Photo: FCA
Two FCA dealers sued the corporation last week on allegations of racketeering. Even though the company denied the accusations and claims it can prove they are not true, the business lost one billion dollars in market value.
According to industry analysts quoted by Automotive News, the lawsuit scared shareholders and raised questions about the trust level of carmakers in general. When such scandals emerge, even if the allegations are untrue, the degree of confidence in the car manufacturer is questioned, as the situation is not the first when car makers have been accused of altering the truth.
Fiat Chrysler Automobiles has an ambitious goal for the year 2018, and the company seemed to be on its way to achieving it. However, the Italian-American corporation must resurrect the Alfa Romeo brand on a global level to achieve its 2018 sales goal.
Furthermore, the FCA must attain an annual operating profit of nine billion euros, and eliminating its net debt is mandatory if that objective is to be achieved.
Until December 2015, FCA managed to attain 69 consecutive monthly sales increases and boasted about being the only Top 5 automaker to grow its market share in the U.S. market.
Other industry analysts, such as Evercore ISI’s Arndt Ellinghorst, has said that the company’s condition is worrisome even without the allegations made by two of its dealers last week. Specifically, FCA has one of the highest dealer inventory levels in the industry.
The passenger car stock of FCA dealers is of 109 days of supply. The analyst explains that such a high level of stock is risky in a market like the United States, where customers tend to go for SUVs and light trucks instead of hatchbacks and sedans. Ellinghorst also specifies that there’s no reason to believe that FCA has breached any law in the USA.
Even after the allegations against FCA are proven wrong, the company will need some time to get its market value back to the level it was before this whole scandal. This goes to show how hazardous some allegations can be and how volatile the stock market really is.
Fiat Chrysler Automobiles has an ambitious goal for the year 2018, and the company seemed to be on its way to achieving it. However, the Italian-American corporation must resurrect the Alfa Romeo brand on a global level to achieve its 2018 sales goal.
Furthermore, the FCA must attain an annual operating profit of nine billion euros, and eliminating its net debt is mandatory if that objective is to be achieved.
Until December 2015, FCA managed to attain 69 consecutive monthly sales increases and boasted about being the only Top 5 automaker to grow its market share in the U.S. market.
Other industry analysts, such as Evercore ISI’s Arndt Ellinghorst, has said that the company’s condition is worrisome even without the allegations made by two of its dealers last week. Specifically, FCA has one of the highest dealer inventory levels in the industry.
The passenger car stock of FCA dealers is of 109 days of supply. The analyst explains that such a high level of stock is risky in a market like the United States, where customers tend to go for SUVs and light trucks instead of hatchbacks and sedans. Ellinghorst also specifies that there’s no reason to believe that FCA has breached any law in the USA.
Even after the allegations against FCA are proven wrong, the company will need some time to get its market value back to the level it was before this whole scandal. This goes to show how hazardous some allegations can be and how volatile the stock market really is.
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