Fiat Chrysler Automobiles is a creature of the 2008 financial crisis and the skillful financial engineering of late CEO Sergio Marchionne. Marchionne had turned around…
Fiat Chrysler Automobiles is a creature of the 2008 financial crisis and the skillful financial engineering of late CEO Sergio Marchionne.
Marchionne had turned around Fiat before he saw bankrupt, bailed-out Chrysler — the basket-case of the collapsing US auto industry — as an appealing target. His dealmaking was sweetened by the US government’s desire to effectively pay Fiat billions to take Chrysler off its hands.
The new entity, Fiat Chrysler Automobiles, has been a success. The Jeep and RAM brands have witnessed surging US sales, and Marchionne savvily spun off Ferrari, the crown jewel, in an IPO that unlocked what’s now a nearly $30-billion market cap (FCA’s is only about $20 billion).
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But that success has some issues. FCA is strong in the US market, but the company is heavily exposed to Europe, where Fiat has struggled. The group is well behind in China, and FCA has been using partnerships to keep up in self-driving development, mainly with Alphabet’s Waymo.
FCA, like Detroit rivals Ford and General Motors, has been able to amass cash as pickups and SUVs have sold well in recent years, but Marchionne also spent much of his CEO-dom chiseling down FCA’s debt. The carmaker’s ability to invest aggressively in the global transformation in mobility took a back seat to Marchionne’s banker’s instinct to tidy up FCA’s balance sheet. Managing a many-headed automotive beast
The bottom line is that the truck and SUV brands kept the whole undertaking on track, while efforts to reestablish Fiat and Alfa Romeo in the US largely failed. The Ferrari spinoff was a highlight, leading to speculation that Maserati might follow — but that brand has seen sales take a hit as the luxury market has become more competitive and the China market has slowed down.
