Why Fiat Chrysler Is Killing The Dodge Dart And Chrysler 200

John Rosevear

Production of the slow-selling sedans will end so FCA can use its assembly lines to make more Jeeps and Rams, FCA's CEO says. Here's how that's likely to play out.

Fiat Chrysler Automobiles CEO Sergio Marchionne said last week that the company will stop making the Dodge Dart and Chrysler 200 at some point in the near future in order to use the cars' factories to make more SUVs and trucks instead.

What's the story, here?

A "permanent shift" away from sedans in the U.S.

Here's what Marchionne said during the company's fourth-quarter earnings conference call:

We have seen a significant shift in the product mix of cars being sold [in the U.S.] Part of this is been driven by continuing low gas prices, which -- certainly in terms of our forecast period -- we do not expect to see fundamentally change directionally.

There has been, in our view, a permanent shift toward UVs and pickup trucks [in the U.S. market]. And we have seen, certainly in terms of our ability to meet market demand, some severe restriction in terms of the dexterity of our manufacturing system to accomplish that end.

In other words, FCA has struggled to meet market demand for highly profitable products like its Jeep Cherokee and Wrangler. Several of its factories are running flat-out now, but the company feels it could sell even more SUVs and pickups if only it could make more.

Meanwhile, sales of FCA's mainstream compact and midsize sedans, the Dodge Dart and Chrysler 200, are lagging.

"And so, one of the things that we have decided to do is to effectively de-focus -- from a manufacturing standpoint in the U.S. -- to de-focus on the passenger car market. There are two cars in particular, the Dodge Dart and the Chrysler 200, which will run their course," he said (emphasis added).

FCA doesn't want to build more factories in North America in order to make more SUVs, because those factories could become high-cost burdens in the event of a downturn. But Marchionne wants to maximize the profitability of the factories FCA already has in North America while the market is favorable.

Source: 
The Motley Fool