Ray Hutton’s insightful look at the likely future of Fiat Chrysler Automobiles after CEO Sergio Marchionne ‘leaves’ (it’s complicated, as you shall see) was one of the most-read articles on just-auto.com this week and, if you haven’t already pulled up a coffee and paused from the work of the day for a look, I recommend you do.
Our well seasoned occasional correspondent Hutton, also an auto industry contributor to key national papers and international publications, provides a superb review of what Marchionne – he of the open neck shirt and knitted pullover instead of the usual CEO’s tailored suit – has done, what he might do after stepping down as FCA chief and who might step into a pretty big pair of shoes.
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As Hutton notes, Marchionne was brought in – in 2004 “when Fiat was in disarray” – from outside the car business and the Italian industrial establishment – and given an unusually free hand to turn it round. “Although he headed the whole of the Fiat Group, Marchionne quickly realised that it was the car business that needed the most attention and appointed himself chief executive of Fiat Auto. FCA has a flat management structure, with 23 senior managers reporting directly to the chief executive. Marchionne has no deputy; no-one has been given the opportunity to show that they could run the business as he has. Marchionne’s era has been like that of the autocratic motor moguls of old: he has made the decisions and personally done the deals. He earned the right to run everything his way when he gambled, and won, with General Motors to ensure Fiat’s survival in its darkest hour.” He can leave, sort of, with head held high and an outstanding near-end-of-career CV few can match, I should think.
Also popular, and no doubt a hit click with our many subscribers in the supply chain and procurement sectors, was news of Faurecia’s plans to open a new factory in Toledo, Ohio, home of course, to one of FCA’s key Jeep assembly plants. The new facility will create more than 100 new jobs and officially begin production in April 2019, ramping up to full production within a few months. Faurecia will spend an estimated US$11m to begin operations at the 73,000 square foot plant which will manufacture and assemble complete instrument panels. Good news.
Not so good was Moody’s Investors Service’s announcement it had downgraded its corporate family rating for Jaguar Land Rover parent company Tata Motors thought it added “the rating outlook is stable”. This sector tends to talk in rather arcane language but this is the gist: “Although JLR accounted for 48% of TML’s group unit sales in the fiscal year ending 31 March 2018, it generated 78% and 76% respectively of TML’s reported consolidated revenues and EBITDA for the automotive business. Given this large contribution, weakening credit metrics at JLR have a direct and immediate impact on TML’s consolidated results. Notwithstanding the improvements in TML’s Indian automotive business, it continues to operate at a higher leverage, with an estimated reported debt/EBITDA of 4.8x as of 31 March 2018. As such, the improvements are not sufficient to compensate for JLR’s weakening metrics.”
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My take: JLR generates the lion’s share of JLR’s revenue but debt at the parent company, whose own-brand models are not as successful is a bit of a worry. But, given JLR’s recent slew of well received new products, and some signs of domestic market recovery at Tata Motors itself, I wouldn’t be too much.
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By GlobalDataNew products continue to be unveiled almost every week and I had the chance to see and drive Volvo’s latest V60 estate car/wagon, the fully redesigned companion to the recently-announced US built S60 we covered last month. Given its never-ending run of new models these past three years, it wasn’t really a surprise to see the Geely owned automaker post a record operating profit for the second quarter.
Renault had some interesting thoughts on EVs to share with Simon Warburton in Lille and this week’s Trump Tariffs news included a both-barrels blast from supplier Linamar and some fast resourcing of a key US market SUV model at Volvo. Closer to home, Chris Wright found a UK new vehicle importer (as distinct from local maker) that isn’t fazed by a no-deal Brexit and is also enjoying some success with a new retailing model it now plans to roll out nationwide.
Finally, it was nice to learn, just this morning, that Toyota Motor Corporation (TMC) founder and former president Kiichiro Toyoda was inducted into the Automotive Hall of Fame in Detroit. Quite an honour. The organisers sourcing and displaying a replica 1936 Model A – Toyota’s first production car – from a museum on the other side of the country was a nice touch. I visited Nagoya and Toyota City back in 2009 and recall the museum which shows Toyota’s history beginning with the loom works – some of which is beautifully replicated in working order – and a fine display of Model A wood prototypes and production cars. Worth a look if you’re ever in Japan.
Have a nice weekend.
Graeme Roberts, Deputy Editor, just-auto.com
