FIAT Chrysler says the popularity of SUVs worldwide is here to stay, and it’s leaning heavily on the Jeep brand to improve its fortunes.
The Italian-American carmaker predicts Jeep sales will nearly double to 2 million worldwide by 2018, fueled by low gas prices and new models. To keep up, Fiat Chrysler plans to cut production of small cars in the US so it can build more Jeeps.
This means reining in the hectic new-model release schedule for Alfa Romeo. It also is set to kill off some Chrysler and Dodge small and medium cars, potentially replacing them with products from another manufacturer.
Describing Jeep as the bedrock of FCA’s new five-year business plan announced yesterday, the company revealed a Jeep sales target of two million vehicles by 2018 – up from last year’s record 1.2 million Jeeps.
The Jeep plan not only includes a born-again Wagoneer and all-new ute but also a new-generation lightweight Wrangler, eventually with alternative powertrains including diesel, mild hybrid and full hybrid.
The new Wrangler is due in about 2017, but the new powertrains will be introduced at intervals between 2018 and about 2023.
FCA has already announced a six-week closure of the Michigan plant that builds the Chrysler 200 due to a whopping 148-day backlog of stock.
According to FCA CEO Sergio Marchionne, the Chrysler 200 and Dodge Dart will be “allowed to run their course” – a euphemism for letting them die after this generation.
The company currently has a deal with Mazda to share the Japanese company’s MX-5 as the new Fiat 124 Spider.
FCA reiterated that Alfa Romeo would remain a core global brand, but that it plans to reduce investment in Alfa research and development, manufacturing and new products between now and 2018.
Blaming Chinese uncertainties and the need to properly execute a global distribution network, FCA said it would “re-pace the launch cadence” of Alfa, completing its new line-up by 2020 instead of the original 2018.
The Alfa plan still includes seven all-new rear-wheel-drive models to follow on from the new Giulia mid-sized sedan, including a mid-sized SUV within the next 12 months, followed by a full-sized sports sedan, two more SUVs, two “speciality” cars and a hatchback.
Along with Jeep, FCA’s Ram pick-up operation is set for expansion, with a new-generation Ram 1500 due before 2022. Later, that will get next-generation powertrains, including a mild hybrid beyond 2022.
The Ram is expected to get lightweight construction using new high-strength steels, although American pundits still expect the truck to sit on a tough ladder chassis.
Ram 1500 production is also expected to move into a former Chrysler plant to increase pick-up capacity for expected sales growth.
“Whatever we put in place will deal with demand and unmet demand as we see it today,” Marchionne said.
Europeans bought a record number of Jeeps last year, helping Fiat Chrysler’s European revenue rise 13 percent to 20 billion euros (RM91.22 billion).
But Fiat Chrysler’s revenue slumped by 25 percent in Latin America, hurt by economic weakness in Brazil and Argentina. Revenue also fell 22 percent in Asia, pressured by price competition from Chinese automakers and an interruption in shipments after the Tianjin port explosion.
“Brazil came out of left field and left most of us staring at uncertain market conditions,” Marchionne said in a conference call with analysts. “It’s very difficult to call the bottom of this market.”
A slowdown in demand for imported cars in China was also unexpected, Marchionne said.