Fiat Chrysler Switches Focus from Smaller Cars to SUVs and Pickup Trucks
The automotive industry has seen a number of incredible changes over the course of its history. From Henry Ford’s mass production innovations to the installation of mass backing as the standard backing in the 1990s to the invention of hybrid vehicles, the industry has evolved. Now, one company, in particular, is adapting to changes in the industry.
Fiat Chrysler, known for their small, pocket-sized cars, is now ceasing small car production in the U.S. to make room for sports-utility vehicles and pick-up trucks.
The company is finishing the production of their Chrysler 200 and Dodge Dart models, then it’ll outsource all other small car manufacturing to Canada and Mexico by the end of the first quarter of 2017.
This action comes as a part of the multi-billion dollar brainchild of CEO Sergio Marchionne. His goal is to increase profit margins to match competitors. Many speculate that this is because fuel prices are dropping nationwide, SUV interest is rapidly increasing, and the cost of vehicle production in Mexico is at an all-time low.
As reported on USA Today, Marchionne explained his goal to focus solely on Ram and Jeep brands in a conference call with Wall Street analysts reporting Chrysler’s second-quarter earnings. He said, “By the time we finish with this, hopefully, all of our production assets in the United States — if you exclude Canada and Mexico from the fold — all those U.S. plants will be producing either Jeeps or Ram. There will be no passenger cars that will be produced in the U.S., and therefore, our expectation is that concentration will give us the possibility to get very close… I think our biggest task now is to close the operating margin gap with our competitors.”
Marchionne explains that Chrysler hopes to get near to General Motors’ 12.1% profit margin by removing the Chrysler 200 and Dodge Dart as the two have had lackluster sales within the past few years.
This announcement comes on the heels of another announcement that Chrysler will spend $1.5 billion on the Sterling Heights, Michigan, assembly plant. This suburban Detroit factory makes the popular Chrysler 200 midsize sedan, and the generous investment will allow the factory to start production of Ram pickup trucks.