In its first quarter, Fiat Chrysler (FCA) saw a 29 percent decrease; dropping in revenue from 1.07 billion Euros in approximately January or March to 24.5 billion Euros in May. The lack of sales in FCA’s North American profit center, Europe and China is why FCA is seeing such a disappointing first quarter.
Since the start of its first quarter, FCA has had a rough start. To begin with, FCA shipped only 1.037 million vehicles, a 14 percent decrease from the previous year. Beyond the smaller number of cars shipped, the FCA has had trouble in its North American, European, and Chinese market.
In North America, which makes up 98 percent of the company’s profits, sales are slowly but surely dissipating with the operating profit margin falling from 7.4 percent to 6.5 percent in the initial months of 2018 and deliveries falling by 3 percent. This drop in the U.S. puts them behind FCA’s North American rivals, General Motors, and Ford Motor Co. FCA activities have also been fruitless in its other two markets with China experiencing economic decline and Europe facing stricter emission regulation; causing any FCA activities to have little to no impact.
Despite this concerning roadblock, FCA remains optimistic. According to the company, it still expects to earn 6.7 billion Euros prior to interest and taxes for the 2019 sales year. The current FCA CEO Mike Manley in the face of these problems has devised plans for each respective market. For China, Manley intends to do a turnaround; reorganizing FCA’s Chinese joint venture with Guangzhou Automobile Group Co. through new leadership and through combining its sales operations. For Europe, Manley plans on preparing for the new emission regulations; preparing to spend $2 billion on regulatory emissions credits over the next few years to ensure all of FCA’s new plug-in hybrid and battery electric vehicles pass expectation.