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Fiat Chrysler's SUVs and Ram Pickups Power Big Sales Gains

The handsome 2014 Dodge Durango SUV is winning fans: Sales were up 28% in May. Source: Fiat Chrysler.

The Chrysler wing of Fiat Chrysler Automobiles (NASDAQOTH: FIATY  ) said on Tuesday that its U.S. sales rose 17% in May, beating analyst estimates.

Chrysler has now posted year-over-year sales gains for 50 months in a row, a remarkable winning streak made possible by dramatic improvements to many of the company's key products.

Better yet for FCA shareholders, May's sales gains came with higher average transaction prices and decreased incentives, both of which should help second-quarter profits.

Pickups and Jeeps paced the month for Chrysler
So what worked for Chrysler in May? Once again, the company saw big gains for its Ram pickups -- along with a surge in momentum for the whole Jeep product line.

The Ram pickups continue to set the pace for strong full-sized pickup sales in the U.S., with a 17% increase versus a 9.5% gain for General Motors (NYSE: GM  ) and a 4.3% decline for Ford's (NYSE: F  ) stalwart F-Series, as Ford gears up for its transition to all-new 2015 models. The Ram continued to take market share from both Ford and GM as Chrysler's bigger rivals lagged.

Sales of the refreshed 2014 Jeep Compass were up over 60% in May. Source: Fiat Chrysler

Meanwhile, Jeep brand sales were up 58%, a huge gain powered not only by the strong-selling new Cherokee, but by strong sales increases across the brand's product line. While Grand Cherokee sales were up 13%, sales of the refreshed-for-2014 Compass were up 64% -- and the Compass's value-priced sibling, the Patriot, posted a 24% gain. 

Dodge's SUVs did well too
Clearly, Jeep is not being left out of the SUV sales boom -- a boom that gave the Dodge brand some momentum in May as well. Strong sales of the Journey crossover (up 33%) and the redesigned Durango SUV (up 28%) paced the brand to an overall gain, which was also helped by much-improved sales of its Dart compact (up 16%).

Overall, the Dodge brand was up 4% -- despite the fact that its second-best-selling product (the Avenger sedan, down 43%) has been discontinued, and sales of the large Charger sedan (up less than 1%) and its Challenger coupe sibling (up 4%) have been tepid. (Significantly refreshed versions of the Charger and Challenger are due this fall.)

The refreshed 2015 Dodge Challenger looks a lot like the current car, but it will carry a host of new high-tech features when it arrives this fall. Source: Fiat Chrysler

Not everything was in positive territory, though. Sales for the Chrysler brand, which is being repositioned as FCA's mainstream U.S. brand, were down 22% -- but there's a good explanation there. 

There are several new Chryslers on the way, including a new compact sedan and two new crossovers -- but right now, the brand has only three models, and one, the midsize 200 sedan, in in the process of being replaced. Most examples of the 2014 200 have been sold off, while the much-improved 2015 Chrysler 200 has just begun arriving at dealers; the model's big drop in sales in May (down 76%) was expected. 

Next up for Chrysler: A refreshed version of the big 300 sedan is expected to appear later this year.

It's not just about incentives anymore
Given that FCA is in the midst of significant brand repositioning in the U.S. and a major global product line overhaul, its recent U.S. sales success is impressive. 

It's even more impressive that May's gains came with higher average transaction prices, and somewhat reduced reliance on the heavy incentives that have long been a Chrysler hallmark. 

Final numbers won't be available for a day or two, but estimates that Chrysler's overall spending on incentives probably fell 5.9% in May over year-ago levels, while its average transaction prices likely rose 6.9%.

If true, that bodes well for FCA's second-quarter profits, at least on the Chrysler side of the house -- and with Fiat still working on a European turnaround, the Chrysler side of the house is the one currently paying the bills.

Introducing improved new models that can be sold at better prices is the surest way to boost margins in the auto business. The sales strength of recently overhauled products like Jeep's Compass and Dodge's Durango show that Fiat Chrysler's product mojo is still strong -- and that bodes well for the company's even-more-ambitious upcoming product plans.

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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 03, 2014, at 3:24 PM, Hoptopia wrote:

    Dodge is that classic company who makes for the most part the more interesting/cool looking vehicles from the US and keeps their noses thumbed up at MPG ratings and high fuel prices.... American's are still eating it up.

  • Report this Comment On June 03, 2014, at 9:01 PM, TMFMarlowe wrote:

    @Hoptopia: My first car was a 1974 Charger. I think my next car is going to be a 2015 Challenger. There have been a lot of cars in between, but I love that it's the second decade of the 21st century and Dodge is still building all-out muscle cars. I hope it continues for a long time.

    (Now, whether FCA is a good investment is another question, of course...)

    John Rosevear

  • Report this Comment On June 07, 2014, at 1:31 PM, SkepikI wrote:

    <I hope it continues for a long time.>

    (sigh) JR, I don't think the taxpayers can afford for this to continue for a long time. Two time loser Chrysler becomes a three time loser despite Fiat...or maybe because of Fiat....No sympathy for investors or customers here. And I say that as a long time Chrysler guy 1971-1998 my first car a 1967 Barracuda my last Chrysler a 95 Grand Caravan.

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John Rosevear

John Rosevear is the Fool's Senior Auto Specialist. John has been writing about the auto business and investing for over 20 years, and for The Motley Fool since 2007.

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