“It’s been a bumpy year,” said Manley, as he settled into a chair in a small conference room at the back of Fiat Chrysler’s auto show display.
And circumstances are forcing him to reexamine a number of elements from the plan Marchionne outlined, including the pace at which Fiat Chrysler migrates from conventional, internal combustion engines to battery-electric technology. That’s particularly the case in Europe, where diesels were expected to provide the means to meet tough new emissions and fuel economy regulations. In the wake of Volkswagen’s diesel emissions scandal, however, sales of those “oil burners” have been tumbling.
“Now we have to revisit our mix in terms of electrification,” said Manley, noting that the automaker likely will have to increase the speed at which it adopts hybrids, plug-ins, and pure battery-electric vehicles.
Under Marchionne, Fiat Chrysler had been reluctant to embrace that technology. At one point, the former chief executive, only half-jokingly, had asked potential customers not to buy the then-new Fiat 500e battery-electric vehicle, revealing that the automaker lost about $10,000 on each one it sold. The situation hasn’t much improved, Manley said this week, noting that Fiat Chrysler can recover only 60 percent of the added cost for electrified powertrain technology.
That’s only one element of last year’s plan that will have to be revisited, said Manley, adding, “There’ll be other changes to follow.”
“Our performance in China is really weak,” he said. Fiat Chrysler is running into a variety of issues as demand has slowed over the past year in the world’s largest automotive market.
The old Chrysler Corp. was actually the first foreign automaker to enter China in 1984, but after the disastrous collapse of DaimlerChrysler in 2007, the Asia operation went to the German side of the partnership.
It took until 2015 to launch a new manufacturing operation there, and production costs are still out of whack, according to Manley. Complicating matters, the division he ran made some fundamental mistakes in positioning Jeep to Chinese consumers — a problem it is now struggling to correct.
The biggest mistake, he said, was positioning Jeep as a “professional” brand in the years before it had a local production plant. That worked well marketing American-made products like the big Grand Cherokee in low volume. But it has backfired now that the Guangzhou plant, operated in a joint venture with China’s GAC, has opened. Mainstream customers have shown little interest in products they think are meant for Chinese elite, Manley explained.
On the whole, though, Manley was cautiously upbeat in his assessment of where FCA stands a half year into his reign. If anything, it has already gone through the painful downsizing that has gripped both of its Detroit competitors. General Motors in November announced plans to close five factories, including three assembly plants, and trim about 14,000 jobs. Ford is readying big cuts for Europe and is expected to reveal plans for a North American restructuring by mid-year.
Fiat Chrysler made most of its cuts around the time it filed for bankruptcy protection in 2010, “when we were in a mode of survival,” Manley said. In sharp contrast, FCA is now adding jobs and will be opening at least one new plant, which reportedly centers around what could be a $1 billion renovation of a currently closed engine plant in the Detroit suburb of Warren, Michigan. It would be used to produce two new models for the rapidly growing Jeep brand, including a three-row model that brings back the old Jeep Wagoneer nameplate.
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