PSA Merger Good News/Bad News For Jeep and Ram
Today we learned that Fiat-Chrysler (FCA) is in talks yet again about a merger with PSA Group of France. PSA is the parent company of Peugeot, which has already announced its return to the US in 2022. It hasn’t sold cars here since the 1980s. But the question is can FCA continue to survive with Ram truck and Jeep sales during the merger talks? Some of the third-quarter numbers for 2019 are good news and some bad news for the storied brands. And what about Dodge, Chrysler, and Fiat? Do they even sell anything anymore?
For third-quarter 2019 FCA sold 565,034 vehicles in the US. Those are better gains than both Ford and Toyota saw for Q3. But those figures represent only a 0.1% gain from Q3 last year. Of course, Ford was down almost 5% and Toyota virtually 10%. So things don’t look too bad for FCA compared to those figures. Or do they?
Here’s the Good Jeep/Ram News:
Ram sales rose 14% based largely on its new Ram 1500 pickup. Since its introduction in 2018 sales has been consistently good. The Ram brand was helped by the segment-leading Ford F-150 showing a loss year-over-year. But Ford is getting ready to release an all-new F-150 by the end of 2020 so Ram should conquest sales while the getting is good.
Jeep Wrangler sales rose 3% with Jeep Gladiator sales of 16,132 units. Since this is its first year there is nothing to compare Gladiator figures with.
Besides Jeep Wrangler increases, Jeep Grand Cherokee sales rose 8% to make it the leading Jeep model for Q3 sales with 61,768 units sold.
So all of this looks like Jeep and Ram are forging ahead with increasing sales helping to keep FCA profits coming at a good pace. But let’s look at the numbers making investors and forecasters nervous about where FCA is headed.
…and the Bad Jeep/Ram News:
Overall Jeep sales are down 2% due largely to the Jeep Compass and Cherokee falling over 21% each. The overall performance of Jeep is central to the FCA profit picture.
The Chrysler brand is dragging down FCA profits as it’s off by 23%. The Pacifica van dropped 24% which doesn’t help Chrysler’s bottom line. Chrysler 300 sales were off 20% from last year’s Q3. This makes some sense as the 300 is an old vehicle going back to 2004, though it has been refreshed and seen special packages helping to give it this amazing longevity.
The other FCA car brands are also offsetting any gains seen by Jeep and Ram. Dodge sales are down 4% with the Durango SUV seeing a 7% slide from last year’s sales. Alfa Romeo has never gotten much traction in the US and it continues to see sales losses year-over-year. Remember, last year’s figures were not so good. Total Alfa sales were down 27% from its iffy sales number of last year.
What Analysts Say About PSA Merger
So what are analysts saying about FCA and how will it affect its ability to survive long enough to merge with PSA? And is there a good chance it will shed the Chrysler and Dodge brands?
First, these numbers indicate that aside from Wrangler, Gladiator, and Dodge cars, there were no winners in Q3. The fear is that there are only a few products propping up FCA right now. Any turn in the economy or buying habits could quickly spell doom and the end of the merger talks. If gas prices continue to shoot up or there are further Trump tariff troubles we could see a massive shift in consumer confidence affecting how they spend their money. Or don’t.
FCA’s third-quarter earnings are due to be released on October 31. This could be more good news or bad news. Those figures will indicate a lot about how much Ram and Jeep can continue to sustain FCA, at least through a possible merger with PSA.