2015 Chrysler 200, Catskill Mountains, NY, Dec 2014
Fiat Chrysler Automobiles is the only U.S. maker to release five-year business plans to the media--and offer updates when things change.
That's just what it did yesterday, when it updated its plan for 2014 through 2018.
The biggest shocker of the day was the company's announcement that it would kill off its two newest sedans, the Chrysler 200 and the Dodge Dart, apparently within 18 months.
FCA will use the freed-up plant capacity to boost production of sport-utility vehicles and light trucks, especially the Jeep Cherokee compact SUV and Ram 1500 pickup.
The company can't meet demand for either vehicle, while having to offer large incentives to move the 200 and Dart off dealer lots.
The announcement runs counter to media reports last fall that suggested the company would move production of its passenger cars to Mexico to achieve the same goal.
2017 Chrysler Pacifica
Chrysler will be left with only two nameplates: the upcoming 2017 Pacifica minivan (which replaces the current Town & Country), and the aged 300 large sedan. It's also expected to get one or more large SUVs in the future.
Dodge is left with its equally aged Charger sedan and the low-volume Challenger performance coupe, its Durango SUV, and (for a while) the Caravan minivan--which will not be updated to match the Pacifica.
The Chrysler 200 mid-size sedan was launched for the 2015 model year; it received high marks for looks and features, but suffered from lack of rear-seat room and a balky nine-speed automatic transmission. Still, ending production after two to three years is almost unprecedented.
ALSO SEE: Why The 2013 Dodge Dart Sedan HAS To Get 40 MPG Highway (Dec 2011)
The Dodge Dart compact sedan was the first all-new vehicle from the combined Fiat and Chrysler companies, rushed into production for the 2013 model year.
It received only lukewarm reviews, and has never sold well, in part because the company's prior compact sedan--the Dodge Neon--had vanished after 2005.
[UPDATE, April 11, 2016: While Chrysler still plans to end production of the Dodge Dart compact sedan at the end of its life, the company streamlined and simplified the model lineup halfway through the 2016 model year. It has been reduced to three trim levels—base SXT Sport, mid-level Turbo, and high-end GT Sport—and the direct-shift automatic transmission has been eliminated. We'll have more details on the full reshuffle tomorrow.]
FCA won't add new workers or factories, but will keep U.S. employment and factory usage at roughly their current levels. The plants that are freed up can thus expand production of more profitable Jeeps and Ram trucks.
2016 Jeep Cherokee
"Jeep is the bedrock of this business plan," said FCA's chief financial officer Richard Palmer in industry trade journal Automotive News.
He increased the target for global Jeep sales in 2018 from 1.9 million to 2.0 million, reflecting Jeep's successes not only in North America but in new markets around the world. Its 2009 sales were just 340,000.
An entirely redesigned Jeep Wrangler will launch next year, including a new pickup-truck version that's expected to be very popular.
A full-size Grand Wagoneer SUV is also on tap, and Marchionne hinted at an additional model just called Wagoneer.
Updated Fiat Chrysler product and financial presentation for 2014-2018, released in Jan 2016
So how does Fiat Chrysler intend to meet continually rising gas-mileage requirements in the U.S.?
A presentation slide titled "Regulatory Compliance" suggests that while the Chrysler Pacifica will include a plug-in hybrid version with a 30-mile electric range, the next generations of both the Jeep Wrangler and the Ram 1500 pickup truck will offer diesel models--and 48-Volt mild-hybrid versions sometime after 2022.
Marchionne's presentation, however, contained significant gaps and omissions--including any details of which products would be assigned to what plants once the Chrysler 200 and Dodge Dart die.
2016 Dodge Dart
And we suspect that there's a lot more FCA isn't telling us just yet. For one thing, it's hard to imagine that the company can completely abandon the compact and mid-size sedan segments.
They're too large a piece of the market to ignore, not to mention their contribution toward lower emissions and the required higher fuel-economy ratings.
And as The Detroit Free Press noted, "Marchionne hinted that the Dart and Chrysler 200 could return to the market if FCA found another manufacturer willing to build the cars."
The two cars will "withdraw" from the market in the next 18 months, Marchionne said, "for a long period of time, during which we will be continuing discussions with potential partners."
2016 Scion iA
Such a partnership might resemble the agreement under which the Mexican-built Mazda 2 sedan is sold as the Scion iA in the U.S.
In setting the stage for the details that were released, Marchionne said FCA does not expect low fuel prices "to fundamentally change, directionally," and that it believes U.S. buyers' shift toward SUVs, crossover utility vehicles, and pickup trucks is permanent.
He did not directly address the risks of the plan should gasoline prices rise sharply and suddenly as they did in 2008.