Can Fiat-Chrysler reach its tough targets?
|Luca Ciferri is chief correspondent at Automotive News Europe.|
With plans to sell more than 4 million units this year, up from 3.6 million in 2010, the Fiat-Chrysler alliance appears on track to reach his 2014 goal of combined sales of 6 million units. That's the volume that Fiat-Chrysler CEO Sergio Marchionne two years ago told Automotive News Europe would be needed for a mass-market brand to succeed following the worst financial crisis since the Great Depression.
At the time of Marchionne's prediction, big companies such as Toyota Motor Co., General Motors Co. and Volkswagen AG already were on their way to easily exceeding 6 million sales in 2008.
While 2009 was tough for companies such as GM and Toyota, each carmaker reported sales of more than 8 million units last year. Meanwhile, VW passed the 7-million mark for the first time and the Renault-Nissan alliance joined the 6-million-unit club by delivering 6.7 million vehicles. Renault-Nissan's total rises to 7.3 million if you include sales at Russia's AvtoVAZ, in which Renault has a 25 percent stake.
To get into the club, Fiat-Chrysler needs to boost sales 67 percent.
That won't be easy given that Fiat-Chrysler has a tiny presence in growing India, is currently a non-player in China – the world's largest auto market – and needs help in fast-rebounding Russia after local partner Sollers decided to end their joint venture to start a JV with Ford.
But Marchionne doesn't set easy goals.
For example, he wants Fiat-Chrysler's revenue to grow 56 percent to 104 billion euros in 2014 from 66.7 billion euros last year.
If Fiat-Chrysler's unit-sales and revenue targets appear aggressive, the profit level that Marchionne wants to achieve is absolutely daunting: an operating margin between 7.2 percent and 8 percent in 2014, up from a mere 2 percent last year.
Can Marchionne really squeeze a premium-automaker-level profit out of a bolted-together mass-market automaker?
Don't forget, he's the same guy who turned around a very troubled Fiat Group not that long ago.
If Marchionne beats the odds again, books will be written on how Fiat-Chrysler pulled off one of the greatest turnarounds in automotive history.
You can reach Luca Ciferri at email@example.com.