Freshened Jeep Cherokee sales helped lift FCA.
DETROIT — Chrysler, in its various forms, has long been the little guy among the Detroit 3, with its profits, work force size and national stature overshadowed by nearby General Motors and Ford Motor Co.
But in a quarter that included the unexpected death of its hard-charging CEO, Sergio Marchionne, Fiat Chrysler Automobiles made clear it can hang with the big dogs. FCA outsold Ford in the U.S. in September for the first time since 2015 and outearned Ford in the third quarter, both in net income and operating profit. FCA’s 10.2 percent profit margin for North America, a record, topped Ford’s 8.8 percent and equaled GM’s.
Q3 North American results
|Source: Company reports|
The performance validated a prediction Marchionne made in April, on the last earnings conference call before his July 25 death, that FCA’s North American margins were entering Ford and GM territory after lagging for years.
“If it doesn’t happen on my watch in ’18, I don’t have a single doubt that my successor will be able to whack the crap out of both of them,” Marchionne had said. “The machine is ready to do it. Just let them engage.”
FCA benefited from a 16 percent U.S. sales gain for Jeep in the quarter and a 12 percent increase for Ram, aided by the redesigned Jeep Wrangler and Ram 1500 and the freshened Jeep Cherokee. Marchionne told analysts in October 2016 that FCA would “be able to achieve double-digit margins” once those products came on line.
FCA’s global adjusted earnings before interest and taxes rose 13 percent in the third quarter, to $2.27 billion, on a 9 percent gain in revenue.
Its North American margin was more than double the 4.1 percent it reported in the third quarter of 2014, when FCA began its five-year business plan that will end with the new year.
But the company suffered a $106 million loss in Asia Pacific because of a dramatic slowdown in China, and a $28 million loss in its Europe/Middle East/Africa region because of slow Fiat sales and costs related to a new emissions-testing regimen.