Analysts and investors doubt Fiat Chrysler’s new business plan

Article by Christian A., on May 12, 2014

Five years ago, Chrysler Group unveiled plans to significantly increase sales. The plan had a lot of doubters, who thought Chrysler “were on some serious hallucinogenic drugs," remarked Reid Bigland, the carmaker’s chief of sales operations in the United States. But Chrysler proved those doubters wrong by achieving most of its targets.

Fiat Chrysler Automobiles -- a merger between the group and the Italian carmaker – recently unveiled a new five-year business plan. Again, a lot of people don’t believe that Fiat Chrysler would not be able to hits targets and accomplish its plan.

That resulted to Fiat shares dropping so sharply in Italy after the plan was announced, even prompting trading to be halted briefly the next day. The skepticism in the new business plan has also prompted chairman John Elkann and chief executive Sergio Marchionne to each purchase over 130,000 shares as a show of confidence.

While analysts were amenable to the direction of the plan, they think that its financial and sales projections were too optimistic. Jeff Schuster, senior vice president of forecasting for LMC Automotive, remarked to Automotive News that the things that Fiat Chrysler want to do and the risks it wants to take “all make sense” to him.

He, however, said that he has trouble with the numbers that Fiat Chrysler placed on its plans, saying that they were “too ambitious." Even Marchionne admitted that parts of the business plan depend on "near-perfect execution."

Analysts from IHS Automotive, however, wrote in a report last week that Fiat Chrysler’s recent product launches "have been anything but 'near perfect.' Fiat Chrysler’s CEO remarked that the carmaker can decrease some investments if vehicles are not received as well as expected.

The IHS analysts said that while that strategy could the carmaker from getting into trouble financially, it also means that its aggressive business plan “could see delays in execution and may not meet aggressive sales targets as quickly as outlined."

The plan calls for Fiat Chrysler to hike its annual global sales by 59 percent to 7 million by 2018.

If you liked the article, share on:

Comments

Recommended

Are you a big fan of legendary boxer Mike Tyson, the former heavyweight world champion? Or are you a big fan of the iconic Ferrari F50? Either way, you will...
by - February 24, 2017
It seems that AM-RB 001 hypercar is not the only vehicle project that Aston Martin and Red Bull Racing has gone into. This time, don’t expect something as outlandish as...
by - February 24, 2017
The year 2018 marks the golden anniversary of Subaru of America. Of course, the company will celebrate 50 years of being at the helm of the brand’s crusade in North...
by - February 24, 2017
During car crashes and accidents, there are times that its occupants can’t get out easily. There are times when the only way to get out of that situation is to...
by - February 23, 2017
Could this be a special version of Ferrari’s much acclaimed LaFerrari? No matter how we look at it, the patent images for this sports car from Ferrari indicate its striking...
by - February 23, 2017
Facebook

Youtube Channel

Tip Us
Do you have a tip for us?
Did you film an important event?
Contact us
Newsletter
Subscribe to our newsletter!
Subscribe
Galleries