FCA reports surprisingly strong Q1 earnings
Fiat Chrysler Automobiles cannot afford to lose production of a single Ram or Jeep in the changeover to new models and that is what is driving a shift in which plants will make future generations of these core and profitable vehicles.
FCA CEO Sergio Marchionne today confirmed that production of the next Ram full-size pickup will be built at the Sterling Heights Assembly Plant in 2018. The plant currently makes the Chrysler 200 but Marchionne wants another automaker to take over production of the mid-size sedan.
The Warren plant that currently makes the Ram will be retooled to make the new Jeep Grand Wagoneer, again so no Jeep sales are lost in transitions.
Tooling the Warren plant to switch to the new Ram would have required “incredible surgery to accept the new truck in the beginning of 2018,” Marchionne said, adding he could not afford to lose production of the current truck during the changeover to bring the next generation on line.
Jobs will not be lost in the moves, the CEO told investors today and he said he has also assured the UAW that manpower will increase as a result of planned changes. Marchionne stressed that U.S.-built Jeeps are designed for international markets and he expects continued growth of global sales which continue to set new records for the brand.
The product updates came during a call to discuss first-quarter earnings. FCAearned an impressive $539 million USD (478 million euros) in the first quarter of 2016, a huge increase from $30.5 million USD (27 million euros) a year ago, for a company seen as somewhat financially desperate given efforts by its CEO to merge with another automaker.
FCA starts the year with a nicer dowry than expected courtesy of strong results in its two home markets: North
America and Europe. Revenue increased 3% to $30 billion USD (27 billion euro). The first-quarter results, released today, exceeded Wall Street expectations.
The strong results follow a tumultuous year for FCA. Marchionne courted and was rebuffed by General Motors in his quest for a partner last year but continues to seek a partner as he hones a product plan that is skewed towardscrossovers in his belief they are hastening the demise of the car.
Marchionne said in January he does not see the value in building his own smaller cars which is why he seeks a manufacturing contract with another company to build the Dodge Dart and Chrysler 200 in the future. Today he said thedecision to stop making small and mid-size cars in-house is “one of the best decisions we’ve ever made” and that if he had known how SUV-heavy the market would become, FCA would not have made a big investment in smaller cars.
It is the kind of decision that affects FCA’s manufacturing base in North America which is expected to undergo massive upheaval.
Workers still await full details of impacted plants. For example, the Dodge Journey was to share a platform and manufacturing base withe the 200 but those plans are on hold and the crossover will now extend its life on its current platform and continue to be built in Mexico, according to Automotive News.
In other product news,Marchionne said today that the new compact Jeep that will replace the Compass and Patriot will go on sale in early 2017. The Toluca, Mexico plant is preparing to build the Jeep as well as a plant in Brazil.
In Canada, production has begun on the new Chrysler Pacifica minivan and it will get a big advertising push in May and June. But FCA will downshift its overall advertising. Marchionne said the company has relied heavily on advertising since 2009 but does not needto keep spraying the world with advertising. “People know who we are now.”
Marchionne is confident Alfa Romeo will do well in the U.S. and China and says these are cars that people want and are not affected by the overall market shift to crossovers.
In another luxury brand, the Maserati Levante crossover is preparing to launch and Marchionne hopes the first units will go on sale in the U.S. in the third quarter but the vehicle must meet all quality targets before it is shipped.