A revised business plan released today by Fiat Chrysler Automobiles moves its profit-heavy Jeep and Ram brands into the passing lane, while tapping the brakes on efforts to build a full line of Alfa Romeos from scratch by 2018.
The automaker said it may also turn to other automakers to produce the Chrysler 200 and Dodge Dart sedans.
FCA said it will add only a midsize SUV and the Giulia to Alfa Romeo by the end of next year, and that the Giulia -- first revealed last June -- will finally go into production by the end of March. It will be joined in the lineup by a new mid-sized SUV by the end of 2017, but other vehicles -- a full-size sedan, two CUV or SUVs, two “specialty vehicles” and a hatchback -- won’t appear until between 2017 and 2020.
The automaker also said it was planning to “realign” its North American production capacity to produce more pickups and SUVs and fewer cars. The reason: It sees low fuel prices as “permanent” and expects recent consumer trends toward utility vehicles and pickups to continue.
“Jeep is the bedrock of this business plan,” CFO Richard Palmer told analysts today. FCA plans to expand global Jeep sales from their 2015 record levels of 1.2 million globally to about 2 million by 2018, relying on new production capacity coming online North America, Asia and Latin America.
Permanent shifts
CEO Sergio Marchionne said low fuel prices are “not expected to fundamentally change directionally,” and that “there’s been a permanent shift toward SUVs and pickups.”
He and Palmer provided few product details of the company’s plans, but did say that the Chrysler 200 and Dodge Dart both “will run their course” to allow their plants to build more Jeeps and pickups.
Marchionne said FCA could enter a partnership with another automaker to build those two cars.
"We need to re-utilize ... plant infrastructure to try and deal with the development of both Jeep and the Ram brands," Marchionne said.
Automotive News reported in September that Sterling Heights Assembly, where the unibody 200 is assembled, would be converted to build body-on-frame Ram 1500 pickups. The next generation Ram 1500 is due in 2018.
Marchionne said that the most important factor in the realignment of the company’s North American manufacturing footprint was that it not impact production volumes.
“These are the things that are fundamental,” Marchionne said, adding that the moves are “justified” by the greater profit potential of a truck and SUV-heavy mix.
Among the other plan highlights:
• No new plants: FCA says it will shift its production “within existing plant infrastructure,” with hourly headcount remaining stable or moving higher. That’s a blow to Toledo, Ohio, where city leaders had assembled a 100-plus-acre tract of land for FCA to expand. FCA took a one-time charge of 830 million euros, or about $900 million, in the fourth quarter to pay for its planned plant realignment.
• More partners: FCA says it plans to “solidify partnering opportunities” to maintain market presence in compact and midsize segments. The company partnered with Mazda to produce the new Fiat 124 Spider and could look to work with other global automakers to make low-profit compact and midsize cars.
• More hybrids: FCA says it will introduce new global small- and medium-engine architectures this year, and 48-volt mild hybrids into its lineup in 2018, to meet emissions regulations. Among the products newly identified to receive hybrid treatments are the Jeep Wrangler and Ram 1500 pickup.
• Diesel Wranglers: The company says it will produce a four-door Wrangler Diesel, but not until after the next generation of the off-roader is introduced in 2017. A timeline shows only that the diesel Wrangler is due before 2022. However, it will precede a Wrangler hybrid by several years, according to the presentation.
Reuters contributed to this report.
