Jeep model push back shows FCA will have numerous challenges seeking merger image

Late last week on Friday, Jeep’s brand leader announced the best-selling Grand Cherokee sport utility model would face a delay of more than a year to its changeover.

That means serious challenges will be faced by Fiat Chrysler Automobiles chief executive officer Sergio Marchionne when out shopping for a partner for the world’s seventh largest automaker. That’s because the Jeep brand is the global ambassador of the recently merged automaker and there have been rumors that overall the carmaker will have delays for at least a dozen current or new models in North America. Jeep brand chief Mike Manley said the launch of a redesigned Grand Cherokee would be postponed to late 2018 or start of 2019 from late 2017. FCA claims the delays are not owed to a precarious financial situation, but the dealers will face longer waits on vehicles with new designs and updated technologies at a time when competitors are pushing for an increased pace of new model introductions. That means analysts and banks now forecast FCA’s market share increases previously targeted might become “unlikely.”

In its quest to find a merger partner, FCA’s prowess in keeping up with the speedier auto technology race could prove crucial for potential interested parties, say analysts and industry insiders. According to an unnamed source quoted by Reuters, FCA only used 1.5 percent of its annual revenue on research and development in 2014, while Ford used 4.8 percent and General Motors another 4.7 percent. In addition, Fiat Chrysler Automobiles US only had a return on the profit of 4 percent in the US last year, compared to roughly double for its two larger rivals.

Via Reuters