Industry News

Despite Quality Issues And Slow Sales, FCA Is Hitting Financial Targets

FCA is on track to become debt-free by the end of the year.

After being purchased by Fiat back in 2014, things didn't look great for the newly formed Fiat-Chrysler Automobiles (FCA). FCA quality ranks near the bottom of surveys and sales were down for 2017. Several reports indicated that FCA CEO Sergio Marchionne wanted to sell the company to another automaker. But after implementing some serious changes, the outlook now looks bright for the Italian-American automaker. The seventh largest automaker is even on track to become debt-free by the end of the year.

According to a report by Autoblog, FCA has managed this huge turnaround by retooling some US factories for highly profitable SUVs and trucks while ending production of unprofitable sedans like the Dodge Dart and Chrysler 200. Marchionne is close to hitting the targets of his five-year turnaround plan. There's a very strong likelihood that we will outperform Ford in terms of operating earnings in 2018," Marchionne told analysts on an earnings call Thursday. "That's something that if I told any of us in the room here that would've been doable five years ago, nobody would have believed it."

Marchionne is getting ready to complete his time as the head of FCA, and will move on to be the head of Ferrari. Whoever takes over for Marhcionne should be in an excellent position as the company should be debt-free by June 2018 and generate around 4 billion euros in net cash by the end of the year. "The 2018 forecast is an indication of what this machine can produce," Marchionne added. "We're going to run our business, and we are going to run hard." FCA has been doing so well, that it will even make profit sharing payments of $5,500 to eligible UAW-represented employees. Approximately 40,000 employees will this receive the payment on February 16, 2018.

It may not seem like it on the surface, but FCA is in a better position than it has been in for years. Looking back, Sergio Marchionne will be credited with saving the Fiat brand when he took over back in 2004 and rescuing the Chrysler brand from bankruptcy in 2014. The next few years will be interesting for FCA, but if the company can sort out the quality issues it could be ready to dominate.

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