Ford may be throttling back on fullsize-pickup production this month, but it’s full speed ahead at Fiat Chrysler Automobiles.
Ram pickup output in Saltillo, Mexico, and Warren, MI, is running “flat out” and is expected to continue that way, potentially right up to launch of a revamped 1500 model in early 2018, FCA CEO Sergio Marchionne tells financial analysts. The comment comes in contrast to actions at key competitor Ford, which is idling its Kansas City, MO, F-150 plant this week to trim inventories.
“I have no indication that would suggest we’re going to take production down in Q4,” FCA’s top executive says during a webcast to discuss the automaker’s third-quarter financial results. “All work continues on making sure we introduce the new 1500 properly in the early part of 2018, but certainly our forecast is not to reduce capacity utilization.
“You can use whatever definition of capacity utilization you’d like, but we’re over 100% of that number.”
In the wide-ranging discussion, Marchionne also says he believes FCA has nailed it with its new Giorgio platform that underpins the Alfa Romeo Giulia sedan and will be the basis for a number of car and CUV models across several brands. And he says FCA will be able to keep pace with the industry’s accelerating shift to electrified powertrains.
As for continued rumors the automaker plans to sell off all or some of its parts-making operation Magneti Marelli, Marchionne remains mostly mum, saying “there are a continuous number of approaches that are made…from a variety of sources that are of potential interest,” but that “there is nearly 100% certainty that no deal will happen in Q4 of this year.”
Ram pickup sales, which jumped 29.2% from year-ago in September and are up 8.3% year-to-date according to WardsAuto data, have been fueled in part by significantly higher incentives in recent months that will continue over the next 90 days, Marchionne says. But the added spiffs are highly targeted, he cautions, “(and) we need to be very careful about reading too much into those numbers, because they do not impact 100% of (inventory).
“We’ve taken a very hard look at our level of penetration in some of the key truck areas in the U.S.,” he says. “We spent a lot of time with the management team yesterday to try to understand how to pitch the position for the next 90 days.”
Marchionne praises the effort around the company’s new Giulia sedan, saying it is “one of the best technical launches (FCA) has ever carried out in its history.” The model already is on the market in Europe and launches in the U.S. this quarter and in China in first-half 2017.
“I’m encouraged by the versatility of the (Giorgio) architecture,” he says of the platform that also will underpin next-generation rear-drive models from the Maserati and Dodge brands, plus a new CUV for Alfa that will be revealed at the Los Angeles auto show next month and hit the market in first-half 2017.
“It’s proved out to be all and more than we expected,” he says. “Its utilization across a wide range of applications within (FCA) is probably the most beneficial thing we’ve done here from a technical development in a long time. Its ramifications are yet to be seen.
“We now have the basis on which we can build a phenomenal rear-wheel and all-wheel-drive environment (that) may spill over in some forms as far as Jeep. So I am delighted.”
Small Cars Little Impact
There’s still no deal with another automaker to collaborate on small, front-drive cars to fill the gap left by the outgoing Chrysler 200 and Dodge Dart, phasing out of production at the end of the year. But Marchionne isn’t worried, saying failure to replace the compact sedans would equate to “a rounding error” level of impact on the automaker’s bottom line.
The small-car market “has been coming down in relevance in the U.S. for a number of sequential quarters,” he says. “We need to recognize this is not a fashion shift from passenger cars into utility vehicles and pickup trucks; it is a structural change.
“The important thing for us was to preserve the uniqueness of the rear-wheel-drive offering that we have across four brands: Alfa, Maserati, Dodge and potentially Jeep. And that solution has been nailed down internally by focusing on the Giorgio architecture.
“As long as this…continues as we expect, then our search for a front-wheel-drive passenger-car solution…is going to have very little impact on our ambitions.”
Speaking on the migration to electrified powertrains to meet toughening fuel-economy and emissions targets worldwide, Marchionne says FCA has what it takes to keep pace with other automakers.
“We certainly have the resources and the network that will make these (projects) a reality in the same timeframe (of competitors),” Marchionne says. “The single largest drawback to electrification to us as OEMs is we’re no longer in control of the component side. All batteries will be made by others. So it’s really a question of capacity and access to that capacity.
“Everything else, including the technology associated with providing electrical powertrains, is within our reach, and certainly supplemented by the relevant Tier 1 suppliers.”
Marchionne appears satisfied with the recent labor contract reached in Canada with Unifor, saying the devaluation of the Canadian dollar will help offset higher wage costs and that “both (FCA) plants in Canada remain competitive. The cost impact remains manageable.”
The automaker reported a €606 million ($660 million) net profit in the third quarter, reversing a €387 million ($421 million) loss from year-ago. The earnings came on revenue totaling €28.8 billion ($31.4 billion), up from €26.8 billion ($29.2 billion) in like-2015.
[email protected] @DavidZoia
