NCPA - National Center for Policy Analysis

Chrysler Still Dependent on Truck Sales

May 27, 2011

Convinced that Americans craved small cars to fight the global warming scourge, the president demanded Fiat bring its best-selling 500 Eurobox to the States as part of the acquisition deal.  Obama was convinced that Fiat could reform the immoral, gas-swigging, SUV-dependent Chrysler.  The exact opposite occurred, says Henry Payne, editor of TheMichiganView.com.

  • Two years later, the little 500 is about to go on sale in dealer "boutiques" -- but it is the resurgence of America's appetite for trucks that has brought Chrysler back from the dead.
  • Chrysler Group reported sales were up 17 percent to 1.1 million vehicles in 2010 on the strength of its wildly popular, redesigned Jeep Grand Cherokee and Dodge Durango SUVs.
  • For CEO Sergio Marchionne, the SUVs success in the U.S. market has been a revelation and he is planning to expand the SUV lineup into Europe with Alfa Romeo and Maserati-badged trucks.
  • Marchionne has realized that trucks like the Cherokee typically rake in twice the per-vehicle profit of cars (thus the beleaguered company's speedy repayment of U.S. loans).
  • Chrysler's truck sales have also been good to UAW workers as Chrysler's Detroit assembly plant is now at full, three-shift capacity.

Chrysler has been here before.  After it repaid its 1980s loans under the legendary hand of Lee Iacocca, Chrysler was unable to diversify into smaller vehicles.  Today, as the truck boom fades before the specter of $4-a-gallon gas, Chrysler is still heavily dependent on truck sales, says Payne.

Source: Henry Payne, "SUVs saved Chrysler," Detroit News, May 24, 2011.

 

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