Fiat Chrysler’s assembly plant in the Detroit suburb of Sterling Heights will remain closed until early April, three weeks longer than originally planned, due to sluggish sales.
FCA Chief Executive Sergio Marchionne has already said he wants to end in-house production of two midsize models, the Chrysler 200, as well as the Dodge Dart, shifting manufacturing to a contract supplier. That would free up space for more popular – and higher profit – models, such as the company’s pickups and SUVs.
Even though the Sterling Heights plant has already been idled for five weeks, there was still a 147-day backlog of Chrysler 200 sedans, as of March 1, according to industry data. While down from a 217-day supply at the start of the shutdown, that’s still more than twice the industry norm of 60 to 65 days’ inventory.
Sales of midsize passenger cars have been especially hard hit by shifting consumer demand as fuel prices have tumbled in recent months, according to industry analysts. That is no expected to recover anytime soon, as midsize buyers have shifted by the millions to pickups, SUVs and crossover-utility vehicles.
Utility vehicle sales are expected to surpass demand for sedans of all sizes this year, noted Stephanie Brinley, a senior analyst with IHS Automotive .
(FCA readying new Jeep pickup.Click Here for the story.)
Last year, all light truck models – including pickups, SUVs, CUVs and vans — accounted for 58% of the U.S. new vehicle market, up from 49% as recently as 2012, according to data tracking service Autodata Corp. That has topped 60% in recent months.
The Chrysler 200 has been especially hard hit, in part due to negative reviews from influential sources such as Consumer Reports. The non-profit publication listed that sedan as one of the worst it rated last year. U.S. sales of the sedan were off 58% in February compared to year-earlier levels.
FCA originally hoped to restart the Sterling Heights line on March 14th. It will now remain closed from February 1 through April 4th.
Also struggling is the Dodge Dart, a nameplate relaunched with much ballyhoo several years ago. But demand has fallen well short of FCA’s initial expectations, and despite cutbacks at a plant in Belvidere, Illinois, inventories still stood at 77 days, as of March 1, down from 122 a month before.
On January 27th, Marchionne revised his five-year business plan to reflect shifting market trends, announcing, “We will be continuing discussions with potential partners” who might be willing to produce the Chrysler 200 and Dodge Dart for FCA.
(Jeep brand aims to launch into booming Indian market this year. Click Here for more.)
The CEO has repeatedly outlined a goal of forming an alliance with another automaker in a bid to improve its economies of scale, though FCA has so far been rebuffed by several potential partners, including cross-town rival General Motors.
So far, no one has expressed a willingness to build the Dodge and Chrysler sedans for the company. It remains to be seen if FCA will continue to produce them on its own or simply walk away from those models to focus on more profitable products.
(Marchionne takes huge pay cut this year. Click Here to find out why.)
looks like the auto industry is not as rosie as Clinton has been saying as of late
Bob,
It depends on how you view things. By most measures, the auto industry is soaring, with record sales and profits in the U.S., a recovery in Europe…but challenges in Latin America and China. In the U.S., the market has shifted dramatically just over the last 3-4 years, away from passenger cars and towards light trucks. Add the fact that the Chrysler 200 and Dodge Dart haven’t gotten the best of reviews and FCA has issues to address. On the other hand, its overall sales have increased every month for almost five years, and it’s clear it would like to shift more towards the products that it can sell and earn maximum profits on.
Neither to defend nor attack the Democratic candidate, I don’t see the political argument you’re trying to make. If anything, the overall sales surge in the U.S. probably support her position — which may be why the auto bailout was notably absent from the GOP debate in Detroit last week.
Paul A. Eisenstein
Publisher, TheDetroitBureau.com
It would be nice to see the FCA plan include “make better cars, surpassing the competition”. This is more like “we can’t, so we’re giving up”
Sergio will always be a ‘beancounter’ first, second, last and always. Based on that premise it will be very difficult for FCA to reach its real potential.