CEO Marchionne invests £9 bn in SUV production of Fiat Chrysler

Fiat Chrysler chief executive Sergio Marchionne delivered a plan on Friday to improve SUVs and invest 9 billion euros in electric and hybrid vehicles in an attempt to double operating profit until 2022.

Fiat Chrysler chief executive Sergio Marchionne delivered a plan on Friday to improve SUVs and invest 9 billion euros in electric and hybrid vehicles in an attempt to double operating profit until 2022.

The 65-year-old chief executive, who will step down in early 2019, said the automaker will phase out diesel engines in European passenger cars by 2021 and reiterated the need for consolidation to produce cleaner and smarter cars as FCA establishes a roadmap for its Jeep, RAM, Alfa and Maserati brands.

"These brands make up the most significant portion of our revenue and our earnings," said Marchionne, adding that FCA will have a positive cash flow by the end of June.

Fiat Chrysler expects to at least double adjusted operating profit and return to investment and dividend by 2022, helped by strong growth in its Jeep SUV brand and expansion of its premium product portfolio.

With a five-year strategy, the world's seventh-largest automaker said it is targeting pre-interest and tax-adjusted profits between 13 and 16 billion euros in 2022, up from 6.6 billion euros last year, while margins are expected to rise between 9 and 11 percent, compared to 6.3 percent in 2017.

FCA expects sales to grow about 7 percent a year and aims for a dividend rate of about 20 percent to pay a total of about 6 billion euros over the next five years.

Marchionne said that FCA will invest 9 billion euros by 2022 in hybrid and electric technology to ensure that the world's seventh-largest carmaker will comply with the emissions rules.

FCA has reshaped some US plants to increase production of lucrative SUVs and trucks while shutting down unproductive sedans and is on track to meet or exceed almost all financial targets set out in the latest strategic plan in 2014.

The move prompted the company to eliminate the margin gap with its biggest US rivals GM and Ford and now Europe is the focus of investors.