108-year old Italian automaker suffered its final blow when its European lineup added rebadged large Chryslers that found few buyers in Europe.
Fiat Chrysler's roadmap to 7 million sales
Fiat Chrysler Automobiles aims to increase global sales 60 percent to 7 million by 2018 from 4.4 million last year. To reach the goal CEO Sergio Marchionne wants to boost Chrysler, Fiat and Jeep's combined sales by more than 2 million vehicles in the next five years. The CEO also will invest 5 billion euros in the chronically underperforming Alfa Romeo brand in a bid to boost sales fivefold to 400,000 by 2018. Here is a brand-by-brand breakdown of the expectations (listed in alphabetical order).
Alfa Romeo
2018 target: 400,000; 2013 sales: 74,00
Key points: Alfa will get a completely new lineup featuring eight models based on a new rear-wheel/all-wheel-drive architecture. The first model -- a mid-sized sedan – is due in late 2015. Marchionne said he expects Alfa's 2019 sales to exceed a half million. Alfa and Jeep are the main pillars of the automaker's global expansion plan.
Chrysler
2018 target: 800,000; 2013: 350,000
Key points: Chrysler will be expanded to six models that cover 65 percent of the global market from three models that cover 25 percent of total sales. The three additional models – the 100 compact sedan, a mid-sized crossover and full-sized crossover – are expected to add about 275,000 sales by 2018. Chrysler also is expected to win about 175,000 customers a year from sister brand Dodge after it stops making the Avenger mid-sized sedan and Grand Caravan minivan in 2018.
Dodge
2018 target: 700,000; 2013: 800,000
Key points: Dodge's global volume will decline as it eliminates models and is turned into a performance brand.
Ferrari
2018 target: 7,000; 2013: 7,000
Key points: Ferrari aims to protect its exclusivity by limiting sales to 7,000 supercars a year. Four-model range will feature two cars with V-8 engines and two with V-12s. Ferrari will debut a new or revised model each year and give its models an eight-year life cycle.
Fiat
2018 target: 1,900,000; 2013: 1,500,000
Key points: Fiat brand foresees no sales growth in Europe during the five-year plan as 2018 sales are expected to be flat at 700,000. Growth will come from Fiat's largest sales region, Latin America, where it expects to sell 800,000 vehicles by 2018, up more than 100,000 from last year. Marchionne wants Fiat to triple sales in Asia-Pacific to 300,000 and double volume in North America to about 100,000. Fiat's U.S. sales should get a boost from the 500X subcompact SUV, which is due to debut in Europe later this year, and a two-seat roadster derived from the new Mazda MX-5. The roadster is due in late 2015 and will be sold worldwide.
Fiat Professional LCVs
2018 target: 600,000; 2013: 431,000
Key points: The vans unit expects to maintain European market share, grow in Russia and Latin America and strengthen its presence in the Middle East and Africa.
Maserati
2018 target: 75,000: 2013: 15,400
Key points: Maserati will grow to six model lines from three during the next five years with the additions of the Levante, the company's first SUV, in 2015, the Alfieri coupe (2016) and cabriolet (2017), and the redesigned four-seat GranTurismo (2018).
Jeep
2018 target: 1,900,000: 2013: 732,000
Key points: Jeep's manufacturing footprint will be expanded to 10 plants in six countries from four U.S. plants. Jeep production will be added in Italy, Brazil, China and India. In the next five years Jeep's U.S. capacity will be stable at 1 million while Europe will grow to 200,000 units a year. Jeep's dealer network will expand to 6,023 outlets in 2018 from 4,706 now to cope with the growth.
Ram
2018 target: 620,000; 2013: 463,000
Key points: Ram's U.S. range will add models derived from the Fiat Ducato and Doblo and add diesel powertrains.
Luca Ciferri and Jennifer Clark
Un interessante analisi da parte di automotive news sui piani strategici del gruppo Fiat-Chrysler.
FCA e' un gruppo multibrand come vw, Renault-Nissan o Gm, e' quindi cruciale una chiara definizione dei ruoli e delle strategie delle singole divisioni per permettere una buona crescita.
Attualmente il gruppo ha nel suo portafoglio di offerte Fiat auto passeggeri, Fiat veicoli commerciali, Lancia, Alfa Romeo, Abarth, Maserati, Alfa Romeo, Ferrari, RAM, Dodge, Jeep, SRT, Chrysler.
Già e' noto che Lancia e' destinata a scomparire entro fine del decennio mentre SRT sarà assorbita da Dodge.
La stessa Dodge e' destinata alla scomparsa entro 10 anni al massimo: le hanno tolto i pick up RAM (40% della produzione), i minivan (25% ) ha come gamma solo la Dart ( mega flop), la Durango ( che morirà nel 2017) e la Charger ( fine produzione 2018).
Dall' altra parte dello spettro c'è Jeep, il vero gioiello della corona, nel 2015 dovrebbe raggiungere 1 milione di unità ed è pronta allo sbarco in Cina, Brasile e forse in Russia.
Mi fa un po' sorridere che adesso Marchionne sia diventato uno scopritore del valore del brand dopo aver ucciso Lancia, massacrato Alfa e raso al suolo Dodge.
Vedremo cosa succederà.
|