Fiat Chrysler (FCAU) Q1 2016 Earnings Call

Fiat Chrysler (FCAU) CEO Serio Marchionne said the company will be focusing on trucks and SUV’s while placing less focus on cars

“I think you’ll see a lot more SUVs of a variety of calibers occupying what has historically been a passenger car market. And so in that part of the market it’s gotten sticker.  On the passenger car side, I think, the call that we made to exit those business as a producer in the United States in hindsight was probably one of the best calls we’ve made.”

Fiat Chrysler (FCAU) CEO Serio Marchionne continues his industry call to arms for auto manufacturer consolidation to improve efficiency 

“I think that this realignment of the NAFTA portfolio, to be perfectly honest, was a direct consequence of the fact that we started focusing on the relevant portion of our activities and sort of abandoned the notion of being able to withstand mediocre performance of some segments, simply because of the fact that it was due to a higher calling of being an auto maker.  And I think we have all learned, I think, inside the house at senior leadership level and working our way down the structure, as to the importance of capital usage and I think that discipline is going to benefit all of us going forward.  Having said this, I’ve remained hopeful that over a relatively reasonable period of time that, this industry will come to risk with this issue and tackle them intelligently. I think we laid out a roadmap for that to happen. I remain hopeful that somebody will pick it up with us and get it done.”

Fiat Chrysler (FCAU) CEO Serio Marchionne said the regulatory environment is making it harder for them to do business

“A couple of general comments about the regulatory environment and then we’re not getting into details. I think we have been incredibly clear over the last number of quarters about the fact that the regulatory environment has become a lot more stringent and I think that the requirements in positions that are being made and I think reasonably so on auto makers are going to increase the cost of doing business for all of us.  And it’s something that we need to understand. I think we need to understand even in terms of the accrual rates with which we are provisioning for eventual remediation cost, whether it be warranty or recalls or otherwise on any unit that we sell.”

Fiat Chrysler (FCAU) CEO Serio Marchionne described why he’s pulling back on advertising 

“I think we’re being incredibly selective about where we’re pumping our money on the advertising side. I think we went through an inordinate effort in the first seven years of our lives to try and get credibility back into the marketplace. And I think advertising was a tool that was used extensively and effectively I think between 2009 and now. I don’t think we need to over-commit as we have done in the past, but I think you’ll see more discipline coming through.”

Pricing in the passenger car business has been unacceptable

“I think we have seen a lot of competitive pricing on the passenger car side. I mean that’s the one that to me is – I hate to say that we were right in predicting the shrinkage, but there’s no doubt that there’s an oversupply of nameplates and of willing players into that marketplace, which is driving pricing to levels that we would have found unacceptable in the medium-term to long-term.”