Fiat Chrysler Automobiles (NYSE:FCAU) said that its U.S. sales fell 10% in the first quarter, as its strong momentum early in the year was more than offset by the impact of the coronavirus pandemic in March.
With FCA's factories in North America and most of its dealerships closed indefinitely, it's clear that the second quarter of 2020 will look very different from the first 2 1/2 months of the first quarter.
In a sense, we've entered a different world. But I think that FCA's first-quarter sales results are still useful to auto investors: They can tell us what was (and wasn't) working before the COVID-19 outbreak, and what might work again after the virus subsides and the economy begins to recover.
Let's take a look.
The high and low points of FCA's first-quarter U.S. sales report
Here's what was working for FCA before the U.S. began to shut down in March:
- Sales of the Ram full-size pickups rose 7% to 128,805, a very good result under the circumstances. Overall Ram-brand sales, including the Ram ProMaster commercial vans, rose 3%.
- Sales of the upscale Chrysler Pacifica minivan rose 5% to 24,525.
- Sales of the Dodge Durango SUV rose 5% to 17,805.
And here are the low points of the report:
- Jeep sales were down 14%, with sales of every Jeep model dropping by double-digit percentages. Sales of the brand's biggest sellers, the Wrangler and Grand Cherokee, were down 21% and 13%, respectively.
- FCA's big, brawny cars all slipped: Sales of the Dodge Charger and Challenger were both down 10% from the first quarter of 2019, and the upscale Chrysler 300's sales fell 32%.
- Alfa Romeo sales fell 14%, with just 3,703 vehicles sold in the U.S.
In a statement, FCA's U.S. sales chief, Jeff Kommor, said that dealers have ramped up their cleaning and sanitizing protocols, and are offering home delivery and other "concierge services," to try to keep some level of sales going through the pandemic and to provide repair services for customers who need their vehicles.
What does this tell us?
The strong sales result for the Ram pickups was a bright spot. These are high-volume products that typically deliver strong profit margins; their sales strength under the circumstances bodes well for FCA's post-virus recovery and should help bolster first-quarter earnings.
On the other hand, the decline in Jeep sales was a not-so-bright spot, but it's not necessarily indicative of larger problems given the steep drop in sales traffic in March. It is, however, something to watch carefully as the economy recovers.
What's next for FCA?
FCA will hold its annual meeting on April 16, and will report its first-quarter 2020 earnings on May 5. I expect that CEO Mike Manley will use both events to share more about the state of FCA's business and his best guesses as to its outlook in coming months.