Fiat Chrysler Automobiles NV (FCA) new CEO, Mike Manley, is now faced with the challenge to execute his predecessor’s plan to increased production of SUVs and catch up on electric cars to be sufficiently competitive in the absence of a merger.
Jeep division head Manley was appointed on Saturday to succeed longtime Chief Executive Sergio Marchionne, who is among the industry’s most tenacious and respected automobile company leaders. Marchionne fell seriously sick after some complications following a surgery.
Marchionne was previously already due to step down next year in April, but shares will potentially react to the news of his health crisis on Monday. The stock finished at 16.42 euros on Friday.
Fiat Chrysler Automobiles NV (FCA) stated that Manley, British-born, would pursue the strategy that Marchionne outlined last month.
FCA has promised to increase production of sport utility vehicles as well as invest in hybrid and electric cars to double the operating outfit by 2020. It also unveiled bold targets for Jeep. Such targets have become FCA’s ticket to creating a high-margin brand with worldwide appeal.
Meanwhile, according to analyst, choosing the 54-year-old Manley sent a vivid message that FCA was staying on course and would keep the Jeep brand at the core of its growth strategy. Under Manley, Jeep’s sales have grown fourfold.
“Manley knows that his primary focus is on execution and that, already, he has a strategy into which his team has bought,” stated George Galliers, who is an analyst at Evercore ISI. “There is no reason the 2020 plan cannot be executed.”
Under Manley’s watch, the company is expected to improve its focus on revamping individual brands. This includes the struggling Fiat in Europe, Chrysler in the United States, and Alfa Romeo, which is still being awaited to turn a profit despite multibillion-euro investments.
Marchionne is widely credited with rescuing Fiat and Chrysler from the edge of bankruptcy. He had focused on fixing FCA’s finances first, remarkably deleting all debt.
He was considered to be a gift to investors, which include Italy’s Agnelli family, through 14 years of canny dealmaking. Fiat’s value grew 11 times, supported by spinoffs of tractor maker CNH Industrial NV and Ferrari NV. The Agnellis still possess controlling interest in all three companies.
However, Marchionne’s track record of solving some of FCA’s brands was mixed with repeatedly delayed investment and product launches.
The company’s profitability in Europe is only slowly recovering, while it still has yet to make substantial inroads in China. The company depends on North America for three-fourths of profits even as the market is expected to come off its peaks.
“FCA needs to fix the volume brands before it’s too late and make them appealing again… Manley is the right man for that job,” stated Felipe Munoz, who is an automotive analyst at JATO.
Marchionne had supported industry mergers to share the cost of manufacturing electric, hybrid, and self-driving cars, but ultimately quit the quest when General Motors Co, which was his preferred target, rejected the offers.
FCA stated on Saturday that Manley would execute the new plan to ensure a “strong and independent” future for the group.
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