Fiat Chrysler 4Q15 Earnings Call Notes

Fiat Chrysler Automobiles NV (FCAU) Sergio Marchionne on Q4 2015 Results

We are not of the view that this industry is facing impending demise

“We are not inside FCA of the view that this industry is facing an impending demise and I think that part of this presentation today is designed to provide you with some comfort that we have appropriate or adequate controls over the strategic development of those business that we do feel that we will be able to navigate through these rough waters and that we will come out of this process as better organizations.”

Need to move from auto making to the business of transportation

“But I think that ultimately trying to move the discussion the way from the concept of auto making, trying to re-pitch our future as being involved in the transportation business in the broadest sense of the term we doesn’t do much service to the sort of needs and objectives of the sector that it faces today.”

The Brazil market lost 1m cars

” the 7 million number was a number that was substantiating or supporting a view of markets as we saw them back in May 2014, we have readjusted all of our plans to reflect current market conditions. We have seen the Brazilian market which was expected to perform much, much better, lose over 1 million cars in less than 18 to 24 months which has had pretty significant impacts on our volume ambitions. So we have recast all those. We are going to stay away going forward from enunciating goals that relate to volumes ”

Development portfolio in the US driven by the regulatory environment

“I have always viewed the development of our portfolio in the United States as being already driven by the regulatory environment and this by the need for all of in the market to achieve the 2025 standards and to achieve the greenhouse gas emission targets that we have all signed up to.”

Autonomous technology is probably going to come from an efficient supplier base

“I am absolutely convinced that all the things that have been talked about by other industry participants will effectively materialize over a period of time and I am absolutely convinced that the relevance of the automaker in that process is not going to be as key as it has been historically in terms of the development of the automotive sector. We are going to have to rely by necessity in efficient supplier base and there is one which continues to break barriers and continues to provide solutions which are going to be available to us and to others. ”

We have to ask ourselves what is the value of a brand in the autonomous paradigm

“one of the questions that we all have to ask ourselves is what is the value of a brand in the presence of autonomous driving if effectively at the end of the day, it is not the driver that effectively exercises control and the way in which that reflects itself in margins and positioning and the relevance of the brands in the marketplace is an unknown issue. ”

The industry has historically done a good job of distracting itself from its primary function: making good cars

“And so we need to be very, very careful that we don’t spend – we have done, by the way, this industry has done a tremendous amount, if you look at its – even its recent past, it has always looked for ways to sort of defocus its primary function of making cars and making them relevant in the marketplace by looking for ancillary side solutions and somehow we will change the paradigm. ”

I do agree that we are at top-ish volumes, but 16m would be too bad

“I do subscribe to the notion that we are looking at top-ish volumes today. The rate of adjustment is unknown. I also know that there is a phenomenal amount of allowed amplitude and the isolation of volumes. I mean, if we went to 16 million, it’s not going to be the end of the world in terms of size and I think that we will all adjust to reflect those market conditions.”

More than half our fleet in the US should come from hybrid in the medium term

“In the medium-term I’d say more than half of our fleet in the United States is going to be in some form of hybrid. Calling the right time for the conversion is difficult to tell.”

There’s always something to monetize

“There are things that I can monetize. I mean, including my office chair, the question is do I need to do that. And the plan is calling for a €5 billion cash holding by the end of 2018. I think you guys should be asking for distributions and that point of time is opposed to my – worrying about monetizing assets.”