Wrangler Pickup, Ram HD, Refocused Maserati Are Key to FCA’s Growth

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To meet Ram pickup demand in the U.S., the automaker has been starving other markets and fleets, a practice that will continue into 2019 when those markets will be opened up, which should maintain growth, he said. This week Manley told Reuters FCA is reconsidering its plan to move Ram heavy-duty production to Michigan from Mexico so that it has enough production for anticipated growth.

Wrangler success to continue

The Wrangler is also strong and volumes should be sustainable because its sales also have been largely restricted to the U.S., meaning there is still much growth upside in other markets which are only now starting to get the flagship Jeep.

Next spring, Jeep will add a Wrangler pickup which will be shown next month at the Los Angeles auto show. FCA does not currently compete in the midsize pickup segment, which has grown significantly.

The CEO is not worried about the return of the Ford Ranger to the U.S. market. The Wrangler pickup is a lifestyle vehicle with light-duty truck capability. Customers have been calling for it, and waiting for it, for years, Manley said. There is pent-up demand, even among Wrangler owners, who want the pickup. The plants making the two vehicles are flexible enough to adjust demand for each in tangent with market demand.

Maserati has been mislabeled

As for Maserati, China accounts for half of the brand’s sales, and the slowdown in the world’s largest market has hurt the brand. The other problem is Maserati was being treated as a mass market brand, which it is not. Under Manley, Maserati has been separated from Alfa Romeo and is now under the leadership of Harald Wester. There will be “further actions” in the fourth quarter, Manley promises, as the brand gets a more pointed management process.



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FCA made $642 million in net profit in the quarter, a 38 percent decline largely attributable to a $812 million charge which is how much the company estimates it will spend in future settlements related to the diesel emissions scandal in the U.S. The automaker said the charge is not an admission of liability as settlement talks continue with the U.S. Justice Department, California officials, and lawyers representing owners of about 100,000 2014-2016 Ram pickups and Jeep Cherokees with diesel engines.

Current Jeep and Ram sales led to the highest profits to date in North America and drove a 51 percent hike in pretax profit compared with a year ago.

Europe and China are problematic. Slow sales have led to bloated inventories which require incentives to sell. Pietro Gorlier, FCA’s new head of Europe, will apply more discipline to the operations going forward, Manley said.

Europe has a new Fiat 500X coming in September and the region will get its version of the new Wrangler and Cherokee. In 2020, the Melfi plant in Italy will start production of the new Jeep Renegade with a gasoline engine as well as a plug-in hybrid version.

China will benefit from the new three-row Jeep Commander designed for that market, and a new Jeep Cherokee coming in early 2019.

This was the second earnings call for Mike Manley as CEO. So far Manley has shown strong business mettle with wise leadership shuffles and the deal to sell Magneti Marelli, which will make it possible to pay an annual dividend of 20 percent of earnings, a promise made by the late Marchionne, his predecessor. Manley also expects the automaker to get an investment grade rating in the near future, which will reduce borrowing costs.

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