DETROIT -- Fiat Chrysler Automobiles' brave new strategy -- basically to get out of the commodity car business and focus on its most profitable products -- may be the best chance for FCA to overcome a perilous lack of resources and find the merger partner it craves.
It's also loaded with risk. Oil prices could start climbing again, or Americans might fall out of love with trucks.
But CEO Sergio Marchionne has few attractive alternatives to the revised strategy he unveiled Wednesday, Jan. 27. FCA is the only major automaker with net debt at what is widely viewed as the top of the business cycle.
If the strategy works -- if FCA can right its balance sheet by selling rebadged compact and midsize sedans built by another automaker while concentrating on high-profit Jeeps and pickups -- Marchionne may have shown the way for other companies.
If it doesn't work, a Jeep- and Ram-focused FCA will at least have been transformed into a more attractive merger or takeover candidate, especially for automakers that have been unsuccessful with SUVs and pickups in North America.
One thing is clear: Come 2018, FCA will be a different company than it is today. It will have a new business model that takes into account a market shifting dramatically toward pickups, crossovers and SUVs.
"This is FCA's diet plan before the wedding to shed unwanted weight and to pad the bank account," says AutoPacific analyst Dave Sullivan. "It's not a long-term plan, but more of a 'Hail Mary' pass to tidy up their appearance for an imminent tie-up with someone."