Editor's note: An earlier version of this report incorrectly stated the type of adjusted earnings projected in 2022 by Fiat Chrysler. Is has been corrected.
BALOCCO, Italy -- Fiat Chrysler Automobiles focused on expanding the Jeep, Alfa Romeo, Maserati and Ram brands in CEO Sergio Marchionne's latest strategic road map presentation unveiled here Friday.
"These brands comprise the most significant portion of our revenues and our earnings," Marchionne told analysts and journalists, adding that FCA will be cash flow positive by the end of June.
FCA will phase out production of all diesel passenger cars in Europe by 2021 while investing 9 billion euros ($10.5 billion) in electrification through 2022. "This is a systemic change" in the automotive market, Marchionne said.
The company sees diesel technology as increasingly challenged by both regulation and consumer attitudes, and of declining importance. FCA was serious about pushing hybrid and electric cars to ensure the automaker remains compliant with emissions rules, Marchionne said.
FCA said it will spend about 45 billion euros on capital investments as it tries to harness an evolving automotive market place driven by electrification, connected services and self-driving cars.
Helped by strong growth from Jeep and expansions of Alfa Romeo and Maserati, FCA expects adjusted EBIT to rise to between 13 billion and 16 billion euros by 2022, up from about 6.6 billion in 2017. The 2017 figure excludes the Magneti Marelli parts unit that Fiat Chrysler plans to spin off at the beginning of 2019. Margins are expected to rise to between 9 percent and 11 percent from 6.3 percent in 2017.
The company expects sales to grow by around 7 percent each year on average. It targets a dividend payout ratio of around 20 percent throughout the plan, expecting to pay out a total of around 6 billion euros over the next five years.
The Friday presentation marked 14 years to the day since Marchionne took the helm at a struggling Fiat SpA on June 1, 2004. Marchionne was hired in the dramatic hours after the death of Chairman Umberto Agnelli when Fiat was on the brink of bankruptcy.
The long-term fates of mass-market brands Dodge, Fiat and Chrysler remained unresolved, with no specific product presentations offered. A company spokeswoman said Thursday that those brands would not be fully eliminated.
Here are some key points from FCA's presentations:
Alfa Romeo plans to revive its 8C supercar and GTV sports car in a bid to reboot the storied Italian sports-car maker that has failed to meet ambitious growth targets in the past. The brand will also launch two news SUVs, drop diesels and focus more on China by introducing long-wheelbase sedans as its seeks to increase annual sales to 400,000 by 2022.
Alfa's new 8C will give the brand an "aspirational" supercar while the GTV will be a sports car that is as attainable as well as aspirational, said Tim Kuniskis, the brand's head. The 700-hp car will have a carbon fiber chassis and a twin-turbocharged mid-engine. It will accelerate from 0 to 100 kph (62 mph) in 3 seconds.
The GTV will have a 600-hp engine and seating for four people. It will feature all-wheel drive with torque vectoring.
Alfa’s future models include a compact SUV and a large SUV, expanding the SUV range to three beyond the current Stelvio. Kuniskis said it is important for Alfa to be able to "compete in two key segments where we have no presence today."
Maserati will add a midsize SUV and an Alfieri coupe/cabrio to its product lineup as part of its plan to double vehicle sales to 100,000 by 2022.
The Alfieri sports car, a rival to Porsche's 911, was first revealed at the 2014 Geneva auto show but has faced delays ever since. The full-electric Alfieri coupe will reach a maximum speed of more than 300 kph (186 mph).
The Alfieri will be a halo car for the brand, capturing years of Italian design, said Kuniskis, who heads both Maserati and Alfa Romeo. It will have three powertrains including a plug-in hybrid. The fastest version will accelerate from 0-100 kph in 2 seconds, Kuniskis said.
The new midsize SUV will be positioned below the Levante. It will have a best-in-class lightweight platform, 50-50 weight distribution, superior ride and handling and a best-in-class power-to-weight ratio, Kuniskis said.
FCA announced aggressive targets for expanding Jeep, which has become the company's ticket to create a high-margin brand with a global appeal. Jeep will launch nine new products, enter three new segments including large SUVs.
Jeep plans to expand its global lineup into the smaller A-segment market. It will broaden its portfolio in North America with a new three-row version of the Grand Cherokee, as well as a return of the Wagoneer and Grand Wagoneer.
The brand will electrify all vehicles in its portfolio in some fashion by 2022, with 10 plug-in hybrid versions and four full-electric models by 2022. Jeep will stop selling diesel vehicles in Europe.
It said it expects one out of every 12 utility vehicles sold industrywide by 2022 to be a Jeep, but stopped short of giving a precise sales goal. The brand over the long term aims for 20 percent of the global utility market.
FCA's Ram truck unit aims to grow global sales by up to 30 percent and in doing so become the No. 2 commercial vehicle brand in North America. It will bring a production model of its 2015 Ram TRX off-road pickup to market to take on the popular Ford F-150 Raptor, Ram brand head Mike Manley said. The move is intended to aid Ram’s average transaction price, which lags major competitors from Ford and Chevrolet largely because of the age of the old model Ram 1500 pickup.
The brand also hopes to improve its pricing with the introduction in 2019 of a new Heavy Duty version of its Ram pickup, which will significantly update the technology of its existing line. The current Heavy Duty Ram transacts at an average of $50,000, about even with Chevrolet, but far below the $56,000 average enjoyed by Ford in the segment, Manley said.
Brand boss Mike Manley also promised that Ram would enter the midsize pickup race soon, joining the Chevy Colorado/GMC Canyon and the return of the Ford Ranger. He did not say if the new midsize pickup would revive the Dakota nameplate used when pickups were under the Dodge brand.
On the commercial van side, FCA will bring a new version of the Ram ProMaster City, its small commercial van, by 2022, but will leave the current larger ProMaster commercial van, without a significant update, Manley said.
U.S. finance unit
Chief Financial Officer Richard Palmer said Fiat Chrysler plans to form a captive financial unit in the U.S. The company has an option to buy out its existing partner, Santander Consumer USA Holdings, and has initiated discussions, Palmer said. Such a move could add $500 million to $800 million in incremental pretax earnings within four years, he said. Fiat could also start its own business, in which case the company envisions about $100 million in incremental profit.
A captive finance unit will allow Fiat Chrysler to “participate more fully in capturing value from emerging platforms,” Palmer said, for example by securitizing vehicle fleets and offering access to service providers on a per-mile basis.
Santander Consumer issued a statement saying it will hold a conference call to discuss the matter at noon New York time.