Sergio Marchionne steps down as CEO of Fiat Chrysler
Fiat Chrysler announced the sudden resignation of long time CEO Sergio Marchionne who was forced to step down following worsening health conditions. FBN’s Cheryl Casone with more.
Detroit’s “Big Three” automakers will reveal second-quarter financial results Wednesday amid uncertainty over President Donald Trump’s proposal to place tariffs on imported cars.
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The auto industry is pushing back against a plan to impose levies on a reported $351 billion in vehicles and parts shipped from markets overseas. In June, Trump threatened to slap the European Union with a 20% tax on car imports unless the bloc reduces trade restrictions. German automakers have reportedly thrown their support behind setting tariffs to 0%, and a group of industry trade organizations sent an open letter to Trump last week calling tariffs a “massive tax on consumers.”
“A strong economy gave auto sales a solid boost in the first half of the year, but in many ways the industry is operating on borrowed time,” Jeremy Acevedo, manager of industry analysis at Edmunds, said in an email.
Higher interest rates and vehicle prices have made car purchases more expensive, and tariffs could cause a “dramatic snap back,” Acevedo added.
“If tariffs cause a significant economic slowdown in tandem with spiking vehicle prices, the impact on the auto sector could be devastating,” he said.
While executives will likely face questions during earnings calls over the impact of trade policy, automakers mostly have enjoyed stronger U.S. sales than expected, thanks to consumer demand for SUVs and trucks.
General Motors said pickup trucks helped drive a 4.6% increase in domestic sales during the second quarter. Wall Street analysts expect the company to report adjusted earnings of $1.81 a share for the period, compared to $1.89 in the same quarter a year earlier. Revenue is projected to hit $36.86 billion, down slightly from $37 billion.
Fiat Chrysler’s earnings report will be the first under new CEO Mike Manley, who abruptly replaced Sergio Marchionne on Saturday after the longtime executive fell seriously ill. Manley previously ran the Jeep and Ram brands.
The Italian-American automaker posted U.S. sales growth of 11.2% during the latest quarter amid a double-digit gain for Jeep. In presenting Fiat Chrysler’s new five-year plan in early June, Marchionne said the second-quarter financial report would show Fiat Chrysler at zero debt for the first time.
|GM||GENERAL MOTORS COMPANY||39.27||-0.13||-0.33%|
|FCAU||FIAT CHRYSLER AUTOMOBILES N.V.||18.98||-0.34||-1.76%|
|F||FORD MOTOR COMPANY||10.47||-0.09||-0.85%|
Acevedo said redesigned Jeep Wrangler and Jeep Compass SUVs have supported strong sales in the U.S. for Fiat Chrysler. Like GM, Fiat Chrysler is also counting on a new version of its full-size pickup truck, the Ram 1500, to further drive sales this year.
Shares of Fiat Chrysler fell Monday in the first day of trading following Marchionne’s departure.
Ford, whose U.S. sales dipped nearly 1%, is expected to report 34 cents a share in earnings on revenue of $36.2 billion. The automaker booked a profit of 56 cents a share and revenue of $39.9 billion a year ago.
Ford’s average incentive spending swung 22.7% higher year-over-year amid an effort to reduce its inventory of passenger cars, according to Edmunds. In April, the company said it would drop most slow-selling cars from its lineup by 2020, leaving just the Mustang and a new Focus Active crossover.
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