Shift to SUVs helps Fiat Chrysler
CEO aiming to reduce automaker’s debt ahead of his retirement in 2019
Fiat Chrysler Automobiles NV’s lineup shift to sport utility vehicles helped the Italian-American carmaker weather a fading U.S. auto market as demand for its high-end Maserati Levante SUV boomed.
Second-quarter adjusted earnings before interest and taxes jumped 16 per cent from a year earlier to
€ 1.9 billion ($2.8 billion) as deliveries by the Maserati luxury brand almost doubled, Fiat Chrysler said Thursday in a statement.
Fourfold earnings growth at the division and a 40-per-cent surge in Europe more than made up for a1.7-percent profit decline at the company’s mass-market nameplates in North America.
Chief executive officer Sergio Marchionne’s strategy to emphasize more-lucrative SUVs over sedans and hatchbacks is gaining traction as he seeks to eliminate Fiat Chrysler’s debt before he retires in 2019.
Since General Motors Co. rebuffed his approach for a combination in 2015, Marchionne, 65, has focused on making Fiat Chrysler a more attractive partner down the road. In addition to expanding the SUV-focused Jeep brand, Fiat Chrysler has added the Stelvio to the Alfa Romeo division’s lineup, with the model now entering the U.S. Net industrial debt narrowed to € 4.23 billion at the end of June from € 5.11 billion on March 31, the company said. Fiat Chrysler stuck to a target for the figure to decline to less than € 2.5 billion at the end of 2017.
First-half demand in the U.S. car market fell 2.2 per cent, with Fiat Chrysler Group sales there dropping 6.9 per cent. That contrasts with the company’s 11-per-cent delivery jump in Europe, which beat the regional market’s 8.2-per-cent growth, according to industry figures.
Fiat Chrysler’s second-quarter profit in North America slid 1.7 per cent while vehicle sales dropped 14 per cent as the company discontinued low-margin models. One of the main threats to Marchionne’s 2018 goals will be U.S. investigations into the company’s diesel models that could put at risk “the compelling de-leverging opportunity we see in Fiat Chrysler in the coming years,” wrote Jose Asumendi, an analyst at JPMorgan Chase & Co., in a report to clients before the results were published.
The U.S. Justice Department sued Fiat Chrysler in May, alleging the carmaker installed software that illegally reduced diesel vehicles’ emissions controls and allowed them to spew out pollution in far excess of standards.