Fiat Chrysler Automobiles NV (FCA) stated on Friday that new U.S. pickup truck models would assist the automaker achieve its 2019 profit targets and offset a weak performance in the first quarter.
Almost all – 98 percent – of the Italo-American automaker’s first-quarter profit was powered by its Ram pickup truck. FCA’s U.S. sales dropped 3.1 percent in the quarter, but Ram sales increased over 20 percent and outsold competitor General Motor’s Chevrolet Silverado.
“The whole quarter was powered by Ram (pickup trucks) while the rest of the company was lagging,” stated Michelle Krebs, an analyst at Cox Automotive, adding that FCA spent a lot on consumer discounts to outsell the Silverado.
“The question is whether the strong performance by Ram is going to be enough to give FCA a push moving forward,” Krebs stated.
Analysts and investors have stressed about FCA’s over-dependence on the U.S. market, noting its loss-making operations in both Asia and Europe.
FCA expects new models including the Jeep Gladiator pickup truck and all-new Ram heavy-duty trucks to assist it meet full-year targets.
CEO Mike Manley informed analysts on a conference call majority of the profit improvement would come in the second half of this year.
The automaker posted a higher profit for the quarter in Latin America and Manley stated the region’s strong performance should continue. He stated FCA’s European region, which lost money in the quarter, would return to a profit with margins of about 3 percent by the end of this year.
The automaker has pledged to invest 5 billion euros ($5.58 billion) on new models and engines in Italy during the next three years to better use factories, and increase jobs and margins in Europe.
Asked about potential partnerships, Manley stated he expected the next two to three years to yield “significant opportunities” and automaker to play an “active role” in that environment.
FCA has been at the center of renewed merger speculation in present times.
Chairman John Elkann – a scion of Italy’s Agnelli family that is FCA’s biggest shareholder – reiterated in the previous month that the family was planning to take “bold and creative decisions” to help build a strong and attractive future for the automaker.
FCA’s North American margin dropped to 6.5 percent from 7.4 percent a year ago, below the first-quarter margins posted by Detroit competitors General Motors and Ford Motor.
The company’s first-quarter operating profit dropped 29 percent to 1.07 billion euros, below expert expectations of 1.31 billion euros.
The operating profit at Maserati dropped 87 percent, harmed by weakness in the Chinese market. CEO Manley stated the performance of the luxury brand should improve in the second half of this year.
Fiat Chrysler stuck to its full-year 2019 adjusted operating profit forecast of over 6.7 billion euros.
