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Fiat Chrysler Wants to collaborate With Others on New Vehicles

Fiat Chrysler Automobiles Chief Executive Sergio Marchionne said his company is in talks with other automakers to share the costs of developing new vehicles and technology, particularly to cut greenhouse gas emissions, and called on the United States to ease fuel economy targets for 2025, reported Reuters.

“I think (automakers’) costs … (are) well in excess of what I consider a mature industry to be able to afford,” Marchionne told reporters at the Detroit auto show on Monday.

The U.S. government wants automakers to average 54.5 miles per gallon of gasoline for their lineup of vehicles by 2025. Marchionne said that with gasoline prices sliding to $2 a gallon or less, consumers have less incentive to pay extra for advanced fuel-saving technology. The U.S. Environmental Protection Agency will review the targets by 2018, and Marchionne said he expects other automakers to lobby the EPA to extend the timetable for achieving the 54.5 mpg target and the corresponding target for carbon dioxide emissions.

Marchionne deflected questions on whether FCA was in merger talks, but said that automakers’ relatively low stock values reflect investor perceptions that car companies are wasting capital producing their own versions of commoditized technologies, such as the hardware for four-cylinder engines.

Recently, separate media reports suggested that the Italian carmaker was talking to PSA Peugeot Citroen and Volkswagen about a potential tie-up. Both reports were denied by Fiat and the French and German companies.

FCA’s October announcement that it would spin off luxury unit Ferrari prompted speculation that the automaker would seek another merger partner, possibly to plug a hole in Asia.

Marchionne said Ferrari will always stick to its policy of keeping production levels below market demand, and dismissed speculation that the luxury group could significantly increase sales after the spin-off.

“To cite Enzo Ferrari, we will always sell one less Ferrari than the market wants,” said Marchionne, who also serves as Ferrari chairman. “That’s a policy that will never change.”

FCA plans to sell 10 percent of Ferrari via a public offering and distribute the rest of FCA’s stake to its shareholders. A bond issue may accompany Ferrari’s IPO in the second quarter, Marchionne added on Monday.

He said he expects the car markets in Europe, Brazil and the United States to post single-digit growth in 2015.

He said FCA would sell more than 5 million vehicles this year, up from an expected 4.7 million in 2014. The carmaker also expects to report 2014 results in line with guidance, he added.

The group said earlier on Monday it would add more than 1,000 workers at its Melfi plant in southern Italy thanks to “extremely positive” sales for its new Jeep Renegade and Fiat 500X models, allowing it to fully utilize the plant’s production capacity.

Marchionne said the new positions were a “big step forward and a positive sign for the country.” FCA will also end a state-backed temporary layoff scheme at the plant, allowing 5,418 employees to return to work full-time.

The positive results at Melfi are just a first step in FCA’s bid to make its European operations profitable by 2016.

They are part of a bigger goal to invest 48 billion euros ($56.73 billion) over five years to 2018 to boost sales by 60 percent to 7 million cars and increase net profit five-fold. Analysts have called those targets highly ambitious, but Marchionne reiterated on Monday that those targets still stood.

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