Fiat Chrysler's SUVs and Ram Pickups Power Big Sales Gains
The Chrysler wing of Fiat Chrysler Automobiles 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 and a 4.3% decline for Ford's 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.
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.)
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 TrueCar.com 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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The article Fiat Chrysler's SUVs and Ram Pickups Power Big Sales Gains originally appeared on Fool.com.John Rosevear owns shares of Ford and General Motors. The Motley Fool recommends Ford and General Motors. The Motley Fool owns shares of Ford. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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