As fragile as Fiat Chrysler Automobiles has appeared to be in recent years, on Friday the company laid out a determined and doable strategy for the post-Sergio Marchionne era — one that should position it to be a highly profitable, stand-alone automaker for the foreseeable future.
That's a far cry from where FCA stood in May 2014, when it last presented a five-year business plan. Then, analysts scoffed at financial projections for 2018 — projections the company is now on track to hit.
And it's a world away from where the company was in November 2009, shortly after Fiat assumed control of a bankrupt Chrysler and presented a plan that would resurrect a company left for dead.
Analysts are no longer scoffing.
"What they presented today really does feel like it builds on what they've accomplished in the last five years," said Stephanie Brinley, principal automotive analyst with IHS Markit who attended the Friday, June 1, presentation in Balocco, Italy. "They are aggressive, but there's logic behind the targets. The difference between today and 2014 is that FCA is done now needing to set up for an IPO, and done with proving that they can do the things they need to do" to survive independently.
Last week, FCA said it could achieve adjusted earnings before interest and taxes of between 9 and 11 percent by 2022, compared with 6.3 percent adjusted EBIT in 2017. And it said that it would end this month with more cash on hand than debt on its books for the first time since what ultimately became FCA was jammed together almost a decade ago.
Unlike previous five-year plan presentations, CEO Sergio Marchionne and top lieutenants provided few specifics on product timelines, powertrain offerings and volumes. And they had to address persistent criticisms of their previous plans for neglecting how the company would compete in fledgling technologies such as electrification and autonomous driving, and in other industry experiments such as subscription models.
CFO Richard Palmer — seen as a potential CEO when the 65-year-old Marchionne retires in early 2019 — painted a detailed picture of how FCA would remain profitable even if auto sales in North America or globally plunge 20 percent, marking a sharp departure from Chrysler's historical susceptibility to U.S. market downturns.