The first half results revealed that FCA is becoming more dependent on US car market and Jeep. The group’s revenue, profits and shipments recorded mix results as the good results in Europe were offset by the drop in Brazil, while North America heads to stabilization. What is clear is that this year FCA will not grow in terms of units sold and Jeep will continue to be a key player in its future.
Jeep sold around 720.000 units in H1 2016, which is about 100.000 units more than in the same period of 2015. The good result was possible thanks to North America, China and Europe, where Jeep continues to grow at strong rates because of different reasons. Sales in North America posted a 15% rise to 523.000 units boosted by the continuous shift of consumer towards SUV and big trucks. In fact the US and Canadian markets keep growing thanks to these two segments. Jeep is one of the brands to post the highest market share so far this year thanks also to the arrival of the Italian made Jeep Renegade, which is having success.
In China the Jeep boom is being generated by the arrival of localized production of the Cherokee and more lately the Renegade. After the flop of Chinese-made Fiat Viaggio and Ottimo, FCA decided that the best way to gain some market share in the world’s largest market was by selling SUVs. The imported Jeeps were are not only expensive but they started to record sales fall due to tougher competition (from Chinese and foreign brands) and the slowdown in growth. Till June 30th, Jeep had already sold 51.700 units of its Cherokee, while the Renegade is expected to increase that volume from July.
Europe is another example of how fast the Jeep growth can be. The brand has sold almost 46.000 units in the first six months of this year, up by 28% over the first half of 2015. Its market share jumped from 0,61% to 0,68%. The reason for this is again localized production with the Renegade made in Melfi, Italy and strongly boosted by FCA Europe. In fact the small SUV counted for around 80% of the brand’s sales in this region. Jeep’s market share in Italy was 2,13%, outpacing other important markets like Mexico and Australia.
But the growth doesn’t stop there. While Brazil deeps into its worst economic and political crisis in years taking the car market to very difficult times, Jeep made its debut with its first locally produced product in May 2015. The results are stunning with more than 26.000 units sold in the first half, becoming one of the top 15 best-selling models in Brazil. In fact the Renegade has not only beaten other popular small SUVs like the Ford Ecosport or Renault Duster, but it has helped FCA to offset the drop on sales of Fiat. The problem here is that FCA built Pernambuco plant (where the Renegade is made) thinking of a 3-4 million units market, and this year the market won’t surpass the 2 million units mark.
If FCA wants to grow more and attract investors, it must continue boosting its Jeep operations worldwide. The Renegade has done an excellent job but it won’t be enough. Jeep must launch the new C-SUV, a all-new Grand Cherokee and add the Grand Wagoneer to its range.