Fiat Chrysler CEO Marchionne Outlines Strategy for GrowthMark Clothier and Tommaso Ebhardt
Sergio Marchionne, chief executive officer of Fiat SpA and Chrysler Group LLC, will lay out his plans at an investor day in Auburn Hills, Michigan, tomorrow for the automakers through 2018.
After successful turnarounds of each -- outlined in audacious five-year plans -- he’s looking toward integration and growth of what later this year will become Fiat Chrysler Automobiles NV. While falling short of volume targets, Marchionne has stuck to these strategic actions, so investors and other stakeholders including dealers and union leaders will be watching closely for how the new company aims to compete.
Investors will have limited chances to ask Marchionne for details about the plan before or after first-quarter financial results come out tomorrow. Here are seven key topics that are likely to come up:
1. Getting Bigger.
Combining Fiat and Chrysler gave the company “the credentials to be at the table.” When and how will the new Fiat Chrysler be able to compete globally with Toyota Motor Corp., General Motors Co. and Volkswagen AG, which are twice its size? Does Fiat Chrysler need to add a partner in Asia, and, if so, which might be best?
2. China Plans.
Fiat Chrysler is just now laying the groundwork to grow in China, the world’s largest vehicle market, with the Jeep-making agreement with Guangzhou Automobile Group Co. How else can the company add capacity and brands in China?
3. Growing Jeep.
Jeep, with its Renegade entry-level model and plans to resume production in China, is becoming a global brand and may reach 1 million sport-utility vehicle sales this year. What is the vision for Jeep in 2018 and how big can it be?
4. Defining Dodge.
The Dodge and Chrysler brands are still amorphous and, in Chrysler’s case, in need of more product. How will those brands be differentiated from each other and strengthened to attract car shoppers from Ford, Toyota or Hyundai?
5. Alfa’s Ascension
Alfa Romeo is developing a new line of rear-wheel-drive sedans and SUVs to take on BMW, Mercedes-Benz and Volkswagen AG’s Audi. How will the Alfa brand be positioned against the German luxury stalwarts? Will the new Alfa still have a place for the MiTo and Giulietta hatchbacks, which accounted for 99 percent of sales last year?
6. Europe Losses
Last year’s operating loss in Europe was trimmed to 520 million euros ($722 million) from 737 million euros in 2012 mainly through cost cutting. How will Fiat Chrysler end losses in the region and fill underutilized Italian plants with re-hired workers assembling new models?
All of this growth and brand building is going to cost money -- for tooling, capacity, platforms, engines and marketing -- as much as 13 billion euros a year, according to Max Warburton, an analyst at Sanford C. Bernstein Ltd. What are the most preferable options for raising money: Offering new shares, issuing a mandatory convertible bond or another alternative? Under what circumstances would Fiat Chrysler sell assets or shares in a unit such as supercar-maker Ferrari?