FCA Feels The Crunch

Stuck in neutral... (courtesy: Bernstein Research)

Stuck in neutral… (courtesy: Bernstein Research)

Ever since Sergio Marchionne offered the auto bailout team a home for a bailed-out Chrysler, his Italo-American hodgepodge has been held together with bootpolish, high hopes and strong demand for trucks and SUVs. Had the Jeep and Ram brands been spun off to any other automaker, the Fiat, Chrysler and Dodge brands would almost have certainly ended up in a bankruptcy sale. Instead the House of Chrysler’s two perennial profit centers have found themselves stuck propping up failing mass market brands, just as they were under Cerberus and Daimler-Chrysler management. In the meantime, Chrysler’s cross-town rivals have improved their cars enough to push their truck-powered profit margins towards the 10% level in North America.  But despite strong growth in sales growth, volume and mix, FCA’s North American margins are “bizarrely low” according to research by Bernstein. And their research shows that the bootpolish is really starting to wear thin…

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