Fiat Chrysler shifts gears to better-selling big vehicles
MILAN— With lower gas prices shifting North American driving preferences toward bigger vehicles, Fiat Chrysler has accelerated its transition away from passenger cars, with an impact on its manufacturing footprint across the globe.
Fiat Chrysler Automobiles CEO Sergio Marchionne gave out pieces of the plan to exit the small and midsize car business in the U.S. and shift factories to hotter-selling SUVs and trucks. They will keep selling muscle cars like the Charger, Challenger and 300 and premium brands like Alfa Romeo.
He has said previously that the market shift in the U.S. to trucks and SUVs is permanent, aided by low gasoline prices, and that FCA would adjust to it.
The North American market, he said, “is relatively healthy in areas where we function well,” like Jeep and Ram.
“It has gotten a lot stickier on the passenger car side,” he said. “I think the call that we made to exit those businesses as producer in the United States in hindsight was probably one of the best calls we made.”
North American sales drove carmaker’s net profit of
€ 478 million ($539 million U.S.) in the first quarter
FCA is talking with other manufacturers to make its small and mid-size cars, but chief financial officer Richard Palmer said he wasn’t at liberty to discuss the talks. The strategy appears to be more targeted than Marchionne’s previous search for a suitor for another tie-up, part of his push for greater consolidation in the capital-heavy industry.
FCA will continue to make larger rear-wheel-drive muscle and luxury cars and should be able to grow in that area, Marchionne said.
But it’s possible, he said, when the plans are finished that “the true passenger car side will represent the lesser portion of our portfolio than it does today.”
North America was the clear driver of first-quarter FCA earnings reported earlier.
The Italian-American carmaker reported a net profit of € 478 million ($539 million U.S.) in the first quarter, up from 27 million in the same period last year, a figure adjusted to exclude the recently spun-off Ferrari division. Net revenues rose 3 per cent to € 26.5 billion.
Fiat Chrysler said its North America adjusted earnings before interest and taxes doubled to 1.2 billion euros on higher revenues, lower advertising spending and lower recall campaign costs.
Sales of Jeep, Ram trucks and minivans led an 8-per cent boost in regional sales to 634,000 vehicles.