Later this week, hundreds of stock analysts and journalists from across the globe will gather in Balocco, Italy, to hear retiring Fiat Chrysler Automobiles CEO Sergio Marchionne and his top lieutenants lay out the automaker's next five-year business plan — a plan that will be the first executed without Marchionne at the helm.
The June 1 event — still an anomaly in an industry otherwise overly cautious about making promises — will be Marchionne's fourth since taking over as CEO of the then-struggling Fiat S.p.A. in 2004, and the third since he assumed control of the bankrupt Chrysler in 2009.
But if experience has taught us anything about these events it is that analysts and industry watchers should pay close attention to what may sound like grandiose financial targets, and not so much attention to how exactly FCA plans to achieve them.
Skeptical analysts scoffed in November 2009 when Marchionne promised he could get out from beneath high-interest government loans, return Chrysler to profitability and improve its products by 2014. And they nearly laughed him out of the building in May 2014 when the CEO promised to put FCA's balance sheet in a net cash position by 2018, boost its profit margin to rival that of major North American competitors and generate €5 billion of profit by 2018.
The 2014 goals were largely met, albeit with some adjustments. And Marchionne's aggressive financial projections in 2014 for FCA in 2018 also appear to be on track.
For shareholders — including Marchionne, who owns more than 16.4 million shares of FCA, according to SEC filings earlier this year — that's great news, because shareholders have benefited most from FCA's strong history of financial performance.
But for FCA's dealers, FCA's stock performance is of only passing interest. Instead, dealers have rightly focused their attention on the product and strategies contained in previous business plans, so as to learn what might be coming to their showrooms. Often, they've been disappointed as promised products either don't show up or are delayed while brand strategies get scaled back or even abandoned.
FCA will no doubt serve up a series of bold stretch goals on Friday. It may be best to consume at least the product portions of the presentation with a large helping of salt.