It's quite apparent that Fiat Chrysler Automobiles NV isn't like many, if any, other automakers in the world. The seventh-largest automobile manufacturer -- a marriage of Fiat SpA and Chrysler Group LLC -- has defied odds and critics from Italy to Auburn Hills, Mich. And on Tuesday, the company took over the automotive world by releasing an extremely detailed 2014-2018 business plan.
DETROIT, MI- It’s quite apparent that Fiat Chrysler Automobiles NV is unique.
The seventh-largest automobile manufacturer – a marriage of Fiat SpA and Chrysler Group LLC– has defied skeptics and critics from Italy to Auburn Hills, Mich. And on Tuesday, the company took over the automotive world by releasing an ambitious 2014-2018 business plan.
“To anyone asking what gives us confidence in the achievement of the plan, the answer is simple: We’re different,” said Fiat CEO and Chrysler CEO and Chairman Sergio Marchionne during an event detailing the plan, which was partially livestreamed online.“We’re fundamentally different. And we’re a different group than we were just a year years ago. And we are also fundamentally different than our competitors.”
Marchionne, when ending the FCA Investor Day 2014, outlined numerous elements that he feels sets FCA apart – from its leadership melting pot to the culture and business operations that Marchionne has instilled in Chrysler since taking the helm in 2009. He went as far to say that the new company is "significantly more than the sum of its two predecessors."
Highlights of the five-year plan include dozens of new, refreshed or significantly redesigned vehicles; global expansion of Jeep; relaunching Alfa Romeo; aggressive production increases; driving vehicle sales up 60 percent to 7 million by 2018, including 3.1 million for North America; and a host of other plans that the company ultimately hopes will increase its net profit five-fold to around 5 billion euros ($6.97 billion) by 2018.
Chrysler Group LLC Chairman and CEO Sergio Marchionne speaks to investors at the automaker's world headquarters in Auburn Hills, Mich., Tuesday, May 6, 2014. Fiat Chrysler Automobiles NV unveiled its business strategy for the next five years as it prepares for life as a newly merged company. (AP Photo/Carlos Osorio)“Sergio Marchionne's aggressive five-year plan reflects his long-standing goal of creating a powerful global automaker,” said Karl Brauer, Kelley Blue Book senior analyst. “The combined Fiat Chrysler Automobiles group can now coordinate its total reach, while allowing each brand to focus on specific goals.”
Much of FCA’s planned growth through 2018 is expected to come from its Asia region, where it looks to grow sales 40 percent to 1.1 million units, and North America, where it aims to top 3.1 million in sales.
Fiat CFO Richard Palmer also said by 2018 the company expects to sell 7 million vehicles globally, a 60 percent increase from last year; revenues to grow to 132 billion euros ($183.8 billion), up from 87 billion euros ($121.1 billion); and net income to jump to more than 5 billion euros ($7 billion), up from roughly 1 billion euros ($1.4 billion) last year.
“We are projecting margin improvements in all regions and business segments,” Palmer said during a presentation, which was webcast in connection to the company’s first-quarter earnings.
The five-year plan, which the majority of companies would never release to the public, is something many in the automotive industry wouldn't have thought was possible when Chrysler was left for dead in 2008-2009. Now, some are thinking the same about the current plan. Fiat shares dropped about 9 percent during Wednesday morning trading, as some analysts questioned whether it could achieve the targets.
But at least for right now, Marchionne and his team seem to have righted the ship with a five-year map of where they want to go. Staying course will be the ultimate challenge though.
"These changes won’t happen overnight, and the long-term success or failure of Marchionne’s plan might take a decade or more to assess, but today marks the beginning of a new direction for Chrysler that should prove fascinating to watch either way,” Brauer said.
So what exactly does all this mean for FCA, including Chrysler's legacy brands? Here’s a look:
- Jeep: It’s the key brand for FCA’s plans through 2018. Amid a global expansion, the company expects Jeep sales to more than double worldwide to 1.9 million by 2018.
For the U.S., FCA plans to resurrect the Grand Wagoneer in 2018; the Jeep Patriot and Compass for a new C-SUV in 2016; launching the next-generation Wrangler and Grand Cherokee in 2017; and refreshing the new Renegade small SUV, Cherokee compact SUV and Grand Cherokee by mid-2017.
- Chrysler: FCA plans to double the amount of vehicles for the brand by 2018.
View full sizeA slide outlining Fiat Chrysler Automobiles' five-year plan for the Chrysler brand vehicles through 2018.
Currently, the Chrysler brand only offers the Town & Country minivan and the 200 mid-size and 300 full-size sedans. Through 2018, the company plans to launch a new compact “100” sedan and unnamed mid-size and full-size crossovers. The new sedan is planned for 2016. The mid-size and full-size crossovers are planned for 2018 and 2017, respectively.
FCA also plans to launch plug-in hybrid electric versions of its Town & Country and full-size crossover by 2016 and 2017, respectively. A refreshed version of its recently launched 200 is also expected in 2017.
- Dodge: The century-old brand is the only North American brand to decline from 2013 through 2018 -- forecasted to be down 10 percent to 660,000 vehicles sold.
Dodge’s decline is expected to be from the company positioning it as a performance brand, which means discontinuing its best-selling Grand Caravan minivan and Avenger midsize sedan.
FCA plans to add two more high-performance SRT models and drop the Grand Caravan minivan from the lineup. Dodge, according to the plan, will also add a small “B-sedan/hatch” to its lineup in 2018, followed by next-generations of its Challenger and Charger later that year.
- Ram: FCA expects the Ram Truck brand to increase sales 34 percent from last year to 620,000 vehicles in 2018, according to a new five-year plan announced today from the automaker.
View full sizeA slide outlining Fiat Chrysler Automobiles' five-year plan for Dodge brand vehicles through 2018.
The 2014-2018 plan includes building on significant growth in the U.S. and minor and major updates of its light-duty and heavy-duty pickup trucks.
The hot-selling Ram 1500 is expected to get a minor update next year, followed by a major update in 2017. The Ram heavy-duty is planned to follow suit with a minor update in 2016, and a major update in 2018.
- Fiat: The Fiat brand plans to expand its global operations, including the addition of a 500X crossover this year and an unidentified specialty vehicle for North America.
- SRT: Effective immediately, the SRT brand is now included in the Dodge brand.
- Alfa Romeo: FCA will spend billions to revive the brand with eight new cars and crossovers by 2018.
- Maserati: Maserati sales are expected to increase nearly five-fold by 2018, according to the plan. Sales of the exclusive Italian luxury brand, according to a new five-year plan released today, are expected to jump from 15,400 units last year to 75,000 in 2018.
- Ferrari: FCA said annual Ferrari sales could rise from 7,000 to 10,000, but the company wants to continue capping production “to preserve the brand’s uniqueness.”
Fiat SpA completed its acquisition of Chrysler on Jan. 21 after agreeing to pay $4.35 billion to the UAW Retiree Medical Benefits Trust, which owned 41.5 percent of Chrysler as part of the 2008-2009 auto bailout.
Editor’s note: Automotive reporter Michael Wayland covered FCA's five-year plan remotely through online presentations.