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At Fiat Chrysler, Quality Is the Way to a Higher FCAU Stock Price

Will Ashworth

Fiat Chrysler (NYSE:FCAU) has the name and the history, but there’s more to do if FACU stock is going to make any real headway.

Fiat Chrysler stock FCAU stock

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Last week there were rumors that Fiat had been approached by Peugeot (OTCMKTS:PUGOY) about a tie-up. Also in the discussion is a possible merger with Renault (OTCMKTS:RNLSY) and Nissan (OTCMKTS:NSANY) who are in the middle of their own merger. While the rumors led to a brief lift in FCAU stock, Fiat Chrysler’s best solution is to build better cars.

Quality is now job one at Chrysler. And it’s about time.

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The late Sergio Marchionne did so many things right when it comes to Fiat Chrysler that it’s futile to try to poke holes in the man’s legacy. The Agnelli family owe him a lifetime of thanks.

Recently, 80 World Car Awards jurors from 24 countries named Marchionne the World Car Person of the Year , in large part because of his daring move to take two struggling car companies (Fiat, Chrysler) and merge them into one cohesive unit with strong brands like Jeep and Ram.

For me, he was and is one of the best CEOs in modern business history.

However, except for Ferrari (NYSE:RACE), he never was able to win many quality awards. Now, his successor, Mike Manley, is attempting to end this losing streak.

Quality Is Job One

Last October, Manley put 23-year company veteran Mark Champine in charge of Quality for North America. Formerly, Champine was in charge of Electrified Powertrain Programs in North America.  

While it won’t happen overnight, I believe a genuine commitment by Fiat Chrysler to make quality vehicles is the one thing that can raise the FCAU stock price over the long haul.

“No, we’re not moving fast enough. We need to move faster to get to … our objective, which is to be among the best. That’s our mission,” Champine told the Detroit Free Press during a meeting at the company’s U.S. headquarters in March.

Look, if Champine and the rest of the management at FCAU can live up to the company goal to deliver quality vehicles, mergers such as the ones mentioned this past week will become a lot more expensive for the interested parties.

Decision Time

As a current owner of a 2015 Jeep Cherokee and previous owner of several Jeep and Chrysler products, I can honestly say that quality isn’t what comes to mind when I think about my ownership experience.

Most of the vehicles I’ve bought were purchased because I liked the way they looked or drove. None were acquired because I thought they were the most reliable vehicle on the road. A financial planner might tell me I’m shortsighted because cars depreciate significantly, but for a lot of people, their vehicle represents who they are (i.e. You don’t buy a Dodge Challenger because you care about gas mileage).

That said, I wouldn’t know that I’ve ever cursed the day I bought a Fiat Chrysler product despite experiencing moments of frustration. You shouldn’t buy a car or truck if you’re not prepared for a little time in the shop.

I’m in the process of starting my search for a vehicle to replace my Jeep.

My wife and I would like to buy a plug-in hybrid. In the most recent federal Canadian budget, the government introduced a proposal that would allow salaried employees who use a car for work to write off the entire cost of the vehicle up to CAD$55,000.

Suddenly, Toyota’s (NYSE:TM) 2019 RAV 4 Hybrid is looking very attractive for two reasons: Toyota’s known for its reliability, it would fit under the $55,000 maximum, and it’s ready for sale.

Over at Jeep, plug-in versions of the Renegade and Compass should be available in 2020 sometime. Neither of those vehicles is appealing to us. However, the Alfa Romeo Tonale concept vehicle that recently appeared at the Geneva Auto Show is.  

There’s a problem: It probably won’t be available until 2021, and Alfa Romeo’s got a history for poor quality.

The Bottom Line on FCAU Stock

If Fiat Chrysler can get its quality ratings higher, not only will FCAU stock move higher, but they’ll likely keep me as a customer.

But it better move fast because we can’t wait past 2021 to replace our vehicle.

At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.

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