Following this week's Fiat Chrysler extravaganza, where the Italian-American manufacturer announced its plans for the next five years, the Autoblog staff was cautiously optimistic of the company's future. Investors? Not so much.

Fiat saw its shares tumble 12 percent in Wednesday's trading, falling from 8.67 euros ($12.06 at today's rates) to 7.44 euros ($10.35) as of this writing, with blame partly going to the Italian half of the FCA marriage, which recorded a pretty significant drop in profits during the first quarter of this year.

The plan, which will cost around $77 billion over the next several years, is facing criticism from investors thanks in part to a 1.4-percent drop in Fiat's first-quarter profits, to 622 million euros ($862 million). That figure is also short of Bloomberg analysts' projections, which predicted $1.18 billion in profits before taxes, interest and one-time items.

Marchionne's goal of dramatically increasing sales before 2018 is a particularly big point of contention.

"If you start your 2014-2018 plan with an extremely weak quarter, nobody will give you the credit that you will achieve your targets," Jens Schattner, a Frankfurt-based automotive analyst told Bloomberg. "If it was so easy just to launch new products to be successful in this industry, why wouldn't everybody do exactly the same."

Some of the concerns are even simpler, though.

"These brands need a huge amount of work to get where they need to be. The world changes very slowly and you have brands at the bottom of the pile in many regions. It's not going to happen overnight," said Harald Hendrikse, a London-based analyst for Nomura Holdings.

Alfa Romeo and Maserati are perhaps the biggest points of concern, each brand facing its fair share of struggles over the years. Marchionne's goal of dramatically increasing sales (over five-fold for Alfa and nearly as much for Maserati) before 2018 is a particularly big point of contention.

"The aspiration is big but the questions are bigger," said Erik Gordon, a business professor at the University of Michigan. "Can Fiat do enough to turn Alfa into a big, profitable brand? Are there enough Maserati buyers to make Fiat a global player?"

While we like what we saw earlier this week in Auburn Hills, it seems fairly clear that there will be a number of bumps in the road along the way. Whether the analysts' concerns end up being correct, though, remains to be seen.


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  • 50 Comments
      DMoney
      • 4 Months Ago
      Still might buy a fiat.
      johnbravo6
      • 7 Months Ago
      What plan? Release more garbage, just like the old garbage, and not even as good as the other companies' garbage?
      Mauricio Porrua Mend
      • 7 Months Ago
      I want to work as an analyst, of any industry, serously, these guys the so called "experts" never are certain of anything and most of the times "fall short" or were wrong about their predictions. These experts didn't predict the world economic crisis back in 2008 nor the auto industry crisis, and then they told that it was a mistake Fiat saving Chrysler from bankrupcy, then they said Marchionne would never buy the reminder of Chrysler for less than 5 billion euros, they also said twice that it was impossible for Fiat -Chrysler to sell the amount of cars they sell right now. Every time it makes more sense that Southpark episode where they cut a chicken head and put it in a board to decide what action take for a certain company, I guess they use the same system for their predictions.
      x percent
      • 7 Months Ago
      Wow, 12% is a HUGE one day share price drop. 77 billion? Fugetaboutit. They'll be broken up and sold off within 5 years.
      sixsix
      • 7 Months Ago
      Well they lost my Viper order, they lost my Cherokee order, and they will lose my next generation SRT Grand Cherokee if they decided to discontinue it, or make it look anything like the Cherokee. Not sure what is going on with them. The Viper launch had so much potential and was completely botched, which is 100% related to the fact that the Viper was a bargain Ferrari slayer for over a decade. Hell, the $100k ACR smoked the $700k Enzo at the Ring. Now before you trigger happy fanboys go off quoting current Enzo prices, at launch it was a little less than $700k. I buy ram trucks among other Chrysler products. If they make me angry enough I will abandon their brand all together, and so will others. Investors are right to be wary.
        whofan
        • 7 Months Ago
        @sixsix
        The Cherokee is worth a second look. I hated it when I first saw it. Now I think it looks very good for the model. I hope the Cherokee doesn`t inspire Jeep to go with that design direction but it`s nice for one model in their line up. The new Cherokee is nice.
        Street King
        • 7 Months Ago
        @sixsix
        Viper will probably go down market a little come refresh time depending on how they position it. The guy running Dodge (and now SRT) is the same guy that fixed the Fiat launch disaster after Laura Sauve messed it up with the JLO crap and got canned by Marchionne. He is a car guy too (owns a 71 Challenger) and knows how to run brands. I am confident the Dodge brand and the Viper are in good hands.
      whofan
      • 7 Months Ago
      Save the Dodge Caravan!!!!!!!!! The one thing I think will be a mistake is dropping the Caravan in favor of the Town and Country. I bought a new Caravan yesterday. I couldn`t afford the T&C for 10K more. A great family vehicle like a minivan needs to be affordable for families.
        express2day
        • 7 Months Ago
        @whofan
        FCA can easily reposition/expand (more lower but still keeping upper) the Town & Country range not unlike was done 10 or so years ago when the T&C took on some of the previous Voyager market. The entry price of the Town & Country in 1999 was about $28K when Plymouth was still around but by 2005 the T&C entry price was only $21K yet still had much higher priced upper level trims. The same sort of thing can and probably will be done again.
        luigi.tony
        • 7 Months Ago
        @whofan
        Totally agree. Dropping the Dodge minivan is like Jeep dropping the Wrangler.
      waetherman
      • 7 Months Ago
      The marriage of Chrysler and Fiat was always the equivalent of a pairing between the wallflower and the awkward guy with braces at the dance; nobody really thought they'd ever get together with anybody, but nobody is surprised that these two ended up together. And certainly nobody will be surprised if the coupling results in some fairly homely offspring and an early separation. Two automakers who haven't really been able to get their siht together before are certainly not going to be able to do it now. It's surprising that investors ever thought otherwise.
      mopar.man
      • 7 Months Ago
      I think this plan has several good moves in it for FCA 1.) SRT goes back to Dodge. This will help solidify Dodge's purpose 2.) Chrysler becomes a truly mass market brand. It really wasn't that upscale, and with Dodge focusing on performance, this is the logical choice. 3.) Most importantly, it keeps the product fresh. There are many refreshes and in some cases, all new product coming out. This is what is needed to build market share and ultimately profits. Overall, I think the plan is ambitious and likely won't fully be completed. However, I do believe (barring any massive economic shock) that Sergio and FCA can complete all of the important parts and some of the minor parts of the plan As far as all of the Wall Street Analysts go, I do believe they have a couple valid points in that FCA needs to make sure they don't bury themselves in debt in an attempt to grow. However, many of their comments show, in my opinion, what is wrong with America. FCA is getting criticized for offering an ambitious plan to grow the company, grow profits and become a strong global competitor. All they are hearing back is "it costs too much" and "it is hurting this quarters results." I would like to remind them that running a business is not cheap and does involve risk. Many manufacturing companies in this country have been hurt by lack of product and innovation. This is caused by large corporate stock holders who want to siphon off all of the profits today for their fund managers while leaving the company high and dry 5 years down the road. This is what happened to GM, old Chrysler and numerous non-automotive American manufacturing companies. Bottom line is, if you want to be successful in the medium term and "around" in the long term, then you must invest now. It may hurt this years profits, but will improve profits 5+ years down the road when the investments pay off. Stockholders provide no benefit to the company, they only exist to take profits. Employees, management, and other similar stake holders are the ones who make the wheels turn
        Janos
        • 7 Months Ago
        @mopar.man
        You've hit the nail right on the head. It takes money in order to make money. Stockholding, on the other hand, is a rentier function. Unless a company is selling new stock in order to generate development funds, a company's stock price is irrelevant in the operation of the company.
        cpmanx
        • 7 Months Ago
        @mopar.man
        Despite all the spreadsheets and all the models and trading theories, investors work heavily on psychology. When a company feels ascendent, like Tesla or Amazon, its shares trade well above what can be justified on income alone. When a company feels embattled, as Fiat does now to some extent, investors shy away. Once the investors and news analysts make their emotional decision, they can always find selected evidence to support it. It's not hard to imagine that if Sergio had presented a less ambitious plan, it would have been attacked for investing too little into future product. The attacks are not rational. In the long run, if Fiat-Chrysler rolls out a series of good new models and can sustain healthy profits, the attacks won't matter either.
        Street King
        • 7 Months Ago
        @mopar.man
        Great post!
      manure
      • 7 Months Ago
      Granted Fiat has no extra money, but the progress is really too slow. 5 year plan?! It's already more than 5 years since the 2008 crisis. You should have already fixed nearly your entire portfolio. In 2 years there is no excuse for any remaining crappy product.
        johnnythemoney
        • 7 Months Ago
        @manure
        Never mind the money spent to actually buy the company they are about to invest even more now.
      sirjaysmith
      • 7 Months Ago
      well i hope marchionne tilts his nose up at these investors. Its times like this investors need to be shown the door. You cant always be so money driven that you alienate your soul and customers.
      RetrogradE
      • 7 Months Ago
      Shocking! I thought Chrysler and Fiat was the greatest pairing since sleeping pills and alcohol.
      Timothy Tibbetts
      • 7 Months Ago
      Sticking to what I said before; the short version was the Dodge enthusiast was ignored.
        express2day
        • 7 Months Ago
        @Timothy Tibbetts
        How was the Dodge enthusiast ignored? I think Dodge came away better than many were expecting including the possibility that it would disappear (be replaced by SRT) or reduced to just a couple of models. True, it's losing the Grand Caravan and doesn't look like there will be an Avenger replacement but is keeping the rest of the models at least in sport/performance forms and adding others. I would think making Dodge THE performance brand and folding SRT back into it would make enthusiasts happy.
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