Fiat Chrysler CEO Sergio Marchionne wants his recently merged nine-brand automaker to more than double vehicle sales and operating profit by 2018, but financial analysts doubt there will be enough cash available to fund double-digit - and in some cases triple-digit – volume growth at eight of the marques over the next five years. They believe Marchionne will need a leaner portfolio for his plan to work.
"If it was not for Brazil, where it is the No. 1 brand, Marchionne should simply kill the Fiat brand," Philippe Houchois, a London-based auto analyst at UBS told Automotive News Europe. Said Arndt Ellinghorst of consultancy International Strategy & Investment in London: "I still think it could be Dodge or Chrysler, but not Dodge and Chrysler."
Marchionne and his team unveiled Fiat Chrysler's five-year plan last month. The key targets for 2018 include: boosting sales 60 percent to 7 million; increasing revenue to about 132 billion euros from 93 billion euros expected this year; and improving operating profit to a range of 8.7 billion euros to 9.8 billion euros from a 2014 goal of 3.6 billion euros to 4.0 billion euros. Analysts consider all three goals beyond Fiat Chrysler's reach, especially since it will carry a net debt of more than 10 billion euros until at least the end of 2016. Fiat Chrysler also must cover costs associated with 55 billion euros of self-financed investments during the plan period.
Marchionne expects to reach the lofty 2018 goals by: more than doubling of Jeep’s global sales to 1.9 million; boosting sales in China fivefold; and turning struggling Alfa Romeo into a sought-after global premium brand with eight new models and annual sales of 400,000 – up from 74,000 last year. Marchionne is betting 5 billion euros on his fourth relaunch bid for Alfa, which has failed to turn a profit during his 10-year tenure at Fiat.