FCA 2018-2022 Business Plan to renew portfolios of Jeep, Alfa Romeo, Maserati and Ram

Investing EUR 9 billion in electrification; Waymo’s autonomous system to be available in FCA cars

2018/08/09

Summary

  The FCA Group will focus on its high-profit global and premium brands, including Jeep, Ram, Alfa Romeo, and Maserati, in its new five-year plan announced on June 1, 2018. The group intends to move into new segments with new vehicles such as a Ram mid-size pickup truck, a three-row Jeep Grand Cherokee, and a Maserati mid-size crossover. At the same time, no specific mid-term product plan was offered for mass-market brands like Dodge, Fiat, and Chrysler.

  FCA plans to increase its net revenues by 7% CAGR (Compound Annual Growth Rate) from 2018 to 2022. The group will also save manufacturing and purchasing costs by EUR 10 billion through architecture convergence and other measures during the same period. The key financial targets of its new five-year plan include adjusted EBIT (Earnings Before Interest and Taxes) of between EUR 13.0 billion and EUR 16.0 billion in 2022, up from EUR 6.6 billion in 2017.

  Regarding strategies for CASE (Connectivity, Autonomous, Shared and Electric), which is currently an area of significant focus for the automotive industry, FCA revealed plans to invest EUR 9 billion in electrification until 2022 to offer electrified vehicles for a number of models in its lineup. As for autonomous driving vehicles, the group is adopting a multi-pronged approach by partnering with three companies including Waymo (a self-driving technology company and subsidiary of Google’s parent company, Alphabet), BMW, and Aptiv (previously Delphi Automotive). For connectivity, FCA is scheduled to launch its new connectivity platform in April 2019. Relating to mobility services, FCA will begin a borrowing program and a subscription service for Jeep vehicle owners in 2019.

  FCA Group reported a net industrial cash position at the end of June 2018 for the first time since the merger of Fiat and Chrysler in 2009. Mr. Sergio Marchionne who revived Fiat, which had a huge amount of debt, and Chrysler, was bankrupt, announced that he would resign as CEO in 2019. However, he had health issues that forced FCA to appoint Mr. Mike Manley as successor on July 21, and Mr. Marchionne died on July 25. Mr. Manley has been working in the automotive industry since he joined DaimlerChrysler in 2000. He used to serve as the chief operating officer for the Asia-Pacific region and has been the head of Jeep and Ram brands. In the days ahead, Mr. Manley will assume responsibility to implement the FCA 2018-2022 Business Plan.

FCA 2018-2022 Business Plan

Portfolio renewal  FCA plans to renew portfolios of its brands and generate 78% of global sales volume from white-space or renewed products by 2022. More than 75% of capital expenditure will relate to global brands.
Revenue growth from enhanced brands  FCA Group net revenues are expected to grow at 7% CAGR from 2018 to 2022. The group’s lineup will be expanded with 19 white-space products. Jeep, Alfa Romeo, Maserati, Ram, and Fiat Professional will contribute to 80% of total net revenues in 2022, up from 65% in 2017.
Cost savings  FCA will save EUR 10 billion of manufacturing and purchasing costs from 2018 to 2022 through architecture convergence and other measures. FCA plans to reduce the total number of architectures from 16 in 2017 to 12 in 2022. The ratio of total volume from the top five architectures will be increased from 60% in 2017 to 80% in 2022.
Key financial targets  Adjusted EBIT (Earnings Before Interest and Taxes) is expected to grow from EUR 6.6 billion in 2017 to EUR 13 -16 billion in 2022; Adjusted EBIT Margin will be raised from 6.3% in 2017 to 9.0-11.0% in 2022; and Adjusted Diluted EPS (Earnings Per Share) will be increased from EUR 2.3 in 2017 to EUR 5.9-7.3 in 2022.
CASE strategy
Electrification  In Europe, FCA will phase out production of diesel passenger cars by 2021. It plans to launch 25 PHVs and 10 EVs by 2022.
Autonomous driving vehicles  FCA is partnering with Waymo, BMW and Aptiv (former Delphi Automotive) to develop autonomous driving technology. Partnership with Waymo, Google’s self-driving technology company, will be expanded with an agreement to add 62,000 Chrysler Pacifica Hybrid minivans (PHVs) to Waymo’s driverless self-driving fleet. FCA and Waymo started discussions on equipping Waymo’s level 4 self-driving system in FCA vehicles for retail customers. FCA also partners with BMW for development of level 3 systems and with Aptiv for improvement of level 2+ technology.
Connectivity  An FCA connectivity platform will be launched in April 2019 and be available on all new FCA cars by 2021.
Mobility services  In North America, as a part of the existing Jeep owner membership program, a borrowing program and a subscription service will debut in 2019. The borrowing program will let owners of certain Jeep SUVs rent other vehicles of the company, while the subscription service will allow members to have access to a variety of FCA vehicles for a monthly fee.

Source: FCA June 1 2018 CMD_BP Financial Overview and others

 

FCA Group revenue growth strategy in its 2018-2022 Business Plan Grand Commander, a China-only SUV, will be based on this Jeep Yuntu Concept
FCA Group revenue growth strategy in its 2018-2022 Business Plan (Source: FCA) Grand Commander, a China-only SUV, will be based on this Jeep Yuntu Concept (2017 Shanghai Auto Show)

 

Related reports
 FCA to globalize Jeep and Alfa Romeo brands (December 2017)

 

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