The first rule of business is to give the customers what they want. Right now, when gasoline costs less than Pepsi, what customers want are trucks, Really big trucks, the kind of heavily muscled, in your face trucks that make you feel you are in your own version of Mad Max as you commute to work every day. Such trucks are also excellent for picking up some finish nails at Home Depot or a quart of milk on the way home. People are also crazy for all sorts of SUVs — the bigger the better.
What people are not so crazy about are sedans. 4 door transportation modules are just not cool right now. Fiat Chrysler’s profits fell 40% last year, according to the Detroit Free Press. FCA boss Sergio Marchionne blames a lot of that on poor sales of its Dodge Dart and Chrysler 200 sedans. So he has decided to throw them overboard and let the FCA banner be carried forward solely by trucks, SUVs, and assorted Jeep products. The only sedan Chrysler will sell from now on is the 300.
During a conference call with Wall Street analysts on Wednesday, Marchionne said, “There will be a number of things that will be put in place in the next 18 months — things that have been agreed and detailed, that will effectively withdraw the Chrysler 200 and Dodge Dart from the marketplace, for a long period of time, during which we will be continuing discussions with potential partners. We have decided to de-focus, from the manufacturing standpoint, to de-focus on the passenger car market. There are two cars in particular, the Dodge Dart and Chrysler 200, which will run their course,” Marchionne said “Without creating additional capacity, in the United States, we need to … to try and deal with the development of both Jeep and the Ram brand.”
Part of the reason for this is that FCA has run out of factory space to build all the trucks, SUVs and Jeeps the market wants. Those vehicles make a lot of profit, sedans only make a little profit. The choice was easy; the sedans had to go. Marchionne has hinted they might return if someone else wants to build them. Both cars have gotten good reviews and won praise for their excellent styling. The news surprised investors. FCA spent $1 billion to overhaul its Sterling Heights Assembly Plant to build the Chrysler 200 midsize sedan that just went on sale in 2014. It also spent $600 million to launch the Dodge Dart compact car in 2012.
My old Irish grandmother would wonder whether Chrysler is cutting off its nose to spite its face. Yes, the market for trucks and SUVs is red hot at the moment, but what happens when the famously mercurial tastes of consumers change? And how will FCA make a fleet composed solely of behemoths comply with upcoming fuel economy standards? No doubt, Machionne, in his infinite wisdom, has a plan, but what it is remains a mystery.