DETROIT -- Compared with its larger and far richer global counterparts, Fiat Chrysler Automobiles faces a set of problems that appears almost insurmountable. FCA trails its competitors in profit margin, r&d spending, fuel economy, hybrid technology, self-driving cars -- you name it. At a time of unprecedented capital investment needs in the auto industry, FCA is the only major carmaker in the world with more debt than cash. Ouch. So what's the level of desperation? CEO Sergio Marchionne insists FCA is not desperate at all, that the company can survive on its own -- "in mediocrity." Given a choice, he'd choose another path. He says FCA needs a partner and that it's a no-brainer who that partner should be: General Motors. Marchionne acknowledges extreme challenges compared with larger global automakers. Many of them, he says, are because of the financial weakness and years of neglect as Chrysler was coming out of its 2009 bankruptcy. Six years later, it is still feeling the effects, even with Jeep selling at stratospheric levels and FCA overall ringing up over five years of consecutive monthly sales gains in the U.S. Jeep, he says, "is the biggest insurance policy I have because that brand was the best part of Chrysler by a long, long stretch." Analysts agree. They have pegged the value of Jeep at close to 60 percent of FCA's total value after Ferrari is spun off. But to outsiders, including analysts, competitors and potential partners, FCA has issues. Lots of big issues. Even after taking dramatic steps to increase its North American profit margin, including hiking wholesale prices in the U.S., the margin remains well behind those of competitors. • Among 23 cars, crossovers, SUVs, pickups and vans FCA US sells, only three, the Jeep Wrangler, Cherokee and Grand Cherokee, aren't outsold by a segment competitor. • Many of FCA's top-selling vehicles ride on platforms that would be considered out of date at other automakers. An example: The Dodge Charger and Challenger and Chrysler 300 are based on a Mercedes-Benz platform first used by DaimlerChrysler in the 2005 model year. • No single FCA platform underpins more than 1 million vehicles a year, increasing costs. • All FCA platforms are reworks of architectures Marchionne found when he joined Fiat in 2004 and took over bankrupt Chrysler in 2009. To meet crash standards, each new model had to be heavier than its predecessor. That means higher fuel consumption as competitors launch lighter models on new platforms. So over time, the weight disadvantage increases for FCA. • In 2014, FCA's U.S. fleet averaged 21.1 mpg, last among all volume automakers in corporate average fuel economy, trailing full-line leader Nissan by 5.7 mpg. • Today, with the exception of a $1.4 million LaFerrari, you can't buy a hybrid from any of FCA's 11 brands. You can, however, purchase a battery-electric Fiat 500e in California and parts of Oregon, but if you do, FCA will lose about $14,000 on the transaction, according to Marchionne. • While companies such as Toyota, Ford and Hyundai-Kia sell the same products in China, the U.S. and Europe, FCA is still the sum of four regional and marginally interconnected regions, with shrinking sales in economically stricken Brazil and a negligible presence in Asia-Pacific, at least for now. • The group appears to have made no progress in connected car and autonomous driving, which Marchionne calls a Pandora's box of problems. • Finally, of all major global automakers, only FCA has a net debt -- $8 billion. Every other company is in a net cash position. Marchionne acknowledges FCA's challenges. Work to do on hybrids? "Absolutely true." Lower margins? "Absolutely true." As for FCA's billions in net debt, Marchionne said the company still is climbing out of its Chrysler hole, having bought out the UAW's Voluntary Employees' Beneficiary Association with $11 billion in cash and repaid its government loans. It also had to sink billions into modernizing "neglected" factories that it got from Chrysler's previous owner, Cerberus. As for catching up with electrification? It's coming, he said, and largely "from the supplier base." Hybridization will be spread across the lineup, starting next year with the next-generation Chrysler Town & Country minivan. Marchionne said FCA will be compliant with tougher emission standards and will continue to buy greenhouse gas credits as long as it is able. He said: "The emissions standards, the greenhouse gas emissions, CO2, all that stuff we have in the plan, and our portfolio will deliver compliance." ________________________________________ FCA by the numbers Global sales and revenue are on the rise at Fiat Chrysler. Jan.-June 2015 Change from Jan.-June 2014 2014 Change from 2013 Revenue* $63.9 billion 22.30% $110.4 billion 10.90% Unit shipments 2.3 million –0.26% 4.6 million 5.90% *$1.15 to 1 euro exchange rate Source: FCAGroup ________________________________________
Alfa bet
And then, there is his big bet on Alfa Romeo. FCA has committed about $6 billion to a massive engineering project to resurrect the long-neglected Italian performance brand. Alfa Romeo boss Harald Wester has been asked to develop as many as eight new Alfas from scratch and grow a brand that sold just 68,000 vehicles globally in 2014 to 400,000 sales by 2018. The first Alfa from Wester's project is the next-generation Alfa Romeo Giulia that was unveiled in June and will go on sale in 2016. "The big bet, and the one that's by definition the riskiest, is the relaunch of Alfa," Marchionne said. "And that's why I think we've gone underground for as long as we did with the car to make sure that we had a technological proposition for the marketplace that was ... unassailable. "The Germans can all look at this [and say] this is another one of those minestrone solutions. This car is better than a German car. I've been driving German cars all my life. That car technically is better." Still, 400,000 is a big number. "It's a big stretch," Marchionne said. "The fastest recovery of Alfa is going to be out of Europe. I can afford to [miss] by X number of cars in the U.S. and still make it back up in Europe." Alfa "is risky ... because a lot of good people have tried to do this stuff, and by definition not everybody's going to be successful. I think we have put in all the safeguards into that bet that we can, including the fact that I can stop the investment cycle if I want to." The Giulia carries impressive performance numbers but, more important for FCA, rides on a new platform that can be used globally to underpin different rear-wheel-drive cars, crossovers and SUVs for several brands. For example, at a dealer show in Las Vegas last week, Dodge showed a next-generation Charger and a convertible Barracuda that will be developed off the Giulia's platform. Most of those future products -- for Dodge, Jeep, Maserati and Chrysler, as well as Alfa -- are still years away. For now, Marchionne must run FCA as it is and wait to see if his Alfa bet pays off. The Alfa Romeo Giulia's new platform can be used globally.
Regional problems
Waiting for Alfa might prove difficult. Since Fiat and Chrysler's shotgun wedding in 2009, the combined company hasn't seen a quarter when all of its global regions were firing on all cylinders. Early on, the North American Free Trade Agreement area was weak as the automaker dumped billions into its lineup and its factories to restore years of neglect from Chrysler's former owners. But just as North America was turning the corner, Europe collapsed. Now, as Europe stabilizes, Marchionne said FCA is "walking on eggs" because of a potential political vacuum in Brazil, its largest market in Latin America. And in Asia-Pacific and China in particular, sales of its high-end imported Maserati luxury cars are slowing substantially. If he goes it alone, Marchionne's global response plan is simple. It's Jeep, which last year sold over 1 million vehicles for the first time in its history and this year is on track to hit 1.2 million. This summer, workers in Brazil began producing the Renegade subcompact SUV in a massive new plant in Pernambuco. FCA expects the Renegade to drive revenue and profit in Brazil. And later this year, Jeep and Chinese joint venture partner Guangzhou Automotive will begin building Cherokees for the Chinese market. Meanwhile, the Indian market soon will have locally produced Renegades. In the end, it comes down to resources, which is why Marchionne wants a partner. FCA is still in a financial hole. "All the money that I make now is a question of rebuilding equity," said Marchionne. "If I went to the public market and I raise 10 billion, 15 billion, debt levels would go down. But I've got a significant shareholder [the Agnelli family] who's got a 30 percent stake in FCA. "If I went to him," Marchionne said, "and I said, 'By the way, let's go out there and raise 20 billion so I can cure all those ills,' he's going to look at me and say, 'That's really nice, but ... ."
La famosa presentazione di Marchionne sui vantaggi di una fusione tra grandi case continua a far discutere il mondo dell´automobile, Automotive news sta pubblicando diverse inchieste spiegando le criticita´e i vantaggi delle proposte del ceo di FCA. Gli articoli sono diversi, tutti molto interessanti e cerco di riassumere il succo. Marchionne non ha proprio riununciato a stanare Gm, anzi ammette di fare un vero e proprio stalking, la dirigenza Gm e´sempre piu´gelida ma il maglionato continua a cercare alleati tra gli analisti, fondi, manager e azionisti. Stretto dalle domande degli analisti Marchionne ammette che FCA avrebbe grossi problemi di finanziamento e non raggiungerebbbe i target previsti, puo´continuare ad andare avanti da sola ma non prosperare e i 32 miliardi di dollari nella cassa di Gm gli farebbero molto comodo. Jason Stein, capo redattore di automotive news, svela che i contatti tra le due aziende sono continuati con Gm che ha sempre rifiutato ogni discussione. Le due aziende hanno profonde differenze sui vantaggi di una fusione con Mary Barra che ha detto: "Perche´dovremmo salvare FCA?". Marchionne ha dichiarato di essere pronto a rimanere in sella fino al 2020, se necessario. La sfida rimane molto interessante.
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