Let's get our facts straight: For years, Fiat Chrysler Automobiles N.V. (FCAU) CEO Sergio Marchionne had said that he would be stepping down as CEO in the first half of 2019. Marchionne was born the year Dwight Eisenhower was first elected to The White House. He's not a young man anymore.
Marchionne had been equally clear that his successor would come from within the company, and that Mike Manley -- the head of Jeep -- was the leading contender for the post. I did not hear anyone complaining about this fine choice. I have met Mike many times and he seems like the obvious man for job.
Then, Marchionne fell gravely ill in the aftermath of a surgery in July. This is obviously a sad misfortune, but from the company's perspective it became the obvious moment to accelerate the long-planned CEO transition by a few months.
FCA is unlikely to see any abrupt changes under Manley for several reasons.
Automotive industry product cycles -- and the associated strategies -- are much longer than in consumer electronics and Internet companies. It takes approximately five years to develop a car -- from sketch to showroom.
Building a factory? Once you have negotiated with a government, obtained permits and financing, two years is the best-case scenario. Then you have to recruit the workforce and develop new supplier logistics. It's a huge challenge, as Tesla's (TSLA) production and logistics problems keep reminding us every day.
So FCA's new CEO isn't going to be able to change anything much on the customer-facing side for at least two to three years, and arguably closer to five.
FCA also has a strong product lineup at present.
If you haven't been in any of the newest FCA 2018 or 2019 model year products -- Jeep, RAM, Chrysler, Dodge, Fiat, Maserati and Alfa Romeo -- in the last year, you are missing out. I've been in all of them and across the board, as a portfolio of products, FCA is extremely competitive.
Highlights include the iconic Jeep Wrangler, the best-in-class RAM 1500 pickup truck, the "Class of one" Chrysler Pacifica plug-in hybrid and the "never abolish it" Dodge Challenger with up to 840 horsepower. If you're in the market for a new car, these are all top picks that should be in your final consideration.
For FCA and Manley the main near-term challenge is the same one that threatens the entire global automobile industry: New and existing trade barriers.
Europe has a 10% tariff on U.S. cars. China has (had) a 25% tariff on U.S. cars. In contrast, the U.S. has only a 2.5% tariff on imported cars. President Trump views this discrepancy as offensive -- who doesn't? -- and has offered Europe and China a "zero-zero" deal, in which all tariffs go to zero.
The U.S. is now threatening higher tariffs, if those other countries don't bring theirs down to at least the U.S. 2.5% level. The risk here is if nobody yields. If that happens, all automakers -- not only FCA -- is in for some big trouble. The cost of making cars would skyrocket, and therefore the demand would collapse. Recession and unemployment would likely follow.
So far, neither China nor Europe has accepted Trump's offer. Will they? I hope so. FCA sure hopes so.
If this happens, the auto industry would boom, and consumers everywhere would be buying less expensive Jeeps, Dodges, Chryslers and RAMs. FCA would thrive.
So FCA's problem is not with its management or the CEO transition. Those things are solid. Rather, the risk to FCA's health is from Europe and China not accepting President Trump's offer of zero-zero tariffs. It's the identical risk facing all of the automakers.
One additional long-term risk is emissions laws that, unless they are cut back, will increase the price of making a car to the point where demand will plummet.
Once we get beyond the dangerous tariff drama, this will be the next challenge for Manley, FCA and the industry. As it stands, these emissions regulations threaten the profitability of all automakers starting as early as the next year.