Pickups and SUVs have long been important to Detroit. They're especially important to FCA right now, and July sales were strong. Image source: Fiat Chrysler Automobiles.

Fiat Chrysler Automobiles (NYSE:FCAU) said it managed a tiny 0.3% year-over-year sales gain in the U.S. in July, paced by gains for its critically important Jeep and Ram brands. 

Digging into the numbers 

Here's a look at what worked for FCA (and what didn't) in July.

  • Jeep sales continue to be the engine of FCA's profits. U.S. sales rose 5% in July, led by a huge (57%) year-over-year gain for the small Renegade. The one-size-up Compass (up 31%) and Patriot (up 11%) both posted gains, as did the big Grand Cherokee (up 3%). But weak results for the brand's biggest sellers, the Cherokee (down 12%) and Wrangler (down 5%), raise a note of concern. 
  • Chrysler brand sales fell 4%, but the news was very mixed: A promising debut for the all-new Pacifica minivan was almost enough to offset major declines for the brand's other models, the 200 and 300 sedans (and the outgoing Town & Country minivan). The midsize 200 sedan is being phased out, and the well-regarded 300 is suffering from a very slow market for large sedans. 
  • Results for Dodge were another mixed bag, with sales down 10%. The high points were two very different brand icons: Sales of the Caravan minivan rose 28%, and the Challenger muscle car gained 7%. But the big Charger sedan (down 17%), the midsize Journey crossover (down 31%), and the Durango SUV (down 3%) all lost ground.
  • FCA's Ram truck brand had a solid month. Sales rose 5%, powered by gains for the full-size Ram pickup line (up 2%) and the ProMaster commercial vans. Year to date, Ram-brand sales are up 10%, as FCA has had some success breaking into the commercial-fleet markets long dominated by Ford (NYSE:F) and General Motors (NYSE:GM)
  • Alfa Romeo sold 43 examples of its 4C sports car in July, down 12% from the 49 it sold a year ago. 
  • Fiat sales fell 14%, on big declines for most of its 500 line. July was the first full month of sales for the new Mazda-based Fiat Spider sports car; 480 were sold.

FCA needs strong sales from both Jeep and Ram  

FCA is coming off a so-so second quarter in which it was able to boost pre-tax earnings despite drops in global sales and revenue. FCA CEO Sergio Marchionne is driving several major efforts to sustainably boost profit margins and reduce the company's debt load over the next few years. (That plan is key to the investment case for FCA.)

But for the time being, as my Foolish colleague Daniel Miller pointed out last week, FCA is heavily dependent on the ongoing success of the Jeep and Ram brands, particularly in the U.S. Put another way, Jeep and Ram are funding the overhaul of the rest of the company. 

Both brands derive much of their profit from the U.S. market, but it's becoming clear that the market's growth is stalling after several strong years. To be fair, it's stalling at a highly profitable level -- but incentives are starting to rise as some automakers reach for growth. That could begin to squeeze profit margins, and FCA has less to give up than its rivals. 

The good news for FCA is that both Ram and Jeep managed good year-over-year sales growth in July, and it appears the company was able to reduce its overall incentives a bit from June (down 1.6%, according to TrueCar estimates). Even if the market has stalled, FCA will need to keep stringing together months like this in order to execute on its overhaul plan. 

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