Fiat Chrysler CEO Sergio Marchionne’s plan to rid the automaker of its $7.65 billion in debt and triple net income to 5 billion euros by 2018 is unrealistic, automotive industry experts told Bloomberg Monday.
Marchionne’s plan to turn FCA’s business around will be his final task before he retires in 2018. The 63-year old hopes to invest 48 billion-euro (about $52 billion) in new product as FCA works towards increasing deliveries by 2.4 million units in three years, however analysts aren’t convinced it’s feasible.
“Ambitious is not really an adequate word to describe it; ‘Fantasyland’ might be more appropriate,” Max Warburton, an analyst at Sanford C. Bernstein Ltd., told Bloomberg. “We would dearly love to see Marchionne leave on a high, but right now it’s hard to envisage quite what the glorious exit to this extraordinary career is going to look like.”
Marchionne’s plan seems especially formidable when you consider that formerly strong automotive markets like China, Brazil and Russia are currently amidst an economic downturn. The CEO had relied heavily on China to help grow its Alfa Romeo brand, however the automotive market there has since fallen off, forcing Marchionne to invest more heavily in stronger brands like Jeep.
According to IHS data, FCA will likely approach 5 million units sold by 2018, much less than the 7 million figure Marchionne is hoping for. He had also hoped to generate $5.1 billion to $5.9 billion on profit by that time, however analysts place FCA’s 2018 net income at just $3.57 billion.
But Marchionne isn’t letting the negativity get in his way. The Italian-Canadian businessman told Bloomberg in an interview that analysts have previously under projected the automaker’s performance and that they are wrong this time around, too.
Analysts never got it right with our estimates,” Marchionne said.“We’ll prove step after step we’ll get there.”