New Fiat Chrysler five-year business plan to focus on execution

Article by Christian Andrei, on May 6, 2014

The new business plan of chief executive Sergio Marchionne for the Fiat Chrysler group will rely on Jeep, Alfa Romeo and Maserati becoming global brands. Marchionne is set to unveil Fiat Chrysler’s five-year business plan on May 6, which should show the newly merged company can "go on the attack against the giants" in the auto industry.

This time, the US-Italian carmaker will focus on execution, after repeatedly missing sales targets due to delayed investments and making some bad styling decision. Investors are aching to see how Marchionne would be able to hike sales by over a third to more than 6 million vehicles by 2018 as well as how and when the CEO would compete against larger carmakers like Toyota Motor Corp, General Motors Co and Volkswagen.

Stephanie Brinley, a senior analyst at researchers IHS Automotive, told Reuters that Fiat Chrysler has to stop saying it will do it, adding that what is lacking is the execution of the plans. Jeep is currently the best weapon that Fiat Chrysler has, having ready products and being a global SUV brand.

To achieve sales targets and boost margins, Marchionne will have to start building Jeep SUVs not only in Europe but also in fast-growing markets like Brazil and China. In fact, Fiat Chrysler will commence building the Jeep Renegade compact SUV in Italy later this year and in Brazil in the next.

The Renegade - the brand's first model to be built exclusively outside the US – is considered as vital for achieving an overall sales goal of 1 million vehicles this year, representing a 37-percent surge over 2013. Even analysts who described the sales target ambitious agree that Jeep is the only truly global brand that Fiat Chrysler has and represents its best opportunity to expand in Asia.

Fiat Chrysler's joint venture in China also has plans to build three Jeep models locally, with the first one arriving in late next year. On the other hand, Marchionne intends to overhaul the luxury Maserati and upmarket Alfa Romeo marques by building them into global brands and boosting their positions in the high-margin market for premium cars. The CEO is expected to pledge at least six new Alfa models under the plan.

The models would include premium-priced sedans and SUVs, the first of which will arrive in early 2016. Marchionne believes Alfa could deliver the global profile that volume brand Fiat couldn’t.

He also believes that Alfa could deliver more sales than Maserati. Analysts, however, Marchionne will need considerable time and billions of euros to outcast Alfa’s weak quality reputation.

Fiat had repeatedly tried to revive Alfa, and those efforts left behind just three models as sales continue to drop by over half over the past decade to 74,000 units in 2013.

The future of Alfa will be crucial to Fiat’s survival in the harsh European market. A success would allow Fiat Chrysler to fully utilize plant capacity in Italy and reinstate thousands of workers currently under temporary layoff schemes. Maserati, meanwhile, saw its trading profit tripled and deliveries doubled in 2013. [source: Fiat]

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