Fiat Chrysler Automobiles (NYSE:FCAU) said its U.S. sales rose 5% in April, on strong results for its Jeep brand and Dodge Caravan minivan -- and a big year-over-year jump in fleet sales.
FCA's gain outpaced the market and all major rivals'
FCA's 5% gain was an outlier. Most of the mass-market automakers doing business in the United States reported year-over-year sales declines for April, which had two fewer selling days than the year-ago month. (Selling days exclude days when new-car dealerships are typically closed: Sundays and some holidays.)
- Ford Motor Company (NYSE:F) said its U.S. sales fell 4.7% in April. Good sales of Ford's pickups weren't enough to offset a big drop in sedan sales and a year-over-year decline in deliveries to fleet customers.
- Toyota's (NYSE:TM) U.S. sales also fell 4.7% last month. Toyota's SUV sales were strong, but sales of its high-volume Camry sedan fell 10%.
- Honda's (NYSE:HMC) U.S. sales fell 9.2% in April. Its three top-selling models, the Civic and Accord sedans and the compact CR-V crossover, all posted significant year-over-year declines from a year ago.
- Nissan's (NASDAQOTH:NSANY) U.S. sales fell 28%, a big drop precipitated by a couple of factors: a planned reduction in fleet sales, and a drop in Nissan's previously generous incentives.
- Hyundai (NASDAQOTH:HYMTF) said its U.S. sales fell 11%. Promising results for some crossover SUVs were more than offset by weak sales of Hyundai, Kia, and Genesis-brand sedans.
- Subaru (NASDAQOTH:FUJHY) bucked the trend with a 1.5% year-over-year sales increase in April. Unlike most rivals, Subaru isn't suffering from the industrywide shift from sedans to crossovers. On the contrary: Nearly all of Subaru's models are crossovers, and sales have been very good.
- Volkswagen (NASDAQOTH:VWAGY) also bucked the trend of declines with a 4.5% sales gain in the U.S. in April. Again, the story was crossover SUVs: VW's all-new compact Tiguan and U.S.-made midsize Atlas crossovers both had strong results last month.
And what about General Motors (NYSE:GM)? GM said it will now report its U.S. sales results quarterly instead of monthly. Bloomberg, citing "people familiar with the matter," reported that GM's sales likely fell 2.5% to 3%, but we'll have to wait until the end of the second quarter to know for sure.
High and low points from FCA's April sales report
The high points:
- Jeep-brand sales rose a hearty 20%, paced by a 58% gain for the Wrangler. The Wrangler is all-new for 2018; dealers are selling a mix of new and (discounted) 2017 models; total sales were a very strong 29,776.
- A minivan boomlet? Sales of the category's stalwart, the Dodge Caravan, jumped 21% to 11,880 in April. But it might not be a boom: Sales of FCA's other minivan, the newer and more upscale Chrysler Pacifica, fell slightly to 10,180.
- The elderly Dodge Journey crossover had a great month, with sales up 39% to 11,638.
- Alfa Romeo had a decent month. Sales of the Giulia sedan rose to 1,123, and the new Stelvio SUV added another 702 units.
The low points:
- Sales of Ram pickups, an important driver of profits for FCA, fell 9% to 39,252. FCA has struggled with the production ramp-up of its all-new 2019 Ram; supplies of the new truck have been tighter than expected.
- Chrysler brand sales were down 18%. The brand has been reduced to just two models, from three a year ago: the Pacifica, down 2%; and the big 300 sedan, down 1% to 3,913 sold. (Sales of the discontinued midsize 200 sedan fell 97% as dealers cleared out 95 leftover 200s last month.)
- Demand was soft for the 300's brawny siblings, the Dodge Charger sedan and Challenger coupe. FCA sold 6,632 Chargers (down 4%) and 5,892 Challengers (down 11%) in April. (For comparison, Ford sold 7,125 Mustangs last month.)
- Fiat-brand sales totaled just 1,404, down 45% from a year ago.
One more point, a mixed one:
- FCA's fleet sales rose to just over 40,500 from 30,650 a year ago, a gain of about 32%. That's good news in the sense that more sales are generally better; it's less-good because much of that gain was probably in low-margin sales to rental-car fleets.
The takeaway: FCA is still doing its thing in a choppy market
FCA has been riding strong Jeep sales to higher profitability, not just in the U.S., but all over the world. The company posted a 59% gain in net profit in the first quarter, thanks in part to booming sales of its iconic SUVs. As long as SUV demand remains strong in the U.S. and elsewhere, FCA will probably continue to thrive.
Here in North America, FCA preceded Ford in eliminating its mass-market car models and shuffling its production lines to boost output of higher-profit vehicles. It's now seeing the benefits of a lineup focused on trucks, SUVs, and high-profit niche car models: a richer "mix" of sales and busier, more profitable factories. FCA's adjusted EBIT margin rose 0.5 percentage points to a fairly healthy 6% last quarter, and CEO Sergio Marchionne thinks there will be more gains to come.
Some of those gains will come from the items remaining on FCA's turnaround to-do list: New heavy-duty pickups are on the way, a replacement for the Journey is way overdue, and at some point, FCA has to figure out what to do with its elderly muscle cars, which are almost certainly still quite profitable but are stuck in a slow-motion sales decline.
But right now, Ram launch snags aside, FCA is doing what it needs to do to deliver a profit in the choppy U.S. market.