Automakers often talk about economies of scale – a moving target in an industry where industry giants like Toyota Motor Co., General Motors and Volkswagen AG are all shooting to reach 10 million annual sales during the next year or so.
By comparison, Fiat Chrysler Automobiles is little more than an also-ran, with a total worldwide sales volume of “just” 4.4 million vehicles last year, and a goal of 4.6 million in 2014. But with the company’s formal merger of its U.S. and Italian operations now complete, CEO Sergio Marchionne has some big aspirations. He is targeting a nearly 25% increase in production over the next four years.
“By 2018, Fiat will be able to make more than 6 million cars,” Marchionne said after a shareholders’ meeting in Turin, where the Fiat side of the company is headquartered. “I don’t want to give any details of the plan, but we are going in that direction.”
In fact, Marchionne is expected to provide significant additional details a little more than a month from now as he is set to lay out Fiat Chrysler’s longer-term strategic plans during a day-long briefing at the U.S. headquarters in the Detroit suburb of Auburn Hills.
Marchionne has often suggested that he’d like to see FCA hit the 6 million mark, a figure that would, in his plan, yield significant improvements in economies of scale. That translates into lower engineering and production costs even as Fiat Chrysler expands its range of offerings and enters into or expands its presence in critical emerging markets.
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One of the most important would be China where the CEO hopes to soon wrap up a deal that would allow for Jeep production, sidestepping hefty import duties the brand is now saddled with. Ironically, Jeep was the first foreign automaker to produce vehicles in the booming Asian nation – but it lost that operation to Mercedes-Benz after the break-up of the ill-fated DaimlerChrysler alliance.
FCA is also hoping to expand its presence in other so-called BRIC markets. Marchionne noted the maker is also setting up a partnership to produce Jeeps in Russia. It remains to be seen if the ongoing crisis over Russia’s aggressive stance on Ukraine might impact that project.
But it’s far from ignoring more established regions, notably the U.S. and Europe. The Chrysler side of the company recently launched production of the newly redesigned 200 sedan at the Sterling Heights Assembly Plant near its U.S. headquarters. The factory was originally slated to close following Chrysler’s emergence from bankruptcy in 2009. Instead, it will be able to produce more vehicles than ever thanks to an $800 million expansion and renovation program.
(Click Here for a review of the new Chrysler 200.)
Europe remains one of the maker’s biggest challenges. The Continent has been hammered by its worst economic crisis in decades but Marchionne said last month that he is “generally optimistic” about the recovery of the European automotive market – though he cautioned the turnaround is likely to be slow.
During an appearance at the Geneva Motor Show, Fiat Chrysler rolled out an assortment of new products ranging from the compact Jeep Renegade – which could become the brand’s biggest global model ever – to the Alfa Romeo 4C Spider. The long-struggling Alfa brand is expected to re-launch itself in the U.S. market by mid-2014 after a two decade absence.
Also unveiled in Geneva was the Maserati Alfieri Concept, a dazzling 2+2 coupe that could be in production within the next two to three years, company officials broadly hinted. Maserati is itself in the midst of a major makeover and has recently been generating triple-digit sales gains in the critical U.S. luxury market.
This week’s shareholders meeting in Turin will be the last there for the newly renamed Fiat Chrysler Automobiles. Going forward, the company will have its legal headquarters in the Netherlands and its financial offices in London. It also plans to re-list its shares on the New York Stock Exchange.
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