No Sale: FCA Not Negotiating with Chinese Nor Willing to Sell Off Jeep, Says Marchionne

Exec plans to release his final 5-year plan this quarter and then name his successor.

by on Jan.15, 2018

Marchionne plans to reveal his successor a few months from now but confides no women are in the running.

Fiat Chrysler Automobiles isn’t open to selling off its Jeep brand nor has it fielded any offers for a complete takeover by a Chinese company, FCA Chief Executive Sergio Marchionne said during a media roundtable at the North American International Auto Show in Detroit on Monday.

Marchionne said he wanted to clear up reports that have, in recent months, suggested Fiat Chrysler was up for sale – or that it was willing to let go of some key assets, such as the Jeep or Ram brands. But the executive did not rule out a closer relations with GAC, the Guangzhou-based automaker that serves as its partner in the Chinese market.

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“Without them we could not have gone as far as we have in China,” said Marchionne, who stressed “We are not going to break up (the company and) we are having no discussions with anyone in China interested in acquiring us.”

Where the relationship with GAC might go is still up in the air, however. The Chinese carmaker staged its own news conference at the 2018 NAIAS, announcing its intent to enter the U.S. market during the fourth quarter of 2019. But there are obstacles ahead, as other ambitious Chinese manufacturers have learned in the past. Not the least is a lack of an American dealer network.

"Maybe our horse doesn't smell as bad" as (Wall Street investors) once thought.

GAC officials said they view FCA as “a mentor that can help us,” adding that “there are long-standing feelings of trust” between the two companies.

Marchionne’s media roundtable covered a wide array of topics, ranging from the Trump Administration to the FCA executive’s upcoming retirement.

(GAC plans to be first to sell Chinese-branded vehicle in the U.S. Click Here for the story.)

Marchionne praised the new tax plan which, he said, will save the company about $1 billion. In a “patriotic” move, FCA returned a chunk of that to U.S. employees, around 60,000 of whom will each get $2,000 bonuses.

But Marchionne, who was raised in Canada, was far less positive when asked about the White House push to renegotiate the North American Free Trade Agreement. “I sincerely hope some of the remarks being pushed by the administration will be retuned,” he said.

In particular, he was critical of plans that would effectively reduce the flow of components across the old U.S., Canadian and Mexican borders. And Marchionne said the administration should feel that it has achieved some of its goals as a result of FCA’s decision to move production of its heavy-duty Ram pickup from a plant in Saltillo, Mexico back the U.S.

Much of the hour-long discussion explored the many changes sweeping through the auto industry, including technologies like autonomous driving and electrification. “It will take longer than expected,” to get many of those technologies into production, he cautioned, Marchionne again questioning just how much of a foothold battery-cars will gain in the U.S.

As to the surge in sales of SUVs and other light trucks – which captured almost two-thirds of the U.S. market last year, Marchionne said, “We made the right call three years ago by trying to disentangle ourselves from the passenger car market.”

Notably, FCA dropped two key sedan models, the Chrysler 200 and the Dodge Dart, retooling their factories to build new Jeep SUVs and Ram pickups. Marchionne did say FCA isn’t walking away from sedans and coupes, entirely, however, stressing that it did have a plan to keep the performance-oriented Dodge brand alive with future iterations of models like the Challenger and Charger.

As he approaches his 15th anniversary with the Fiat side of FCA, and nearly a decade since helping pull Chrysler out of bankruptcy, Marchionne is getting ready to announce his final five-year plan before retirement. It will continue to push for the revival of the Italian-based Maserati and Alfa Romeo brands. While Maserati’s turnaround is reasonably well along, Marchionne cautioned, Alfa’s is “still in the nursery, not even in nursery school yet.”

The brand has had some initial success since its returned to the market with the first few new models. It’s first-ever SUV wound up as a finalist for North American Utility Vehicle of the Year – though the award, announced Monday morning at the opening ceremony for this year’s Detroit Auto Show, wound up going to Volvo for its new XC60 crossover-utility vehicle.

(Click Here for more FCA’s $1B investment to bring truck production back to Michigan from Mexico.)

Marchionne said he hopes to wrap up his career by putting FCA on track to deliver $9 billion in operating profits for 2018, and after-tax earnings of $5 billion. He also declared that FCA should hit one of his biggest targets by eliminating its debt by the end of 2018, “and possibly as early as June.

FCA, under Marchionne, has been unusually open in laying out its business strategy, though he said it would be ridiculous to believe it might not need to make mid-course corrections – pointing to the unexpected surge of SUV sales during the last two years.

The new plan will be put in place this quarter. Implementing – or revising – it will be up to his successor, Marchionne saying he and the FCA board will announce the next CEO soon afterwards. Who might that be? He offered only a few hints, saying that the next five-year plant was put together by a selection” of senior managers at FCA, adding that “My successor will come out of those ranks.”

“I hate to disappoint,” he continued, but considering those now on his first-tier management team, “It will be a male.”

Among the Detroit automakers, FCA has the lowest number of females in its senior ranks. It will be up to the next CEO to address that issue at a time when rival General Motors is now headed by a woman and has an assortment of female execs in senior posts.

But while some might be disappointed that there are no women on the FCA fast track, Marchionne and FCA have been earning kudos from investors who made the company’s stock the fastest-growing of the Detroit Big Three last year.

(To see more about Fiat Chrysler’s redo of the Ram 1500, Click Here.)

“I think what you’re saying,” said the executive, “is the (stock) market is recognizing that maybe this horse doesn’t smell as bad as it looked.”

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