While other mainstream auto brands head for sliding US demand this year, Jeep is rolling out new models to buck the trend and bring 16 straight months of sales declines to an end.
Fiat Chrysler Automobiles NV’s most valuable brand is launching an all-new version of its iconic Wrangler sport utility vehicle in the first quarter, followed quickly by a refreshed Cherokee being revealed this week at the Detroit auto show.
“If I don’t grow volumes with those opportunities, then we’ll be sitting and having a different conversation next January, won’t we?” Mike Manley, the head of Fiat Chrysler’s Jeep and the Ram brands, said in a phone interview.
The bolstered Jeep lineup should help boost the automaker’s North American deliveries 5% this year, according to Barclays analyst Brian Johnson, who sees both General Motors Co and Ford Motor Co poised for a drop. Growth would be a welcome change for Fiat Chrysler: US sales have declined every month since August 2016 after the company killed several struggling car models. Discounted deliveries to fleet customers fell to 19% of total US sales last year, the lowest level since 2001, the company said.
Optimism that new Jeeps and a redesigned Ram 1500 pickup may reverse the negative sales trend has helped boost the Italian-American automaker’s shares. The company’s US-listed stock has surged 31% already this year after almost doubling in 2017.
The shares could go higher still as investors become more aware of Fiat Chrysler’s efficient transition to the new Wrangler and Ram models, Barclays’ Johnson said. The Jeeps are going into production at re-purposed factories, so output of the current models won’t be lost in the process.
“Investors under-appreciate how they’ve engineered this like a Swiss watch,” said Johnson, who rates the stock the equivalent of a buy. He projects production increases this year of about 50,000 Ram pickups and 80,000 Wranglers, boosting revenue and profit for what chief executive officer Sergio Marchionne has said will be his last calendar year on the job.
Most of those vehicles will be sold in North America, but the increased supply creates export opportunities, too. Wrangler has long missed out on unmet demand in overseas markets including China, and Manley pointed to opportunities for Ram 1500 in Latin America and the Middle East.
At home in the US, where Ford is planning to sell a pickup that will reach the $100,000 price range, Fiat Chrysler can try to use its new truck to keep moving up-market. Its current design - soon to be dubbed Ram Classic - will remain in production and can be sold profitably to government and business fleet customers, plus retail buyers looking for a bargain.
“Higher-trim levels obviously bring a higher transaction price, so it’s really good business,” Manley said of the new Ram 1500. “For those companies that are really looking for a very capable, durable workhorse, we have Classic that can look after those guys. So that’s why for me, when I think about this year, obviously I’m pretty excited about it.”
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