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FCA goes all-in on Jeep and Ram brands on cheap gas bet

It's no surprise that as SUV and truck sales remain strong in the wake of unusually cheap gas, Jeep and Ram sales are taking off. What is a surprise is that FCA CEO Sergio Marchionne thinks that cheap gas will be a "permanent condition," and feels strongly enough about it to change up North American manufacturing plans. Jeep appears to be the biggest beneficiary of the product realignment. In addition to increasing the sales estimates for the brand worldwide upwards to 2 million units a year by 2018, the brand will get a flood of investment for new product and powertrains. Consider the Wrangler Pickup to be part of the salvo, as well as the Grand Wagoneer three-row announced in 2014 as part of the original five-year plan. The Wrangler four-door will get at least two new powertrains, a diesel and mild hybrid version, in its next generation. That mild hybrid powertrain may utilize a 48-volt electrical system like the one that's being developed by Delphi and Bosch – which the suppliers think will be worth a 10 to 15 percent fuel economy gain at a minimum. Down the road, in the 2020s, the Wrangler could adopt a full hybrid system. The diesel powertrain is planned for 2019 or 2020. The Ram 1500 is also pegged to receive a mild hybrid system, again potentially based on 48-volt architecture, sometime after 2020. Lastly, Jeep and Ram will take over some of the production capacity of existing plants. The Sterling Heights, MI, plant that builds the Chrysler 200 will now build the Ram 1500; the Belvidere, IL, facility that produces the Dodge Dart will take over Cherokee output; the big Jeep facility in Toledo, OH, will be used for increased Wrangler demand. In 2015, according to FCA's numbers, car and van demand went down by 10 percent, but SUV demand went up 8 percent and truck demand 2 percent. Considering that these are high-margin vehicles, FCA can't ignore the math. FCA also won't build any new factories to supplement production to meet demand, but instead are reshuffling production priorities. Think of it this way: FCA is gambling on cheap gas being a permanent part of our lives, at least into the 2020s. By doubling down on SUVs and trucks, the company stands to win big, unless a spike in gas prices changes the landscape. FCA isn't talking about a Plan B, so they're all in. It'll be interesting to see how this plays out.

Fiat Chrysler's profit boosted by Ram and Jeep in North America

MILAN/DETROIT — Fiat Chrysler took the market by surprise by sticking to its full-year profit guidance on Wednesday after a strong performance from its Ram pickup truck in North America helped it defy an industry slowdown. Chief Executive Mike Manley, in FCA's first earnings release since a failed attempt to merge with France's Renault, also left the door open to that or other deals. "We are open to opportunity," Manley said on a call with analysts. "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 Fiat Chrysler's business plan was strong. The company said it remained confident its adjusted earnings before interest and tax (EBIT) would top last year's 6.7 billion euros ($7.5 billion). Given disappointing forecasts from other automakers this earnings season, FCA's confirmation of the outlook sent Milan-listed shares in the Italian-American automaker, whose other brands include Jeep, up over 4%. A broad-based auto sales downturn has rattled the sector, forcing 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. In the second quarter FCA's adjusted EBIT totaled 1.52 billion euros, versus analysts' expectations of 1.43 billion euros, according to a Reuters poll. FCA's U.S. shipments were down 12% in the second quarter but the group said that the successful performance of its Ram brand resulted in an enhanced share of the large pickup truck market of 27.9%, up 7 percentage points from last year. Adjusted EBIT margin in North America rose to 8.9% from 6.5% in the first quarter, thanks to strong demand for the heavy-duty Ram and the new Jeep Gladiator pickup. Chief Financial Officer Richard Palmer also said FCA expected to report up to 10% margins in the region in both the third and fourth quarters.

FCA applies to trademark 'Hornet' and 'Dodge Hornet' names

FCA's trademark binge on March 6 isn't the only time this month that the automaker's appealed to the U.S. Patent and Trademark Office. Motor Trend discovered two applications FCA submitted on March 3, one for "Dodge Hornet," the other simply for "Hornet." The automaker requested to reserve both names in Canada and Mexico, too. The only time Dodge has ever used the Hornet name was on a chunky, four-door subcompact hatchback revealed at the 2006 Geneva Motor Show, planned for the European market with a 170-horsepower engine developed with BMW. Crowds loved the car, encouraging Chrysler to find a way to put it into production. What followed was three years of aborted platform-swapping efforts first with Chinese automaker Chery and then with Nissan before Chrysler gave up. In 2009, analysts suspected new owner Fiat might try to get a Hornet done on one of the Italian automaker's European platforms. Nothing came of that, either, FCA opting to resurrect another historical nameplate for the Dodge Dart sedan in 2011. If a new Dodge model gets the Hornet label, the best guess for a product that needs to succeed in North America is a crossover. With the Grand Caravan soon headed to pasture and the Journey expected to follow soon after, the brand will be left with a big sedan, a big coupe, and a big three-row crossover. A reborn Hornet could pick up where the concept left off, slotting into the compact space left by the outgoing Journey and where models like the Nitro and Caliber once lived. Another guess posits something a little larger, based off the Chrysler Pacifica platform, to lower development costs and increase utilization at the Windsor, Ontario, plant that builds the Pacifica and Grand Caravan. Or the Hornet could be a PSA Group model reworked into service for our market; that opens up the size choices, although PSA is moving all of its products to two platforms, both front-wheel-drive based. It's possible Dodge won't do anything with the name, the recent application nothing more than an attempt to reserve company property. Hudson reserved Hornet in 1950 for a sedan built from 1951 to 1954. After Hudson merged with Nash to form AMC, AMC used the name on a compact sedan built from 1969 to 1977. Chrysler took over AMC in 1987, letting the Hornet trademark expire in 1992.