Fiat News: FCA's European Business Problem

[William Maley]

Fiat Chrysler Automobiles' new CEO Mike Manley has a lot on his plate. He has address multiple challenges in the U.S. that were left by the passing of Sergio Marchionne last month - moving forward with the five year plan, figuring out the future of Chrysler and Dodge; and getting new vehicles out the door. But that doesn't compare to the challenges in Europe.

The Wall Street Journal reports that Manley has a number of issues that need be addressed. The biggest one is improving the overall profitability in the region. Last year, FCA had an operating profit of $5.96 billion in the U.S. In Europe, only $840 million. A key reason for this is that three-quarters of FCA's European sales are made up of Fiat models that have razor-thin profit margins. Each Fiat sold makes an operating profit of €250 ($288), compared to the average of €2,850 ($3,274) for every Jeep and Ram model sold. Alfa Romeo was seen as a possible way to help boost profits, but sales have fallen very short of targets in a market where the likes of the Audi, BMW, Lexus, and Mercedes-Benz dominate.

“FCA would need a merger to improve the profitability in Europe,” said Martino De Ambroggi, an analyst with Equita told the journal.

Marchionne tried his best to court FCA to other automakers such as GM, but to no avail. Earlier this year, FCA said the search for a possible partner was taken off the table and that it could survive on its own.

There is also the question as to whether FCA has too many workers in Europe. The region makes up about 36 percent of FCA's workforce, but only  a tenth of its profit. A key example is FCA's Mirafiori plant which employs 13,000 people, but is on track to build 50,000 vehicles this year. In 1997, the plant produced 463,000 vehicles. 

Source: Wall Street Journal (Subscription Required)

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[Robert Hall]

Same old, same old Fiat problems.   And the current 500 has been around over a decade..

[G. David Felt]

FCA has some hard reality to address in the future and that is cutting on over bloated workforce on terrible products that no one really wants to buy except that they are cheap. Welcome to a new world and I believe FCA choose an American to lead who is willing to cut the workforce in places that socialist have believed they have control of but really do not.

[daves87rs]

Could use some chargers there.....

[riviera74]

It would take some balls for the new CEO to simply dump European production for US production.  In some cases, some automakers build in (somewhat cheaper) Central Europe, but it would be better to simply ditch European production entirely.

[Robert Hall]

7 hours ago, riviera74 said:

 In some cases, some automakers build in (somewhat cheaper) Central Europe, but it would be better to simply ditch European production entirely.

They do that already w/ the 500, built in Poland (and Mexico).

[G. David Felt]

Seems FCA is wasting more money on product that will have limited sales and cost money not make it. Alfa 600 HP 2 door Coupe.

https://autoweek.com/article/rumormill/alfa-romeo-gtv-and-spider-heres-what-expect 

Talk about a waste of time and efforts when the market does not care nor want auto's like this. YES, Enthusiast want these cars, but they do not make the profits and FCA needs to focus on profits more than Luxury Halo models.

[Robert Hall]

They are trying to take on BMW's M4, and Mercs C class AMGs.   Probably a futile effort, but at least it's not another damn CUV...