In 2014 Fiat Chrysler CEO Sergio Marchionnne laid out an ambitious five-year sales plan that entailed boosting global sales 59 percent to 7 million units annually by 2018. Marchionne says the goal is still “achievable,” but according to Automotive News, investors aren’t convinced.
FCA has dealt with a whirlwind of problems in the past year, from safety issues and recalls to an investigation by the Securities and Exchange Commission and the Justice Department into how it reports sales. Negative headlines are no doubt turning away a customer or two and with Marchionne set to retire at the end of 2018, time is running out for the Canadian-Italian executive to make things better.
Industry analysts were skeptical FCA could hit 7 million global sales by 2018 even before the automaker was slapped with a $105 million fine by NHTSA for mishandling 23 recall campaigns. If that was the only controversial issue putting FCA in the news it might not look so bad, but combined with the recall of 811,000 vehicles for a shifter design that may have resulted in the death of Star Trek actor Anton Yelchin and the SEC investigation, it looks like troubled times over in Auburn Hills.
That’s not to say Marchionne’s goal was never within reach. The five-year plan is reachable, but in Marchionne’s words, it required “near-perfect execution.” Rebecca Lindland, an analyst at Kelley Blue Book, told AN “all the moons have to align, and the markets have to align,” for the plan to properly play out, “and that just hasn’t happened for them.”
Marchionne is currently in the midst of rolling out a separate plan that aims to boost FCA’s profit margins to a General Motors-rivaling 12 percent. Under the new plan, FCA will move production of passenger cars abroad, freeing up production space in the U.S. to build more trucks and SUVs, which offer higher profit margins.
Whether either plan will successfully come to fruition remains to be seen – even for Marchionne.
“So just bear with us as we work our way through the details,” Marchionne told analysts in a recent earning call. “But I think we’ll give you a better view at the beginning of 2017 as we launch into the second-last year of this plan and see whether we can bring it home.”