Like a blurry picture where only one object remains in focus, Fiat Chrysler Automobiles muddy 2016 first quarter had a single thing that crisply stood out.
It’s a recurring theme, yes, but once again double digit Jeep sales growth propelled FCA’s adjusted first quarter profit to $1.39 billion – nearly double from the same period last year ($678 million) – despite worries recall notices, growing industrial debt, and merger calls would lead to lower growth.
Overall, the automaker’s 2016 first quarter vehicle shipments were flat as Chrysler and Fiat again dragged, but Jeep shipments rose 15 percent to 326,000 units.
North America continued to pace the majority of FCAs profit (90 percent), and the automaker announced plans Tuesday to retool two US plants to further boost Jeep and pickup truck production.
The company’s Sterling Heights, Mich., plant will soon phase out production of the brand’s Chrysler 200 in favor of Ram Pickup trucks, while it’s Warren, Mich., plant will convert to an all Jeep Cherokee line by 2018.
"We see nothing negative on the horizon,” CEO Sergio Marchionne said during a conference call Tuesday. "The outlook for the year continues to be strong."
FCA reported Tuesday its industrial debt grew to $7.4 billion during the first quarter, from $5.8 billion at the end of 2015. However, Marchionne has set debt elimination as his highest priority before leaving his job in 2018, which would strengthen the company's balance sheet and perhaps position it for a partnership with another global automaker. FCA hopes its continued push away from lower profit automobiles and into higher profit SUVs and Truck will accomplish this goal.
Last week, FCA said it was recalling 1.1 million vehicles in North America that could begin rolling unexpectedly when electronic transmissions weren't engaged properly. The vehicles affected include 2014-15 Jeep Grand Cherokee SUV, 2012-14 Dodge Charger, and Chrysler 300 sedans.