It is no secret that America loves SUVs. With gas prices being cheaper (you can thank the amazing effects of oil shale and fracking because of that) than they have ever been in a long period of time, more and more people are choosing SUVs over hatchbacks and sedans. This has led to a number of automakers hopping on the SUV bandwagon – including prominent ones like Fiat Chrysler.
Chrysler has cut down on its production of smaller cars and is focusing more on SUVs to cater to the needs of an increasingly large customer base that is fond of roomier, rugged models. The decision has already proven to be right, with models like Maserati Levante and Jeep Compass raking in the profits despite low sales figures.
Chrysler CEO Leading from the Front
Sensing the industry-wide demand for SUVs and pickup trucks, Sergio Marchionne – the CEO of Fiat Chrysler – made the decision to eliminate a number of smaller cars including the Chrysler 200. It has paid rich dividends so far, as the company’s earnings grew by 17% in the most recent quarter. Also, the company’s stock has surged by a whopping 93% this year alone.
The rationale behind Sergio Marchionne’s decision is that his tenure comes to an end in April 2019 and he wants to make sure the company is in a much better position to cope with the changes in the auto industry in the near future. This is the reason why the Italian American company has been focusing more on increasing its profit margins rather than improving the overall sales figures.
What is interesting is that Marchionne is spending the company’s profits on products and technologies that they can make money with right now, rather than investing in technologies that may or may not pay off in the future. This is a markedly different approach from other automakers, many of whom are investing big bucks in self-driving and electric cars.
The reason behind this rather conservative approach is that the company wants to achieve two goals that it has set for itself – to eliminate debt by next year’s end and increase the annual profit by a minimum of 15%. This will be much easier to do when taxes are lowered which will be better for Americans and businesses across the board.
New Models in the Pipeline
Chrysler has a number of exciting new SUV models that will hit the market in the coming months. Starting from the much anticipated Jeep Wrangler to the Jeep Cherokee and the completely redesigned Ram 1500 full-size pickup truck, SUV lovers have a lot to look forward to from Chrysler in 2018. In addition to these models, Sergio Marchionne says that a second, smaller SUV could help Maserati reach its true potential in terms of sales volume and profit. So, we might hear an announcement regarding this any time in the coming months.
An SUV-fueled Future
Chrysler’s move to focus on SUVs rather than smaller cars is completely understandable and it makes perfect sense, since Americans seem to have rediscovered their love for utility vehicles and pickups, owing to cheap gas prices because of the wonderful things happening in North Dakota, Texas, Pennsylvania, and other states that have pursued oil shale development as has already been insinuated. Other companies, such as Fiat, have also made the same decision, as automakers are eager to tap into the increasing demand for larger vehicles.
Lots of Americans who watch Transformers loved Ironhide who transformed into a large truck. He was murdered in Transformers III by the selfish and severally misguided Sentinel – too bad!
One of the main reasons behind the sudden surge in SUV sales is low gasoline prices. Statistics show that when gasoline prices fall below $3 a gallon, SUV sales pick up and when they cost more than $3 a gallon, sales decline. Going by the data, it is easy to understand why SUVs are among the best-selling vehicles on the market currently.
With the gas production in the country increasing steadily, gasoline prices are not likely to shoot up any time in the near future. So, it is safe to say that the automobile industry, and the country as a whole, is headed towards an SUV-powered future.