Fiat CEO Sergio Marchionne has gone native.
Brought to the United States by President Obama a year ago to teach the planet-killers at Chrysler how to make fuel-efficient econoboxes like the ones that proper Europeans drive, the refined Italian executive has fallen in love with big, money-making American SUVs. In an announcement that shook the auto world this week, Sergio announced that he wants Chrysler to help make . . . Alfa Romeo and Maserati SUVs.
Mama Mia! Just wait until Papa Obama gets back from Asia!
On the condition that Fiat would build a 40-mpg car — the Fiat 500 — in the colonies, President Obama agreed to hand over Chrysler for free to the Turin-based automaker in April 2009. “At long last we might finally see some small, fuel-efficient cars from an automaker that milked the SUV cash cow until long after it ran dry,” cheered the snobs at Wired magazine.
But a funny thing happened on the way to converting the savages to the Green faith: Fiat starting making green in the U.S. market. Not tree-hugging green — but the kind of green that comes from selling the old-fashioned, iconic Jeep Grand Cherokee SUV.
Thanks to Americans’ renewed love affair with light trucks — the cuddly giants made up 53 percent of market sales in October compared to just 47 percent for cars — Chrysler’s third-quarter earnings soared. While Washington is forcing Detroit to make small electric cars consumers don’t want, America’s lust for SUVs may rescue the recently bankrupt companies.
Profits on SUVs dwarf those on small cars. Indeed, says Jesse Toprak, auto analyst with TrueCar.com, the Mexican-made Fiat 500 may just break even for Chrysler while the Detroit-manufactured Grand Cherokee is raking in between $3,000 to $5,000 per sale.
“The trend that is really helping Chrysler right now is the return to SUVs among consumers,” says Toprak.
And the Jeep truck brand holds the key to increased Chrysler sales abroad as well. “The potential of the Jeep outside the U.S. is actually better than inside the U.S.,” says Toprak. “If you own a Jeep in the Middle East, for example, you ‘have made it.’”
That is, the vehicles Nancy Pelosi & Co. despise are actually the vehicles that can lead the company that taxpayers were forced to bail out to profitability (Obama himself is the biggest obstacle, as he seeks to punish Detroit automakers with a further doubling of fuel-mileage mandates to 62 mpg by 2025). What’s more, the American invention that our president apologizes to the world for is actually the vehicle that the world craves as a status symbol.
If Fiat’s Marchionne didn’t understand that before he came to America, he understands it now.
The Chrysler flagship Grand Cherokee — fuel mileage just 17 mpg — increased sales a whopping 291 percent in October leading a 37 percent increase in overall Chrysler sales. Fiat’s new American brand now projects its 2010 operating profit to hit $700 million, up from an expected, break-even $200 million.
No wonder Marchionne is an SUV convert.
Light trucks are money in the bank — and a big reason every automaker in the world wants to be in the low-gas-price U.S. market. Sergio’s got religion all right. He announced November 8 that he wants Chrysler’s Detroit Assembly Plant — the very facility Obama visited last July to crow about his Detroit bailouts – to build SUV platforms for as many as four brands: Chrysler, Dodge, Alfa Romeo, and Maserati.
Yee-haw! “The improving financial picture is helping make possible development of the fleet of new vehicles that Chrysler executives believe will further bolster the bottom line,” reports the Detroit News, “and take the once dying automaker to Wall Street, as a publicly traded company, in 2011.”
Industry analysts still bemoan the fact that Chrysler’s product mix is still too heavily dependent on SUVs — making it vulnerable to gas-price hikes — but Marchionne is laughing all the way to the bank.
How quickly can Chrysler churn out Fiat SUVs? Reports the News: “The timetable to add a Detroit-built Alfa, and possibly a Maserati, from Grand Cherokee underpinnings is 12 to 18 months, Marchionne said.” Global volume of the Italian SUVs could total 5,000 outside the U.S.
The accelerated schedule would mean jobs, jobs, jobs. Not the green, taxpayer-subsidized jobs that Obama promises. But the private, sustainable jobs that Wall Street investors crave.
“I’ve never seen a vehicle have this kind of support,” Marchionne admitted of the Grand Cherokee, adding that he underestimated its quality and appeal. Welcome to America, Sergio. You knuckle-dragging savage, you.