Remember the basket-case that was Chrysler? Then who do you think Sergio Marchionne can have been describing in yesterday’s webcast eulogy: “We are incredibly satisfied with the first quarter; absolutely outstanding; fired on all cylinders…600,000 cars for the quarter…the target for the year is 2.4m. The outlook is absolutely positive.”
It’s a bit like going out of the room during the chainsaw massacre and coming back in to find everybody getting married.
“We have no bad news to give you,” said Marchionne, chairman and CEO of both Fiat and Chrysler, when he opened up his briefing on Chrysler’s first quarter results.
He is expecting a 33% rise in vehicle revenues this year… mostly from volume but also a big contribution from price which reflects better basic content. There is to be a new C-segment car and a range from the Dodge stable under the Dart name. The proof of that pudding will be in the third and fourth quarters of the year. Production arrangements are very flexible. “I can make as many cars as I need to.”
“Do I have nightmares about the US market? No. I sleep well. I see the market being incredibly rational. No-one has done anything stupid. As long as no-one else starts building new plants in the US, I think it will be OK.” Operating margins of 9% are do-able, he reckons.
On desirability and reliability, Marchionne says he has found a survey somewhere showing that Chrysler is behind one of his US rivals and ahead of the other.
There was an interesting exchange with the equity analysts about whether or not Chrysler should have its own captive finance company.
“The downside risk on a captive is that you co-mingle financial and industrial and end up making the wrong decisions,” said the ex-banker. “As long as I outsource finance I will be forced to be sensible. You need to be disciplined… if you want to stop drinking you don’t hang around in bars.”
So what’s next from Chrysler? Is the Dodge Dart range the most important thing since bankruptcy? “No. The [Jeep] Grand Cherokee is the most important. We have to drive the dealers into selling fully-loaded versions.”
Further to go with the renovation of Chrysler? “We hit the growth period with old product. We are continuing to spend on the C and D segments but we are still in that state [of having a shortage of new product].”