Fiat Chrysler Braves Auto Slowdown: Q2 Results Cheered By North America Sales

Italian American automaker Fiat Chrysler has braved the trend of the auto sector slow down and sprung a surprise with its full-year profit guidance and a better second-quarter result.

On Wednesday Fiat Chrysler delivered a fairly good second-quarter performance buoyed by the brisk sale of RAM pick-up trucks in North America.

Auto news reports had been brimming with sales downturn in the sector, forcing players such as Renault, Daimler, and Aston Martin to cut sales forecasts after announcing their second-quarter results.

American carmaker Ford also announced a weaker-than-expected 2019 profit outlook while Nissan motor opted for massive job cuts, some 12,500 after earnings collapsed.

Specifics of the results

According to the Q2 results of Fiat Chrysler, it booked $884 million in profit. Fiat Chrysler is the parent company that produces Maserati Levante, the best selling mid-size luxury crossover SUV.

The financial guidance for this year involves a forecast of the adjusted operating profit of more than €6.7 billion ($7.5 billion) and a profit margin of more than 6.1 percent reflecting improvements on last year’s results.

North America delivered the bulk of Fiat’s earnings, up 12 percent to $1.75 billion, with fast-moving products Jeep Gladiator alongside Ram models countering the weakness of lower shipments.

The results shot up Milan-listed shares of the Italian-American automaker more than 4 percent.

Pickup sales delivered a 14 percent year-over-year increase in profit for Fiat Chrysler.

Induction of the new Ram heavy-duty pickup and sustained sales of the new and older model Ram 1500 pushed up the automaker's U.S. market to 28 percent, the company said.

Profit margins also expanded in the region after hefty discounts helped to capture a good share in the lucrative U.S. truck market.

In the second quarter, the auto maker’s light-duty trucks, including Jeep Gladiator accounted for 92 percent of sales.

Fiat Chrysler succeeded in placing Ram pickup as the No. 2-selling truck in the United States in the second quarter and overtook the share of Chevrolet Silverado. But it is still behind the Ford F-Series. Jeep Gladiator was able to grab a 7.7 percent share of the U.S. segment in June.

The bullish earnings report comes after a failed attempt to merge with France’s Renault.

FCA said the group experienced a strong performance in Latin America. In the European markets too margins have turned positive. Overall in the EMEA region covering Europe, the Middle East, and Africa margins expanded 0.4 percent replacing losses in the previous quarter.

CEO hopes the European market will turn profitable soon

CEO Mike Manley expressed the hope that the European region would return to profitability with margins of around 3 percent by the end of 2019. Manley assumed FCA’s chief position days ahead of the unexpected demise of Sergio Marchionne.

Meanwhile, challenges such as investments for future technology, high inventory levels, trade issues, and falling global auto demand need strategic tackling.

According to market observers, FCA’s full-electric 500 mini car and hybrid electric versions of Jeep and Maserati SUVs are unlikely to hit the market this year and will have to wait until next year.