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FCA: unified, rewarding loyalty

by David Zatz on

FCA: Fiat-Chrysler AutomobilesSergio Marchionne told Fiat shareholders today that the combined Chrysler and Fiat organization, to be traded in both New York and Milan, has adopted a completely new logo to “avoid the suggestion that one has precedence over the other,” a major break from the disastrous linkup of Chrysler with Daimler-Benz.

The company will also adopt a “loyalty voting structure to reward long-term share ownership and promote a stable shareholder base,” presumably reducing the danger of corporate raiders such as Kirk Kerkorian or Carl Icahn suddenly grabbing power and forcing the company to shed assets or make unwise dividend payments. Mr. Kerkorian’s attempt to take over Chrysler and put Lee Iacocca back into power reportedly pushed then-CEO Robert Eaton into giving the company to Daimler-Benz in 1989.

The new holding company for Chrysler and Fiat is called Fiat Chrysler Automobiles, and is to be incorporated in the Netherlands, using the United Kingdom as a tax base.

Sergio Marchionne

Mr. Marchionne also noted that much of the companies’ growth in the Asia-Pacific region has been driven by the American side, notably by Jeep (half of total sales in the region), with growth also stemming from the jointly developed Fiat Viaggio and Dodge Journey/Fiat Freemont; Journey is the fourth best seller in the region. Sales in China, Australia, India, Japan, and South Korea have greatly outpaced the market, although Fiat and Chrysler remain minor players in each country.

Declines in Europe were mainly due to the Italian market, with sales in the rest of Europe essentially flat; Mr. Marchionne noted that the company was sacrificing sales in order to avoid “value destroying pricing strategies.”

Dodge Durango and Jeep Grand Cherokee were launched in Brazil, which also gained the Fiat Palio Fire, Fiorino, and a new Strada pickup. A new plant at Pernambuco, capable of 200,000 units per year on the Small-Wide platform, will start up in 2015.

Larry Vellequette of Automotive News noted that FCA’s long-term goal of 6-7 million units per year may be difficult to achieve with current and planned production facilities.

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