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Fiat Chrysler cuts 2018 outlook, shares tumble on weaker quarterly profit

MILAN — The news of former Fiat Chrysler chief executive Sergio Marchionne's death arrived Wednesday moments before the group reported a surprisingly heavy drop in profit. The death of one of the auto industry's most tenacious and respected CEOs overshadowed a big selloff in Fiat Chrysler shares. FCA's scheduled second-quarter earnings presentation, led by Marchionne's successor and former lieutenant Mike Manley, began on Wednesday afternoon with a moment of silence. As eulogies flooded in, FCA shares fell as much as 10 percent as investors digested an unexpected 35 percent fall in net profit, well below market forecasts. Marchionne rescued Fiat and Chrysler from bankruptcy after taking the wheel of the Italian carmaker in 2004 and he multiplied Fiat's value 11 times through 14 years of canny dealmaking. He was due to step down at FCA in April next year. "The best way to honor his memory is to build on the legacy he left us, continuing to develop the human values of responsibility and openness of which he was the most ardent champion," Chairman John Elkann added. On Saturday, FCA named Jeep division head Mike Manley, 54, as head of the world's seventh-largest carmaker, saying the Briton would execute a strategy that Marchionne had outlined in June. FCA has said Manley will work to ensure a "strong and independent" future for the group. Underlining the task facing Manley, FCA cut its full-year earnings outlook after the weaker-than-expected quarterly earnings. Having to deliver the bad news four days into his new job, Manley blamed the result on a weaker performance in China, a market that represents one of new CEO's immediate headaches. "The biggest challenges we face and frankly we're going to continue to face ... are all focused in China," Manley said. FCA has yet to make any significant inroads in China. In Marchionne's June plan, FCA pledged to boost production of sport utility vehicles and invest in electric and hybrid cars to double operating profit by 2022. It unveiled bold targets for Jeep, FCA's profit engine. FCA said adjusted earnings before interest and tax (EBIT) for the April-June period fell 11 percent to 1.7 billion euros ($1.99 billion), compared with 2 billion euros in a Reuters poll of analysts. Chinese demand slumped in the quarter ahead of a July cut in import duties, resulting in higher incentive spending and an increase in unsold vehicle stocks that "particularly affected Maserati," Manley said.

Jeep to stop using bad Takata airbag inflators next week

FCA is gradually ceasing to produce vehicles equipped with Takata airbag inflaters found to be inherently faulty. These airbags, which lack a certain drying agent, have been linked with dangerous premature ruptures. According to FCA, the only vehicle still in production with the named airbag is the 2016 Jeep Wrangler, and in this case they are passenger-side airbags. Fiat Chrysler says it isn't aware of any incidents involving these air bag inflaters in Jeeps, but amidst concerns that vehicles with failure-prone airbags are still being marketed to customers, North American-market 2016 Wranglers will cease to be equipped with them starting next week. As per FCA's statement, global production is expected to end by mid-September. In addition to Toledo, Ohio, the Wrangler is produced in Egypt. FCA isn't going to sell the cars with the deemed-faulty airbags without disclosing the fact to the customers: anyone buying a 2016 Wrangler will be notified that the vehicle will most likely be subject to a recall in the future, even if there is not currently a recall announced for them. NHTSA has specified a "Coordinated Remedy Program" recall schedule for the coming years, and the airbag inflaters will degrade over a time frame of several years, when subjected to a humid environment. Related Video: News Source: Fiat Chrysler Automobiles, The Wall Street JournalImage Credit: Julien Amado / Autoblog Quebec Plants/Manufacturing Recalls Chrysler Jeep Ownership Safety Takata airbag recall

Fiat's Marchionne ponders Chrysler going public again

Fiat boss Sergio Marchionne says there's a real possibility that its majority-owned Chrysler Group may eventually return to the ranks of publicly traded companies. According to Bloomberg, the Fiat and Chrysler CEO gives that a "50 percent chance" of happening, but he doesn't appear to favor that scenario: "My preference is to be one single company... we belong together."
Marchionne has seemingly been operating under the assumption that Fiat will eventually own all of Chrysler, working to buy up the shares it doesn't own and looking to buy out the retiree trust fund that it shares Chrysler ownership with. Certainly, Chrysler going independent again would be increasingly difficult, as the companies continue to blend products, technologies, facilities and staffing, a trend started immediately after the Italian automaker became custodian of the brand following Chrysler's bankruptcy in 2009.
Marchionne's remarks to the media came at Chrysler's Kokomo, Indiana plant, where he was on hand to announce a major investment at four facilities in the state to build eight- and nine-speed automatic transmissions.