Business

Fiat Chrysler CEO says no plans to sell brands to Chinese

Sergio Marchionne, CEO, Fiat Chrysler Automobiles, speaks with journalists at the North American International Auto Show in Detroit, Michigan, U.S., January 15, 2018. (REUTERS/Rebecca Cook)
Sergio Marchionne, CEO, Fiat Chrysler Automobiles, speaks with journalists at the North American International Auto Show in Detroit, Michigan, U.S., January 15, 2018. (REUTERS/Rebecca Cook)

DETROIT — Fiat Chrysler Automobiles NV’s (FCA) has no intention of breaking up the company or selling individual brands to China or other parties, the company’s chief executive said on Monday, adding that the group was counting on its coveted Jeep brand to drive future profits.

“We’re not going to break up anything,” Chief Executive Sergio Marchionne said at a news conference at the Detroit auto show. “We have no intention of breaking it up and giving anything to the Chinese.”

Marchionne said the Jeep sport utility vehicle brand could help FCA double its net profit. FCA’s portfolio also includes luxury Maseratis, sporty Alfa Romeos and tiny Fiats.

FCA’s share price has jumped more than 30 percent this year on a bullish outlook for the auto sector, Jeep growth expectations and speculation that Marchionne’s final year at the helm could prompt strategic deals such as spin-offs, technology alliances and disposals.

The popularity of the Jeep brand, which is targeting sales of 2 million vehicles this year, has prompted talk it could be spun off from the group, as happened with tractor maker CNH Industrial and supercar group Ferrari, or sold off.

Rumors have resurfaced that Guangzhou Automobile Group Co Ltd might be interested in snapping up part of FCA. Marchionne said on Monday that while GAC has partnered to deliver Jeeps to the Chinese market and FCA is talking to the Chinese automaker about helping it enter the U.S. market “none of these things are designed to impact on the independence of FCA.”

FCA has often been the subject of merger speculation, especially after its unsuccessful 2015 attempt to tie up with larger U.S. rival General Motors Co. Its share price jumped to record highs in August after reports of interest from China’s Great Wall Motor Co and South Korea’s Hyundai Motor Co.

ARTICLE CONTINUES BELOW ADVERTISEMENT

Marchionne said while both Jeep and truck brand Ram are strong enough to exist on their own, “we need to talk about... what will be left behind.”

Marchionne said he has recommended to the company’s board that the automaker spin off Magneti Marelli, a maker of components for lighting, engines, electronics, suspension and exhausts, to shareholders by the end of 2018.

Marchionne confirmed FCA’s targets for 2017 and for 2018, including a plan to erase all debt and generate up to $6.14 billion in net cash.

Asked about the possibility of paying dividends, Marchionne said the markets had changed and “it makes more sense to buy back shares than pay a dividend.”

The 65-year-old executive is due to step down in early 2019, and a successor will be appointed from within FCA.

Finance chief Richard Palmer, European head Alfredo Altavilla and Jeep boss Mike Manley have often been cited as possible candidates, according to sources close to the company.

Marchionne said there are other possible candidates who are not in the media spotlight.

FCA announced last week it will shift production of Ram heavy-duty pickup trucks from Mexico to Michigan in 2020, a move that lowers the risk to the automaker’s profit should President Donald Trump pull the United States out of the North American Free Trade Agreement.

“I think we’ve done the right thing by the American market, by the U.S. consumer,” Marchionne said, .”.. and I think we’ve addressed Mexican concerns” about production with plans to repurpose the company’s Saltillo, Mexico, plant to build commercial vehicles for sale globally.

ARTICLE CONTINUES BELOW ADVERTISEMENT

Thank you for signing up for our e-newsletter!

You should start receiving the e-newsletters within a couple days.

He said the U.S. tax code overhaul passed in December would provide a $1 billion boost to the company in 2018, noting that the overhaul “was to make sure the economy got a boost... develop a sense of confidence about the future, and that’s exactly what we as an automaker in the U.S. were waiting to hear.”

A number of major automakers plan vast investments in developing electric vehicles. Ford Motor Co said on Sunday it plans to invest $11 billion and have 40 hybrid and fully electric vehicles in its model lineup by 2022.

Marchionne said electric vehicles will eventually form a large part of vehicle lineups, “but it’s a lot further off than people think” in part because they are not profitable for automakers.

“I don’t know of a guy, or a person or a entity or economic organization that is making money out of selling electric vehicles unless you’re selling them at the very high end, which is rare,” he said.

Give us feedback

We value your trust and work hard to provide fair, accurate coverage. If you have found an error or omission in our reporting, tell us here.

Or if you have a story idea we should look into? Tell us here.

CONTINUE READING

Give us feedback

We value your trust and work hard to provide fair, accurate coverage. If you have found an error or omission in our reporting, tell us here.

Or if you have a story idea we should look into? Tell us here.