Fiat-Chrysler Expects Smoother Sailing Following Merger

Sergio Marchionne, the CEO of the newly named Fiat Chrysler Automobiles, says he expects operations to run more smoothly now that the two automakers have been combined.

“We’ve worked diligently over the past four one-half years to bring together these two companies,” he says today in a conference call with analysts and reporters to discuss 2013 financial results.

“One of the problems we were running into is because of the different ownership structures, it added on the amount of time in the decision process,” Marchionne says. “Now we can move ahead at the speed of light.”

Marchionne says the merger of the two companies, which took place Jan. 2, makes him more comfortable in issuing goals and targets, including predicting the automaker will sell 1 million Jeeps globally this year.

He’s also optimistic the auto maker can build upon a successful 2013, in which Chrysler posted full-year 2013 earnings of $1.8 billion and Fiat declared profits totalling $1.3 billion.

The combined auto maker says it expects its North American region to be buoyed by a U.S. market predicted to eclipse 16 million units this year, although Canada is expected to remain flat.

Brazil sales should rise by single digits, while Argentina is forecast to decline this year due to import restrictions and high sales taxes. Fiat’s home market of Italy, as well as Europe overall, likely will remain flat, FCA says. 

Marchionne is particularly bullish on the growth shown by the premium Maserati marque, which in fourth-quarter 2013 had higher operating margins than sister brand Ferrari.

“We have to see if we can maintain that pace and operating performance,” he says. “All signals in connection with Maserati are positive.”

Jeep is another highlight of 2013 and is expected to continue to be a profit generator and growth brand this year. Sales increased 4% last year to a record 731,565 vehicles, making the 1 million-unit goal realistic.

The all-new Chrysler 200 midsize sedan, introduced at this month’s North American International Auto Show in Detroit, also is expected to drive growth this year.

Without bashing the outgoing 200, Marchionne says the new model has all that is needed to succeed in the competitive midsize segment.

“The 200 and (Dodge) Avenger are two of the oldest cars in our fleet,” he says. “The new 200 is intended to replace both of them in the marketplace, and I think we now have a competitive vehicle to give us a significant presence in the largest passenger-car portion of the U.S. market. We needed this car, and initial reaction has been phenomenal.”

The outgoing 200 relied heavily on daily-rental customers to bolster its numbers. Marchionne says daily-rental sales will be less for the new model, but notes fleet customers will not be left out in the cold.

“The 200 is a car that has a significant relevance in the rental market, and we have to be sure to not choke off some customers,” he says.

The executive says he does not foresee heavy price discounts by competitors due to overcapacity, noting the industry learned the lesson of aligning supply with demand during the recession.

While capacity for most FCA products is adequate, Ram pickup production is somewhat curtailed. Marchionne hints a new manufacturing facility may be needed to alleviate constraint, but says that is not the direction he would like to head.

“We’re trying to get additional production out of existing operations by putting on additional shifts,” he says. “We have looked at the opportunity to set up another truck operation, but I’m of the view we should not be doing this and succumb to this alluring potential of truck capacity.”

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