Fiat Chrysler Automobiles has been having some trouble for a few years now, but it appears things are finally taking a turn for the better. By noticing the new trends among consumers, FCA is beginning to push high-end Jeep SUVs and RAM trucks as they attempt to climb out of debt. After spending a lot of money on the production of sedans that didn’t sell, FCA has created quite the hole for themselves.
I certainly can’t blame consumers for making the change over to larger vehicles. In recent years, many manufacturers have put a lot of work into making SUVs and trucks more sleek, affordable, and technologically advanced. Sedans used to be a very safe purchase for the public, seeing as how they tended to have the best fuel economy for the least amount of money. Now that SUVs and trucks are seeing major rises in fuel efficiency, people are opting to spend a bit extra to obtain the size, comfort, and security that comes with owning a larger vehicle.
Since making the change over to SUVs and trucks, the company has reported an 8 percent adjusted operating profit margin in North America for the third quarter, which is up from 7.6 percent just one year ago. Oddly enough, this 0.4 percent increase was actually obtained even though the company reported lower numbers for sales and shipments. This 8 percent margin is being compared to General Motors’ 8.3 percent, showing that FCA is very serious about closing the gap between U.S. rivals.
If the trends keep heading in this direction, FCA is on track to erase all of their current debts by the end of 2018, while simultaneously hauling in up to $5.88 billion in net cash. The age of the sedan is just about over, and if other companies like Hyundai and Kia (known for their range of sedans and compact cars) want to keep their heads above water, they need to make the same changes that FCA is making. They were able to make the transition before the debt became too high and demonstrated an agility that is paying serious dividends.