Could Fiat Chrysler Be At The End Of The Road?

CEO Sergio Marchionne maybe in the position to dismantle the company rather than a merger.

The Fiat Chrysler Automobiles N.V. (FCA), which is the world’s seventh largest auto maker, may have rocky times ahead.
It’s unclear at this point if the company will end up in a merger or broken up into pieces and sold.

In an article by thestar.com the points are highlighted to the intricacies at present.

In fiscal 2015, a year of record volume in North American auto sales, FCA eked out a profit of $410 million (U.S.) on record sales of $120 billion. Its profit would have been just $104 million without the contribution of Ferrari, which FCA has recently spun off. If this is the best FCA can do when the notoriously volatile auto industry is at its peak, buckets of red ink are in store, come the inevitable next industry downturn.

That explains why FCA has a modest shareholder value, or market cap, roughly equal to that of the much smaller Mazda Motor Corp., which has about one-third FCA’s vehicle production.

FCA is overly reliant on two gas-guzzling vehicle families, the Jeep SUV and the Ram pickup. Fiat, which makes the decisions for FCA, is gradually exiting passenger cars – Fiat’s traditional strength – in favor of the lucrative big-metal vehicles.

Many factors have been the cause such as the lack of focus in the small car market, but the tension here is with Chrysler, Dodge, Jeep, Ram and Mopar.
It doesn’t mean these brands will go away any time soon, but the situation equally means it is unclear who is going to be managing the shop in the future.

Check out the full article here

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