FCA optimistic on new trucks

Fiat Chrysler Automobiles (FCA) said that new US pickup truck models would help the automaker achieve its 2019 profit targets and offset a weak performance in the first quarter.

Sticking to its previous forecast, which calls for a full-year 2019 adjusted pre-tax profit of more than 6.7 billion euros ($7.48 billion), sent FCA’s shares up more than 2.5 per cent.

Nearly all - 98 per cent - of the Italo-American automaker’s first-quarter profit was powered by its Ram pickup truck. FCA’s US sales were down 3.1 per cent in the quarter, but Ram sales were up more than 20 per cent and outsold rival General Motor’s Chevrolet Silverado.

“The whole quarter was powered by Ram (pickup trucks) while the rest of the company was lagging,” said Michelle Krebs, an analyst at Cox Automotive, adding that FCA spent heavily on consumer discounts to outsell the Silverado.

“The question is whether the strong performance by Ram is going to be enough to give FCA a push moving forward,” Krebs said.

Analysts and investors have worried about FCA’s over-reliance on the US market, given its loss-making operations in both Asia and Europe.

FCA expects new models such as the Jeep Gladiator pickup truck and all-new Ram heavy-duty trucks to help it meet full-year targets.

Chief Executive Mike Manley told analysts on a conference call that most of the improvement in profits would come in the second half of the year.

The automaker posted a higher profit for the quarter and Manley said he expected the region’s strong performance to continue. He said FCA’s making European region, which lost money in the quarter, would return to a profit with margins of around 3 per cent by the end of 2019. FCA’s North American margin fell to 6.5 per cent from 7.4 per cent a year earlier.

Reuters