The Ram brand, buoyed by the introduction of its new heavy-duty pickups and continued production of last-generation Classic model, led Fiat Chrysler Automobiles to record results in North America, helping the automaker defy an industry slowdown.
FCA, in its second-quarter report released earlier Wednesday, said North American adjusted earnings gained 12 percent to 1.56 billion euros ($1.74 billion) while revenue was flat at 17.64 billion euros ($19.66 billion). Vehicle deliveries fell 12 percent to 596,000 units, but the company’s truck-dominated product mix improved and profit margins rose nearly an entire percentage point to 8.9 percent.
Fiat Chrysler’s redesigned heavy duty lineup, loaded with premium interiors and the latest infotainment technology, joined the recently revamped 1500 in the lineup as the last piece of its “three-pronged truck selling strategy.”
The Classic continues to chug along as well and the company says it will produce it as long as it makes business sense.
Dealers have said they expect the Classic to be a viable option through the end of 2019 at least. FCA began deliveries of the special edition Classic Warlock — a factory- customized truck — late in the first quarter.
The Classic is being aimed at value shoppers, the automaker says, while the 1500 is the choice for those looking for technology.
“Ram continued its momentum in the second quarter, gaining share in both the light-duty and heavy-duty segments of the marketplace. The brand generated a lot of customer enthusiasm and took advantage of favorable market conditions,” CEO Mike Manley said during the company’s quarterly conference call. “As a result, the all-new heavy duty along with the new and Classic models of the Ram 1500 gained what I think is a significant 7 percentage points of total share from last year, resulting in a segment market share of over 27 percent.”
Fiat Chrysler also attributed some of its success in the second quarter to the launch of the new Jeep Gladiator midsize pick, which got off to a hot start with an April 4 promotion that allowed for pre-orders of 4,190 special-edition model that topped $60,000.
The versatile Gladiator had 4,231 deliveries in June, lifting its total U.S. sales to 7,252 since its spring launch. FCA said the Gladiator captured an estimated 7 percent of the midsize pickup market after only one full month on dealership lots.
As FCA’s second-quarter success played out, the company was carrying out a dealer inventory reduction effort.
“Actions to adjust production to expected demand are on the way and progressing as planned,” Manley said. “We’ve reduced our global dealer stock by 100,000 units since December. The vast majority of this reduction came in the US where our dealer stock was reduced by over 90,000 units.”
Still hope for Renault
Manley, during the conference call, left the door open to continuing merger talks with Renault or listening to fresh offers from others.
“We are open to opportunity,” Manley said. “I have no doubt why there still would be interest in it,” he added, when pressed on what it would take to revive talks with Renault. Manley declined to comment further.
FCA last month abandoned its $35 billion merger offer for Renault, blaming French politics for scuttling what would have been a landmark deal to create the world’s third-biggest automaker.
Manley said a merger was not a must-have and FCA’s business plan was strong.
Sticking to projections
FCA, meanwhile, stuck to its full-year profit guidance, saying it is confident adjusted earnings in 2019 would top last year’s 6.7 billion euros ($7.5 billion).
FCA shares gained 1.7 percent to close at $13.19 in New York.
The automaker’s overall adjusted earnings were flat at 1.52 million euros ($1.69 billion) in the second quarter, versus analysts’ expectations of 1.43 billion euros, according to a Reuters poll.
The company also delivered an improved performance in Latin America, but results for the rest of the world remained flat.
In Europe, it posted adjusted earnings of 22 million euros ($24 million), down 88 percent from the same quarter last year. Revenue in Europe fell 12 percent to 5.56 billion euros ($6.2 billion).
A broad-based auto sales downturn has rattled the sector, pushing FCA’s competitors — including Renault, Daimler and Aston Martin — to cut their sales forecasts after second-quarter results, while U.S. carmaker Ford gave a weaker-than-expected 2019 profit outlook.
Japan’s Nissan, a long term partner of Renault, said it would cut 12,500 jobs by 2023 after its earnings collapsed.
Philip Nussel of Automotive News and Reuters contributed to this report.