Sergio Marchionne says US incentive spending is not out of control

Article by Christian Andrei, on January 15, 2015

Sergio Marchionne, chief executive of Fiat Chrysler Automobiles NV as well as FCA US, believed that incentive spending in the United States has not gotten out of control. He said that he believed that the auto industry as a whole is healthy and there is no need to sacrifice profits just to gain market share – just like before the financial collapse of Chrysler and General Motors in 2009.

He noted that there are two signs that indicate the state of health of the industry -- incentives and inventory levels. “We’re miles away from 2009,” he quipped. Marchionne also said that that the auto industry may have, on some instances, over-reacted on recalls. He said that in a lot of ways, the “all-encompassing issue to the airbag issue may have been overkill.”

FCA’s top honcho said the National Highway Traffic Safety Administration and the auto industry will be able to find an equilibrium over the next 12 to 18 months. He, however, said that that the costs incurred for the recalls will be ultimately passed on to consumers.

In late 2014, FCA expanded its regional recall of some vehicles fitted with Takata airbags to a nationwide one, despite claiming that its own testing and the reported incidents only discovered issues in areas of high, sustained relative humidity.

On the other hand, Marchionne said during his press conference at the Detroit auto show that the car will take “a very hard look” on whether there is need to shift the production of the Wrangler away from its Toledo site because the plant’s workers built over half of the record one million Jeeps that FCA sold globally in 2014.

“It’s something that cannot be ignored,” Marchionne remarked. He even called the Jeep sales record and the record output in Toledo a “huge accomplishments” for the carmaker and its employees. Marchionne confirmed plans to meet with Ohio Gov. John Kasich and Toledo Mayor D. Michael Collins over the future of Wrangler output in Toledo. He, however, noted the money issue since keeping Wrangler production in Toledo requires a large investment.

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