Chrysler/Fiat CEO Sees Sales Doubling In Five

Chrysler/Fiat

Sergio Marchionne, CEO of Chrysler Group LLC, came to the stage at the New York Automotive Forum on Tuesday, and as he launched into his presentation about Fiat's acquisition of Chrysler last year and the company's government bailout, a heckler burst into the room, shouting imprecations and swearing that Chrysler LLC owes the American taxpayers cash for the bailout okayed by the Obama administration.

Marchionne took the moment in stride, conceding that the bailout was not universally popular. "On that day, Obama gave us a second chance," he said. "Obama committed to providing Chrysler working capital for 30 days. It would be remiss of me not to acknowledge that Chrysler LLC owes gratitude to the U.S. taxpayers. Government assistance as we know is not universally popular, as you have just heard."

Marchionne said that closing factories is necessary for the automotive business. "Around the globe, auto plants are operating below capacity," he said, noting that global capacity for cars and trucks is 94 million, "which is 30 million more than the market can adjust to."

Another historic, he said, is inefficiency. Underperformance has been characteristic of the entire industry. For the past 30 years, the European and American automakers lost half their value. In any other industry, he said, the reaction would be, "let's find out who's responsible for this and get rid of them."

Fiat/Chrysler chief Marchionne said that by 2014, more than half of Chrysler vehicles will use Fiat architecture and over 40% will have Fiat powertrains or technology. He added that Fiat will develop car platforms while Chrysler oversees development of large vehicles. "The deal represents an enormous step forward for both of us."

Marchionne conceded that history has not been kind to corporate marriages, especially ones that attempt to forge consolidations across cultures and oceans.

"But," he said, "this relationship is about partnering, and listening, not dictating. Attempting to impose answers across cultures doesn't work and fails. By contrast, tearing down walls is something on which the survival of the entire industry depends. And the quality of integration depends on the style of leadership."

Per Marchionne, the company will end the year with a $5 billion cash balance. "We intend to break even on operating business this year, with operating profit increasing. In five years, we will double global sales to 2.8 million cars."

He said that 75% of Chrysler's vehicle lineup will be new or renewed by the end of the year and that 100% will be refreshed or renewed by the end of 2012. In December, Fiat brings the 500 to American roads, the first Fiat in the U.S. in 25 years. In 2012, there will be a pure electric version for the U.S. market, per Marchionne.

The company is also making a $500 million investment in the U.S. retail network, he said, adding that the 50 letters of intent the company has sent to dealerships it had earlier intended to close "brings 86 dealers back to the fold, so 25% of dealers who chose to arbitrate Chrysler's decision to resize dealerships to meet the market will remain open."

"We have one last chance to make it real," he said, quoting Bruce Springsteen. "It rarely happens in life that you get a second chance. The failure of most automakers is they fail to react. At Chrysler, thanks to the alliance with Fiat, we have a second chance."

 

Tags: automotive
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