Jeep’s Moonshot Growth Drives Chrysler’s Profit Surge

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Fiat CEO Sergio Marchionne is likely quite pleased with his firm’s investment in Chrysler Group after the latter nearly surrendered to the currents of bankruptcy after the financial recession did quite a number on America’s auto industry. Under Fiat’s command, Jeep has seen consistent double-digit growth, as has Ram; Chrysler and Dodge, though still getting to its feet, are also showing signs of life.

This past quarter, Chrysler Group’s profits leapt 22 percent, on the strength of Jeep’s SUVs and utility vehicles and Ram’s line of pickups. It’s the 11th month out of the last 12 that the company has landed in the black, Bloomberg reported. Revenue grew 14 percent to $20.5 billion, and modified operating profit jumped by the aforementioned 22 percent to $985 million. 

The pressure is on Marchionne to turn the company — which will be known by the moniker Fiat Chrysler Automobiles NV later this year — into a global powerhouse that one day may be able to compete on a volume level with the likes of Volkswagen, General Motors, and Toyota. Given that much of Fiat’s portfolio includes niche brands like Ferrari, Lancia, Maserati, and Alfa Romeo, much of the volume growth must come from Chrysler Group.

Bloomberg quoted Marchionne as saying on a conference call on Wednesday that there remained an unfilled demand” for Jeep sport-utility vehicles in the U.S., where sales are more profitable, and that “when supply is as tight as it is now, we need to be very careful that we don’t sacrifice margins,” he said. “We’ve started looking at alternatives on a global scale.”

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U.S. deliveries rose 20 percent to 167,667 in July, boosted by Jeep’s 41 percent growth moonshot. This is even prior to the release of the Renegade, which will be Jeep’s smallest SUV available and will be Jeep’s token to cashing in on the booming compact crossover sales.

Ram trucks have continued to perform admirably, and at one point earlier this year the 1500 unseated the Chevrolet Silverado as the number two best selling vehicle in the country for a month. It’s EcoDiesel model, though not a volume seller, has been well-received and is the only truck in its class to offer a diesel powertrain option.

Marchionne May introduced a blueprint in May that calls for Fiat to invest 55 billion euros in order to more than double earnings before interest and taxes to a range of 8.7 billion euros to 9.8 billion euros from 3.5 billion euros last year, Bloomberg noted. Virtually every line under the company’s umbrella will see some significant attention and makeovers over the next five years.

For its part, the Fiat 500L tacked on a 49 percent gain in sales, handily offsetting the slide of 16 percent that the tiny 500 suffered.

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