Fiat Chrysler Loses Sergio Marchionne With Bumpy Road Ahead

Mike Manley, the head of the Jeep and Ram brands, took over as chief executive of Fiat Chrysler Automobiles on Saturday. The company’s other brands have not performed as well as those that Mr. Manley led.

Fiat Chrysler Automobiles was facing an uncertain future even before the man who led its unlikely turnaround became gravely ill.

After he became incapacitated from complications of shoulder surgery, the company was forced to hastily replace Sergio Marchionne as chief executive over the weekend. Fiat Chrysler now must find a way to deal with its own shortcomings without him — even as the auto industry experiences changes that would be challenging enough under the best of circumstances.

Now, the hard decisions fall to the new chief executive, Mike Manley, who has been running the arm of the company that is easily its best reason for optimism.

The Italian-American automaker has reported steady earnings, driven by the Jeep and Ram brands that have been run by Mr. Manley. But the Fiat, Dodge and Chrysler nameplates contribute little to its bottom line.

The company lags its rivals in China, the world’s largest auto market, and gets three-quarters of its profits from North America, where the entire industry is experiencing a slowdown.

Competitors like General Motors and Ford Motor have sped ahead with development of electric vehicles and self-driving technology, while Fiat Chrysler has been slow to do the same. It does not operate its own financing company, a competitive advantage for its rivals who are able to offer attractive discounted loans and leases.

And the possibility that President Trump could push for tariffs on imports of cars and auto parts has sent uncertainty rippling through the entire industry.

“Sergio has done an incredible job revitalizing the company since Chrysler’s bankruptcy in 2009,” said Rebecca Lindland, an analyst at Kelley Blue Book, an auto research firm. “But there’s more work to be done. There’s still a lot that needs to be addressed.”

Now Fiat Chrysler, which has seen its stock lose around a fifth of its value since January, must do it without Mr. Marchionne, 66, who has led the company for 14 years. The company declined to comment on Mr. Marchionne’s condition, but the decision to replace him on a Saturday, effective immediately, was a clear sign that his prognosis was poor.

The carmaker’s shares fell more than 5 percent at one point in morning trading in Europe on Monday before recovering some of those losses.

Fiat Chrysler will provide a fresh glimpse of its finances on Wednesday when it reports its second-quarter results. Wall Street analysts expect a rise in earnings, driven almost exclusively by robust Jeep and Ram truck sales. A year ago, it reported second-quarter net income of 1.2 billion euros on revenue of €27.9 billion.

The company’s profitability is perhaps the central issue that Mr. Manley will have to tackle. Profit amounted to about 6 percent of Fiat Chrysler’s revenue last year, well short of the 11 percent achieved by General Motors. In June, Mr. Marchionne and his executive team laid out a business plan that calls for spending 45 billion euros to develop more than two-dozen new vehicles, including electric models, all while slashing costs by €9 billion — a tough balancing act for an automaker. The goal is to more than double its profit margin by 2022.

American dealers expressed confidence in Mr. Manley. “We’re thrilled with his selection,” said Wes Lutz, owner of a Chrysler Dodge Jeep franchise in Jackson, Mich., and chairman of the National Automobile Dealers Association. “He’s passionate about product. He’s worked on the retail side, so he understands dealers. Any time you have a C.E.O. who understands dealers, you usually have good market share, so I’m excited about Mike Manley.”

Mr. Manley, who was not available for an interview, has the unenviable task of replacing Mr. Marchionne, a larger-than-life executive who quoted both philosophers and pop music lyrics with ease and pushed his workers to match his boundless energy.

Ms. Lindland said that Mr. Manley “is a different kind of character.”

“He’s quieter,” Ms. Lindland said. “Nobody has the force of personality that Sergio had, but Mike can motivate people. He’s been doing that at Jeep.”

Mr. Manley took over Jeep in 2011 and has nearly tripled its global sales. The company expects to sell 1.9 million Jeeps this year, and its models are now produced in 10 plants in six countries. When Mr. Manley took over, Jeeps were only made in four plants, all in the United States.

“Mike has been one of the major contributors to F.C.A.’s success and he has a remarkable track record of accomplishments,” John Elkann, the great-great grandson of Fiat’s founder, Giovanni Agnelli, said in an email to Fiat Chrysler employees.

Mr. Manley will have to rely heavily on the sport-utility vehicle line going forward. Consumers in the United States, China and elsewhere are increasingly opting for roomier models like S.U.V.s, and pricier Jeeps like the Grand Cherokee generate hefty profits. With its heritage dating back to the rugged military vehicles used in World War II, Jeep also has a global appeal that other Fiat Chrysler brands lack. Under the company’s five-year business plan, Jeep is scheduled to introduce a midsize pickup truck next year as well as 14 new hybrid or battery-powered models. In China, Jeep would offer four fully electric models.

Mr. Manley “has to grow Jeep in China,” said Tom LaSorda, a former Chrysler chief executive. “That’s the future.”

In the United States market, the new models can’t come soon enough, especially the seven-passenger Jeep Grand Wagoneer that’s scheduled to arrive in 2020. “We needed that vehicle yesterday,” said Mr. Lutz, the dealership owner. In the first six months of this year, Fiat Chrysler’s United States sales rose 5 percent, due exclusively to higher Jeep sales.

Fiat Chrysler also plans to spend heavily to develop new models for its Ram, Alfa Romeo and Maserati lines, all of which are solidly profitable. But the future for the company’s other brands is uncertain.

Chrysler only offers two models and has little presence outside America. Dodge has been reduced mainly to selling big, powerful sports cars, a segment whose sales are declining. Fiat Chrysler also spent billions of dollars to introduce Fiat small cars to American buyers, but so far this year it has only sold about 8,000 Fiats in the United States. The company sells that many Ram trucks in one day.

Those brands have been hurt as consumers have turned away from passenger cars. When Mr. Marchionne decided to stop making small- and midsize cars in the United States in 2016, it was considered a risky move. But Ford recently said it would follow suit; it plans to drop venerable models such as the Fusion and Taurus within a few years.

In light of the shift in the market, Mr. Manley will probably eventually have to address the question of whether to kill Dodge or Chrysler, and whether to continue to sell Fiats in the United States, Ms. Lindland said.

But the Chrysler brand could have a future in autonomous vehicles, even though Fiat Chrysler has done little to develop its own self-driving cars.

Mr. Marchionne long expressed doubt about investing in technology whose future is unknown, but Fiat Chrysler has partnered with Waymo, the self-driving car company that was spun out of Google. It is supposed to produce up to 62,000 Chrysler Pacifica minivans that Waymo will equip and use for a driverless ride service it is starting.

“They need to make sure they don’t fall too far behind on autonomy, and Waymo may be the way they do that,” Ms. Lindland said.

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