Marchionne Details FCA’s Future, Warns of Industry’s Challenges

“Hell no,” Chrysler will not lose money on the ’17 Pacifica plug-in hybrid, “especially since plug-in hybrids are going to become such a big piece of the portfolio going forward.”

Discussions on bringing out an all-new Chrysler-badged CUV are ongoing. “Tim Kuniskis (FCA North America-passenger cars chief) is fighting for it.”

The Alfa Romeo Giulia goes on sale in late summer, a rollout that was significantly delayed as the company developed an all-new rear-wheel-drive platform for the car and other future Alfa models. “The (RWD) architecture is in perfect shape. The car is late because…this car is going to be the basis on which we evaluate Alfa going forward.”

FCA remains “cautiously optimistic” on diesel’s future in the U.S. “We need to wait until this thing shakes out. I don’t think that what Volkswagen did was a reflection of diesel as much as it was a reflection of poor governance of the process. I think we might want to be very careful that we don’t confuse the two issues. There’s nothing wrong with diesel. There is something that is wrong with anybody who effectively abuses the rules.”

Viper’s future is uncertain after 2017 and any future model would have to be built on a shared platform that would offer similar curb weight with significantly higher performance. “Given the architectural developments going on inside the group which expand beyond the Viper, there is a possibility that a new version of the Viper may eventually surface. Whether it surfaces within a reasonable period of time is unclear.”

Jeep will get a built-in-Toledo, OH Wrangler pickup possibly by late 2017, following the launch of the all-new ’18 Wrangler.

Consolidation is “abandoned” for now, but FCA continues to study potential combinations that have merit. “We’ve had expression of interest from more than one party. We have to make a choice as to whether they offer us enough of an upside to engage. “Consolidation, in my view, is unavoidable. And especially if you lend any credence at all to all this noise and buzz that is being created around the fact that we’re really not into the car business anymore, that we’re all transportation companies who are interested in connectivity and not performance driving.”

Commitment to achieving financial objectives for 2018 – debt-free, tripling net income, €9 billion ($9.8 billion) in operating profit, 5 million-plus annual sales – will put FCA on firm ground to renew discussions of consolidation with another automaker. “The achievement of the plan in 2018 will create a car company that is fundamentally different than the one you’re looking at today.”

Partnerships with Silicon Valley firms are inevitable. “Willy or nilly they will play a significant role in the way in which the auto industry goes. Outcome uncertain. The manner in which the interface ultimately plays out is yet to be seen.”

Concern about the high costs associated with developing autonomous, electrified vehicles that will drive the mobility future as envisioned by many in the industry. “I’m very wary of all this incredibly enthusiastic view of the world that we’re transitioning from a car business into a transportation business. How we transition and how much money we make in the transition is a big issue. I still don’t understand the economic model and I need somebody to explain that. “We don’t make enough money at this business to try to justify the size of the capital we commit to this thing.”

Marchionne admits many issues will be left to his successor, but he says that person will inherit a much easier job if the company meets its financial objectives for 2018. At the same time, he says, “I’ve had comments from people inside the group executive council who say they pity the poor bastard who takes over for me.”