Marchionne dumps merger ideas as money pours in

Fiat Chrysler Automobiles is having a record year. Lead by CEO Sergio Marchionne, the automaker is set to pay off all its debts and bank a projected $4.9 billion in cash by the end of 2018. The solid financial footing will put FCA in a stronger place to compete against General Motors and Ford, perhaps even surpassing them in earnings.

Marchionne told analysts in a recent earnings teleconference that, "There’s a very strong likelihood that we will outperform Ford in terms of operating earnings in 2018. That’s something that if I told any of us in the room here that would’ve been doable five years ago, nobody would have believed it."

FCA’s very positive standing is surprising considering Marchionne was practically begging General Motors for a merger, with CEO Mary Berra reportedly declining multiple offers. Now, Marchionne has completely dropped the idea, saying, "The necessity to find a partner, to try and guarantee our survival, going forward, is put to bed. I mean we’re done."

The automaker’s success is pinned on its truck and SUV sales lead by the Ram 1500, Jeep Grand Cherokee, and Jeep Wrangler. Sales forecasts only show growth, too, thanks to an all-new Wrangler for 2018, an all-new Ram 1500 for 2019, a refreshed Jeep Cherokee for 2019, and the Jeep Grand Cherokee’s new halo model, the Hellcat-powered 2018 Grand Cherokee Trackhawk. Add to that Jeep’s upcoming Scrambler pickup, three-row Jeep Wagoneer, and the luxury-minded Grand Wagoneer.

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Sunny Outlooks for FCA

2018 Jeep Wrangler Exterior Wallpaper quality
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Another factor in FCA’s recent financial fortune is growing profit margins, which rose from 7.1 to 8.0 percent over the last year

Another factor in FCA’s recent financial fortune is growing profit margins, which rose from 7.1 to 8.0 percent over the last year. Comparatively, Ford’s profit margins have fallen from 8.5 to 6.8 percent in the same time. That further substantiates Marchionne’s claim of surpassing Ford in earnings.

"The 2018 forecast is an indication of what this machine can produce," Marchionne said in the teleconference. "We’re going to run our business, and we are going to run hard."

Adding fuel to the fire, President Trump’s recent U.S. Tax Code revamp is forecasted to help FCA by $1 billion in 2018.

Marchionne is expected to deliver FCA’s next four-year strategic plan in June of 2018, taking the company out to 2022. It’s very possible new vehicles will be announced then, too, so we’ll certainly be paying attention to that. We fully expect FCA to continue and further its reliance on crossovers, SUVs, and pickups as fuel prices stay low. Simultaneously, the automaker is working on fuel-saving systems like the mild hybrid systems found in the 2018 Jeep Wrangler and 2019 Ram 1500.

References

FCA Almost Debt Free; Aims to Overtake Ford in Earnings! Exterior
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Read our full review on the 2018 Jeep Wrangler.

All-New 2019 Ram 1500 Steals The Show at Detroit
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Read our full review on the 2019 Ram 1500.

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Read more FCA news.

Source: Automotive News

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