Fiat Chrysler profits up on record North America results

Business News
Mike Manley

FILE – In this file photo dated Monday, Jan. 14, 2019, Fiat Chrysler’s new CEO, Mike Manley at the North American International Auto Show in Detroit, U.S.A.. Manley told analysts Wednesday July 31, 2019, that the logic of the failed tie-up with French carmaker Renault remains in place but repeated that FCA can survive on its own and refused to discuss terms under which merger talks might resume. (AP Photo/Carlos Osorio, FILE)

MILAN (AP) — Fiat Chrysler Automobiles CEO Mike Manley said Wednesday that the logic of merging with French carmaker Renault remains sound but refused to discuss terms under which talks might resume after a deal that would have reshaped the global auto industry collapsed last month.

Manley repeated to analysts that FCA could survive on its own, saying that the merger “was not a necessary step for us in terms of how we develop our business going forward.”

Fiat Chrysler has “a relatively robust plan that survives without that type of merger, but it clearly added very significant synergies,” Manley said, noting purchasing and platform sharing. Those cost-savings can still be achieved, but would be delayed, he said.

Fiat Chrysler proposed a full merger with France’s Renault to create the world’s third-largest carmaker and redraw the industrial landscape. But the deal stumbled last month over political resistance in France and the role of Renault’s Japanese partner Nissan.

Manley made the comments in a call with analysts after Italian-American Fiat Chrysler released second-quarter earnings showing a 14% increase in second-quarter profits on the back of record results in North America.

Net profit rose to 793 million euros ($884 million) during the quarter from 754 million a year earlier. The 2019 figure reflects the sale of car parts maker Magneti Marelli earlier this year. Fiat shares rose 3.9% to 12.16 euros in trading on the Milan stock exchange.

North American operations accounted for 65% of global revenues of 26.7 billion euros and nearly all profits were generated by sales of the new Jeep Gladiator and an expanded offering of pick-up trucks.

Still, regional shipments in the period were down 12% to 596,000 units due to dealer stock reductions. Worldwide shipments slipped 11% to 1.15 million.

Brazil helped Latin American profits rise 9%, but profits in Europe sank 88% and Asia narrowed losses.

Luxury marquee Maserati had another tough quarter, with a drop in shipments due to lower sales and dealer stock reductions. Manley said that the next two quarters would continue to be “relatively difficult for Maserati” but that it was “in good shape as we get into 2020,” when key product launches including an all-new sports car are planned. He confirmed plans to build a small utility-vehicle, which is scheduled for release in 2021.

Manley said Europe would be a priority in the second half of the year, but acknowledged challenges due to a relatively old and low-margin product portfolio, which will be updated in the next two years.

Manley said that “partnerships, cooperation and even mergers are going to be necessary going forward” for carmakers to maintain profitability in Europe, especially for those that are heavily exposed in the market. He insisted, however, that Fiat Chrysler can continue to meet global targets as a stand-alone after the failed Renault deal.

“Is our mantra going forward ‘We must have it, we must have it?’ The answer is no,'” he said.

Copyright 2019 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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