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 FCA Chief Executive Sergio Marchionne is shuffling product plans
even as he seeks a partner for his company, the seventh largest
global automaker. Marchionne says consolidation in the auto industry
is inevitable, because automakers are burning capital investing in
overlapping engines and vehicles.
Among the North American vehicles FCA has delayed updating are
high-margin models including the Ram 1500 pickup and the Jeep
Wrangler utility vehicle, according to five people familiar with the
company's plans. Sales of pick-ups and utility vehicles account for
more than half of FCA's pre-tax profit, according to industry
analysts.
At the same time, FCA is accelerating development of certain
vehicles. The Alfa Romeo brand may be getting more models on a
faster schedule than originally planned, suppliers told Reuters.
FCA made its future model plans the centerpiece of a five-year, $50
billion plan that Marchionne outlined to investors in May 2014,
including boosting annual global sales to 7 million by 2018 from
4.75 million last year.
Since Marchionne came out with his plan, at least 12 future vehicle
programs have been delayed at Jeep, Ram, Dodge, Chrysler and
Maserati, in some cases by a year or more, suppliers said.
Suppliers cited several possible reasons for the delays, among them
last-minute design and engineering changes, including some that
could reduce FCA's overall investment. FCA's cash and marketable
securities fell by 1.1 billion euros ($1.2 billion) between Dec. 31,
2014, and March 31, while its net debt rose to 8.6 billion euros
from 7.7 billion euros.
FCA declined to comment on specific delays. The product plan
outlined to investors in 2014 was "a five-year snapshot of our
plans," the company said in a statement to Reuters.
"Those plans need to be flexible and fluid, with the potential to
add some vehicles, pull some forward and extend the life cycle of
others," the company said. "We look at these programs on a
vehicle-by-vehicle basis."
The automaker appears to be focusing its resources on updating its
most profitable vehicles, including the Ram, the Wrangler and the
Jeep Grand Cherokee, while pushing back planned redesigns of such
slower-selling, lower-margin models as the Dodge Dart.
However, redesigns of some of the company's most popular models are
being slowed, suppliers said.
The redesigned Ram 1500 pickup now has moved from mid-2017 to
November 2017, they said.
REDESIGNED WRANGLER
The introduction of the redesigned Jeep Wrangler is now slated for
July 2017, suppliers told Reuters. FCA said a year ago it planned to
begin production of a redesigned Wrangler in early 2017. Marchionne
said two weeks ago that he hasn't yet decided where the new Wrangler
will be built. The vehicle is currently assembled in Toledo, Ohio.
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Marchionne also said that a redesign of the Grand Cherokee, one of
the company's most profitable models, has been delayed for an
unspecified period of time so engineers could take "a complete
re-look" at the vehicle's basic underpinnings. That architecture
will be shared with a larger and pricier derivative called Grand
Wagoneer that’s intended to compete with luxury utility vehicles
such as the Range Rover, he said.
In its 2014 investor briefing, FCA said the redesigned Grand
Cherokee would be introduced in fall 2017 and the new Grand Wagoneer
in fall 2018. Suppliers told Reuters this week that the Grand
Cherokee introduction now may be delayed by up to a year, while the
Grand Wagoneer's launch could slip even further.
FCA also has delayed the planned release of a new Jeep compact
utility vehicle that will supplant the Patriot and Compass,
suppliers told Reuters. The as-yet-unnamed Jeep compact originally
was to have gone into production in spring 2016, but has been pushed
back at least six months, suppliers said.
The company has postponed a full redesign of the Dart and the Dodge
Journey crossover, both of which had been scheduled for mid-2016.
Instead, both models will get a mild makeover, but may not be fully
overhauled until 2019-2020, suppliers said.
Plans to offer new full-size and mid-size crossover models under the
Chrysler brand in 2017 and 2018, respectively, appear to have been
postponed or shelved, suppliers said.
A major redesign of FCA's full-size Chrysler 300, Dodge Charger and
Dodge Challenger, originally slated for mid- to late 2018, could
slip to 2019 or later, suppliers said.
FCA shares on the New York Stock Exchange rose 1.62 percent on
Monday to $16.29, and are up 36 percent since the start of the year.
By comparison, General Motors shares have risen about 3.7 percent
this year, and Ford shares are down about 0.7 percent.
(Reporting by Paul Lienert in Detroit, editing by Joe White and John
Pickering.)
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