Jeep News: FCA Sees Jeep Becoming Quite Big In Sales

[William Maley]

Trying to figure what is going with Fiat Chrysler Automobiles and Jeep could be a full-time job. This week has seen Chinese Automaker Great Wall announce its intentions of possibly buying Jeep from FCA, before backtracking on that a day later. Then rumors surfaced that FCA is considering spinning off Maserati and Alfa Romeo, along with its components operations. Now there is another twist.

According to a report from Bloomberg, FCA believes Jeep could sell as many vehicles as a standalone automaker thanks to the increased demand for SUVs. The company forecasts that Jeep's annual sales will rise 30 percent to two million next year. FCA CEO Sergio Marchionne told analysts that the brand could deliver up to seven million vehicles a year if demand for SUVs keeps rising. 

But for Jeep to reach that ambitious sales goal, they would need to have their lineup (including the new Wrangler, Wagoneer, Grand Wagoneer) to sell 50 percent more vehicles than what FCA delivered last year.

“It seems pretty pie-in-the-sky at this point,” said Richard Hilgert, an autos analyst at Morningstar.

Hilgert does also note most observers thought it was crazy that Jeep could expand to 2 million in annual sales by 2018 - something that is likely to happen.

Marchionne also talked about why it would be a bad idea to split Jeep away from FCA.

“We do need to worry about the stump that’s left behind,” Marchionne said.

“If we start picking away all the things that appear to be interesting to people, then I think we’re going to end up with a sub-optimal business that cannot run.”

It should be noted that only a few months ago, Marchionne floated the idea of spinning off Jeep.

Source: Bloomberg

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[David]

 Of course Sergio would say it was a bad idea to split Jeep away from the rest of FCA US or Europe. Jeep is paying to keep the rest of the product lines up and running.

Sell off Jeep without the rest of the US products and FCA would just be in a nose dive of spending.

[Drew Dowdell]

Jeep and Ram are probably the only brands in the entire FCA organization bringing in any real cash.  Fiat commercial in Europe maybe also as the Promaster equivalents there seem quite popular. 

Maserati may be profitable, but it is so niche market at this point that it can't be making serious volumes of cash even if the ROI is decent.  Plus they're still using Chrysler parts bin for far too much of the Maserati interior.

There's no way that Alfa is profitable yet. 

[balthazar]

I am seeing Maseratis every other day- I think recently posting about the brand has made me notice the big chrome 1950's script Maser likes to slap on the butts of all their cars. I saw 2 yesterday alone (that I noticed). Sales runs about 12K in the U.S. and 36K globally. I have no idea what their parts sharing or profit may be tho.

Beyond that I agree with DD- Jeep & Ram are likely the only profit centers, possibly Maser and Dodge. At this point I believe Chrysler, unfortunately, is probably in the red. That's a GD shame in my book.

[smk4565]

FCA has pension and debt liabilities still too.  Something a Chinese car maker probably doesn't have to worry about.  Which is what makes the Jeep brand by itself so valuable.  

[balthazar]

Jeep brand is valuable because of worldwide appeal, iconic & aspirational product and 1.4 million units sold last year. They are gunning for 2 million and will likely get there.