Fiat Chrysler delays many Future Vehicle Programs- Reuters

Fiat Chrysler Automobiles in the past year has delayed the redesign or release of at least a dozen current or new vehicles in North America, according to suppliers familiar with the company’s plans. The unusual number of delays could let the automaker defer billions of dollars in investment while searching for a partner.

FCA Chief Executive Sergio Marchionne is shuffling product plans even as he seeks a partner for his company, the seventh largest global automaker. Marchionne says consolidation in the auto industry is inevitable, because automakers are burning capital investing in overlapping engines and vehicles.

Among the North American vehicles FCA has delayed updating are high-margin models including the Ram 1500 pickup and the Jeep Wrangler utility vehicle, according to five people familiar with the company’s plans. Sales of pick-ups and utility vehicles account for more than half of FCA’s pre-tax profit, according to industry analysts.

At the same time, FCA is accelerating development of certain vehicles. The Alfa Romeo brand may be getting more models on a faster schedule than originally planned, suppliers told Reuters.

FCA made its future model plans the centerpiece of a five-year, $50 billion plan that Marchionne outlined to investors in May 2014, including boosting annual global sales to 7 million by 2018 from 4.75 million last year.

Since Marchionne came out with his plan, at least 12 future vehicle programs have been delayed at Jeep, Ram, Dodge, Chrysler and Maserati, in some cases by a year or more, suppliers said.

Suppliers cited several possible reasons for the delays, among them last-minute design and engineering changes, including some that could reduce FCA’s overall investment. FCA’s cash and marketable securities fell by 1.1 billion euros ($1.2 billion) between Dec. 31, 2014, and March 31, while its net debt rose to 8.6 billion euros from 7.7 billion euros.

FCA declined to comment on specific delays. The product plan outlined to investors in 2014 was “a five-year snapshot of our plans,” the company said in a statement to Reuters.

“Those plans need to be flexible and fluid, with the potential to add some vehicles, pull some forward and extend the life cycle of others,” the company said. “We look at these programs on a vehicle-by-vehicle basis.”

The automaker appears to be focusing its resources on updating its most profitable vehicles, including the Ram, the Wrangler and the Jeep Grand Cherokee, while pushing back planned redesigns of such slower-selling, lower-margin models as the Dodge Dart.

However, redesigns of some of the company’s most popular models are being slowed, suppliers said.

The redesigned Ram 1500 pickup now has moved from mid-2017 to November 2017, they said.

REDESIGNED WRANGLER

The introduction of the redesigned Jeep Wrangler is now slated for July 2017, suppliers told Reuters. FCA said a year ago it planned to begin production of a redesigned Wrangler in early 2017. Marchionne said two weeks ago that he hasn’t yet decided where the new Wrangler will be built. The vehicle is currently assembled in Toledo, Ohio.

Marchionne also said that a redesign of the Grand Cherokee, one of the company’s most profitable models, has been delayed for an unspecified period of time so engineers could take “a complete re-look” at the vehicle’s basic underpinnings. That architecture will be shared with a larger and pricier derivative called Grand Wagoneer that’s intended to compete with luxury utility vehicles such as the Range Rover, he said.

In its 2014 investor briefing, FCA said the redesigned Grand Cherokee would be introduced in fall 2017 and the new Grand Wagoneer in fall 2018. Suppliers told Reuters this week that the Grand Cherokee introduction now may be delayed by up to a year, while the Grand Wagoneer’s launch could slip even further.

FCA also has delayed the planned release of a new Jeep compact utility vehicle that will supplant the Patriot and Compass, suppliers told Reuters. The as-yet-unnamed Jeep compact originally was to have gone into production in spring 2016, but has been pushed back at least six months, suppliers said.

The company has postponed a full redesign of the Dart and the Dodge Journey crossover, both of which had been scheduled for mid-2016. Instead, both models will get a mild makeover, but may not be fully overhauled until 2019-2020, suppliers said.

Plans to offer new full-size and mid-size crossover models under the Chrysler brand in 2017 and 2018, respectively, appear to have been postponed or shelved, suppliers said.

A major redesign of FCA’s full-size Chrysler 300, Dodge Charger and Dodge Challenger, originally slated for mid- to late 2018, could slip to 2019 or later, suppliers said.

FCA shares on the New York Stock Exchange rose 1.62 percent on Monday to $16.29, and are up 36 percent since the start of the year. By comparison, General Motors shares have risen about 3.7 percent this year, and Ford shares are down about 0.7 percent.

Source: Reuters