Chrysler’s 2019 Successes Foreshadow Positive Momentum in 2020

Boosting sales growth with its overhaul of the Ram pickup truck series, Fiat Chrysler (NYSE: FCAU) came out swinging in the 2019 struggle for sales and market share in the pickup and SUV sector. Overall, automotive demand softened this year in the USA, but Chrysler punched above the average weight among the big car companies. Chrysler's plans for building on its success via revamped SUV models, a diesel version of the popular new Jeep Gladiator pickup, and other truck-sector tactics, seem likely to pay off with continued positive momentum into 2020.

A 2020 Dodge Ram 1500 truck.

The 2020 Dodge Ram 1500. Source: Fiat Chrysler Automobiles.

How Chrysler pulled ahead of the pack

One of Chrysler's two power moves for 2019 consisted of a thorough redesign of the Dodge Ram 1500, soon followed by Ram 2500 and 3500 overhauls. Aesthetics- and comfort-related changes include refreshed bodywork for current-year styling, plus luxury cab features such as ventilated and heated seats, a sunroof option, touchscreen infotainment systems, and optional wood and leather details. The Ram 1500 aims for a silkier ride than its competitors with better suspension.

At the same time, Chrysler kept the Ram a workhorse with towing capacity better than most other 2020 model pickups in its class. The improvements appear to be popular, with Ram pickup sector market share popping up to 27.9% in Q1 and Q2 2019, compared to approximately 21% market share for the same period in 2018. Sales and profits strengthened in Q2 2019, with optimistic company guidance for the rest of the year.

Chrysler's launch of the 2020 Jeep Gladiator also gave some high-octane support to sales. The company designed the Gladiator from the ground up as a rather successful mix of a medium working pickup (maximum towing capacity 7,650 lbs) and an off-road vehicle only slightly less mobile than a Jeep Wrangler. 

While the Gladiator is new and still finding its legs, sales rose to more than 16,000 vehicles in the third quarter ended Sept. 30, 2019. The company's second foray into Jeep pickup truck design has therefore massively outdone the first -- the Jeep Scrambler, which, at its peak, sold 8,355 vehicles in the entire year of 1981, before fizzling out with just 128 unit sales in 1986. 

Selling twice as many Gladiators in three months as it did Scramblers in one year proves that Chrysler has hit on a winning design formula this time around. The rumored heavy-duty Jeep Gladiator Hercules could push the envelope through direct competition with the Ford F-150 Raptor and similar vehicles.

Leveraging rising diesel truck demand

Chrysler's other major sales-boosting power move is the addition of new and improved diesel engine choices throughout their various brands. Demand for diesel trucks outstripped sales gains for other types of vehicles during 2019. Sales of diesel pickups revved up 23% in Q2 compared to Q1, in fact, more than doubling overall gasoline vehicle sales growth. 

The excellent fuel efficiency, eco-friendly near-zero emissions, and potent torque boost that diesel engines offer in pickup trucks meld to create a greener, yet even harder-working vehicle choice for businesses and independent contractors. Chrysler got on top of this demand by developing a new high-torque, fuel-efficient 3.0L EcoDiesel engine option for the Dodge Ram 1500. This move undoubtedly helped to augment Ram sales. The same engine option is now available for most Jeep Wrangler trims.

More importantly for continued growth into 2020, Chrysler plans a diesel-powered version of the Jeep Gladiator. Combining an already popular new pickup with an equallyalready popular new diesel engine may well be a winning play for strengthening the Gladiator's mid-size pickup market share through the coming year. 

Overhauling several SUV lines in 2020

Chrysler is currently busy building a new plant on Mack Avenue in Detroit, giving it the production moxie for additional ambitious model overhauls. The 2021 Dodge Durango will feature body-on-frame architecture, improving its ruggedness and safety at the cost of some fuel economy, plus possible new engines and hybrid options.

The company likewise intends to modernize the Jeep Grand Cherokee. Likely features include improved turbocharged engines, another appearance of the 3.0L EcoDiesel engine option, air suspension on the off-road Trailhawk trim, and a possible new version housing three rows of seats. Chrysler is clearly betting on gaining the same success with these 2021 model year updates as it witnessed with the revamped Dodge Ram 1500.

Taken together, Chrysler has seemingly hit on a successful formula to ramp up market share and profits despite the general economic headwinds faced by the automotive industry. Refreshed vehicle lines, the Jeep Gladiator, and leveraging diesel demand won the company important gains this year. Energetically building on this foundation, Chrysler's coming-year outlook currently looks bullish. This could make the company a good investment opportunity for solid earnings through at least summer 2020. 

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Rhian Hunt has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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