SUVs, Trucks, Pickups and city-cars: FCA to focus on what it does better

Global car industry moves so fast that the small trends taking place might not be observed. This is the case of FCA global sales trend, its forecast and the way this company will face the coming years based on its always changing strategies. While the industry keeps growing and evolves thanks to the new technologies and energy sources, it is clear that there is a shift on the preferences of worldwide consumers. The SUV surge is not an American trend anymore, but it has also arrived in Europe, China, South America, India and Australia. This is having a big impact on all car makers and their future plans, and FCA is part of that.

Last year FCA sold 4.602.000 units globally, which is one thousand more than the result in 2014. Even if the total was the same, the sales composition posted a big change by segments. The SUVs from Jeep, Fiat and Dodge were the biggest growth driver last year as the demand grew in North America and Europe, while in Brazil it was a source of positive news in this troubled economy. Thanks to the Jeep family and the new Fiat 500X, SUV sales continued to grow and last year they counted for almost 31% of the group’s global volume. This is definitely more than the share they had in 2014 (around 24%). Global sales of FCA’s SUVs totaled almost 1.4 million units in 2015, and two out of three were sold in USA. But European and Brazilian figures posted big increases thanks to the Fiat 500X and Jeep Renegade.

Source: FGW database

The second largest segment for FCA was the Pickups thanks to the RAM and the Fiat Strada. Even if global sales fell by 5% due to the drop of the Brazilian demand of the Strada, these vehicles represent an important source of volume and profits for FCA. Both North and South Americans love the pickups and they use them not only for work reasons but for pleasure as well. This allows to increase prices/profits by upgrading the versions. Actually, the group is moving in that direction by introducing new pickups outside North America. The Fiat Toro compact pickup for Brazil, and the Fiat Fullback for EMEA region are good examples. In 2015 the pickups counted for 15% of the group global sales.

FCA is also good making MPVs. The popular Dodge Caravan/Chrysler Town & Country, along with the strong Dodge Journey allow FCA to have an important position in this segment. Even if this is the segment that has suffered the most because of the SUV rise, FCA continues to invest on it as it is the top-seller in USA, Canada, Brazil and Europe combined. FCA sold almost 500.000 units in these four market in 2015, while Hyundai, at second place, sold 306.000 units. Finally, city-cars is the other segment where FCA is very strong. The tiny Fiat 500 is the best example of how strong Fiat can be in the A-Segment. The group is by far the largest in this segment in Europe with a 28,3% share in 2015, against a 13,5% of VW Group. Fiat plays also a big role in the Brazilian market with one-third of the city-cars sold using its logo.

Source: FGW database

The SUV, Pickups, MPVs and city-cars counted for almost 69% of the group’s global sales in 2015. The percentage is certainly higher than the one seen in VW Group (21%), Toyota (51%) and Renault-Nissan (around 43%). These four segments also represented a lower share on global sales of GM (51%) and Ford (51%). During the first five months of this year, FCA sales in USA totaled 960.000 units (Maserati included, Ferrari excluded), and 80% of them corresponded to SUV, MPV, Pickup segments. The weight of those segments during January-May 2015 was 71%. At the same time Mr. Marchionne said that USA, the market that counted for 48% of FCA global sales in 2015, will focus on the production of big SUVs and trucks, and not passenger cars. He even said that the regular passenger cars production could be outsourced and that he had already begun talking to other automakers about a deal to produce compact and midsize cars for FCA in their factories.

This chart shows the evolution of the share of FCA within each segment in its three main markets. You can notice the very low presence it has in B-E segments, and the increasing share in the SUV segment. * LCV-derived. Source: FGW database

Based on this scenario brands like Chrysler, Dodge or Alfa Romeo will only survive if they add SUVs to their ranges. The only existing SUV from these brands is the Dodge Durango, while Chrysler’s volume is strongly dependent on the MPVs as the new 200 midsize sedan sales continue to fall (-62% in Jan-May 2016), and Alfa Romeo concentrates all of its efforts in the launch of the new Giulia midsize sedan. If Marchionne has in mind to start outsourcing the compact and midsize sedans, then Alfa Romeo should hurry up with the launch of its midsize SUV. The latest global trends confirm that the trend is clear and FCA may be just anticipating it.