Fiat Chrysler's new five-year plan: Sales target of 7 million units by 2018

Investments to expand Maserati, Alfa Romeo and Jeep brands

2014/06/09

Summary

FCA unit sales targetFiat: acquires 100% ownership of Chrysler On January 29, 2014, Fiat completed its acquisition (100% stake) of Chrysler, making the U.S. automaker its wholly-owned subsidiary. The newly merged company, Fiat Chrysler Automobiles N.V. (FCA), will be registered in the Netherlands and will have its tax domicile in the U.K. Fiat S. p. A. (in Italy) and Chrysler Group LLC (in the U.S.) will continue to exist as legal entities while FCA will serve as their parent company. Although the location of the FCA headquarters has not been officially announced, it has been widely reported that it will be located in London with a small office focused on finance to be set up.

New five-year plan Fiat and Chrysler operated in accordance with the 2009-2013 five-year plan; however, since the companies have been fully merged now, a new five-year plan has been formulated from a new perspective. On May 6 and 7, 2014, FCA held an explanatory meeting, in which institutional investors, etc. were invited. In the meeting, the company unveiled its five-year plan, covering the years from 2014 to 2018. The following are some highlights. -Unit sales target: 7 million vehicles FCA aims to sell 7 million vehicles a year by 2018 increasing from 4.4 million in 2013. As for the sales by brand, the company plans to expand the sales of its premium brands, Maserati and Alfa Romeo, and to establish a global production and sales network for Jeep. -Sales by region: expands sales in China and North America As for the sales by region, the company expects its sales in the Asia Pacific region to grow over fivefold from 200,000 units in 2013 to 1.1 million units in 2018. A large portion of the sales will be generated by the Jeep business of its joint venture in China. The company also aims to boost its North American sales by 50%.

-Financial target: net income of EUR 5 billion in 2018 FCA set its 2018 financial targets as follows: EUR 132 billion in revenue (actual revenue in 2013 was EUR 86.8 billion) and EUR 5 billion in net income (actual net income in 2013 was EUR 1.95 billion; net income excluding extraordinary factors was EUR 900 million). The company will invest EUR 48 billion over the next five years in new model development and plants.

Stock market evaluation: company's stock price falls more than 10% on skepticism of plan Many of the institutional investors and analysts view the new five-year plan negatively. They believe that the plan is pretty ambitious but risky and not feasible. The company's stock price fell more than 10% after the meeting. Marchionne, Fiat Chrysler's CEO, commented that even if the company misses the target, it will be considered a success if progress is made in a large part of its business expansion plan. The company has a proven record of growing its sales from 1.3 billion units in 2009 to 2.4 million units (wholesale volume: 2.6 million units) in 2013. The result was close to the 2.6 million unit target of the previous five-year plan, though some of its individual brands and projects did not make the expected progress.

Related reports:
Beijing Auto Show 2014: 2 Jeep design concept vehicles and Fiat Ottimo
North American International Auto Show 2014: Chrysler 200, 300S, SRT Viper GTS


Sales target by brand

2013 (in millions of units) 2018 (in millions of units) CAGR (Annual Growth) 2018/2013 comparison
Maserati/Ferrari 0.02 0.08 ~32% 400%
Alfa Romeo 0.1 0.4 ~40% 400%
Dodge 0.8 0.7 ~-3% 88%
Chrysler 0.4 0.8 ~15% 200%
Jeep 0.7 1.9 ~22% 271%
Ram/Fiat Commercial Vehicles 0.9 1.2 ~6% 133%
Fiat 1.5 1.9 ~5% 127%
Total 4.4 7.0 ~10% 159%