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How Fiat Chrysler Automobiles Is Gaining Ground in Europe

Red Alfa Romeo Giulia sedan

Fiat Chrysler Automobiles (NYSE: FCAU) said that its sales in Europe rose 15% in January, on strong year-over-year gains in Germany, France, Spain, and Fiat's traditional home, Italy.

FCA's European sales: The raw numbers

FCA's definition of "Europe" for sales-reporting purposes includes the 28 countries of the European Union, plus the four countries that are members of the European Free Trade Association (Iceland, Liechtenstein, Norway, and Switzerland). Note that aside from its results for Maserati, FCA reports European sales totals rounded to the nearest thousand vehicles.

Brand January 2017 sales Change (YOY)
Fiat 63,500 17.3%
Lancia/Chrysler 5,900 2.5%
Alfa Romeo 6,000 31.4%
Jeep 7,400 (5.1%)
Maserati 995 128%
Total FCA (as reported) 83,800 15.2%

Data source: Fiat Chrysler Automobiles NV.

Red Alfa Romeo Giulia sedan

The all-new Alfa Romeo Giulia helped boost that brand's comeback effort in Europe last month. Image source: Fiat Chrysler Automobiles NV.

What's working, and what isn't, for FCA in Europe now

FCA's 15.2% year-over-year sales increase outpaced the overall 10.1% gain for the 32 markets in FCA's definition of Europe, and the company's market share in the region rose 40 basis points to 7%.

While southern Europe has traditionally been Fiat's stronghold, the company posted gains in nearly all European markets, including a 22.7% year-over-year gain in archrival Volkswagen AG's (NASDAQOTH: VLKAY) home market of Germany. (The VW Group's European sales were up 10% last month, in line with the overall market.)

Not surprisingly, the Fiat brand accounted for the bulk of FCA's January sales. Fiat's Panda and 500 models make it the leading brand in Europe's "A segment," which includes minicars (one size smaller than subcompact). Fiat's 500X, an SUV-ish variant of the little 500 sedan, sold well against fierce competition in the small SUV segment.

FCA's old Lancia brand once occupied a niche in Europe's market akin to General Motors '(NYSE: GM) Buick in the United States, a step up from mass-market Fiats but not quite a luxury brand. FCA tried selling some rebadged Chrysler models as Lancias for a while, but today, Lancia is down to just one model, the subcompact ("B segment" in Europe) Ypsilon. Most sales are in Italy, though a few are sold under the Chrysler brand in the U.K. Ypsilon sales were up 4% in Italy, where it is the B segment leader.

Alfa Romeo sales jumped thanks to the arrival of its all-new Giulia sedan. The Giulia is the first model to be built on an all-new FCA vehicle architecture code-named "Giorgio," and it has received high praise for its handling and on-road dynamics. Alfa's sales were up almost 50% in Germany in January, and nearly 60% in Spain.

A white 2017 Lancia Ypsilon.

The subcompact Lancia Ypsilon sells well in Italy, but it's rarely seen elsewhere. Image source: Fiat Chrysler Automobiles NV.

FCA has been trying to establish the very American Jeep brand in Europe. The small Renegade, which is built in a Fiat plant in Italy, was designed in part as a way to introduce the rugged SUV brand in new markets (including China as well as Europe). Although Jeep's overall European sales were down last month, the Renegade managed a slight (0.8%) year-over-year increase.

Maserati remains a tiny niche luxury brand in Europe and elsewhere. The arrival of Maserati's first SUV, the Levante, has given its sales a boost around the world, as it did in Europe last month.

A silver Maserati Levante.

The new Levante SUV has given Maserati a sales boost in Europe and elsewhere. Image source: Fiat Chrysler Automobiles NV.

FCA is looking to build on a profitable 2016 in Europe

FCA's pre-tax profit in Europe more than doubled to 540 million euros ($575.8 million) in 2016 on a 14% year-over-year increase in sales across its brands. But its profit margin in the region remained thin (just 2.5%) due to high costs. Those costs included money spent to relaunch the Alfa Romeo brand around the new Giulia sedan, an investment that FCA hopes will pay off handsomely over the next few years.

FCA has had some success gaining ground on VW in Europe, as the German giant has continued to struggle with the fallout from its global diesel-emissions cheating scandal. VW kept pace with the overall market's gain last month, as did perennial competitorFord Motor Company , but some other rivals lost ground.

In particular, GM's Opel unit continued to struggle after once again failing to break even in 2016 . Opel's sales in the EU and EFTA regions rose 5.3% in January, trailing the overall market's gain. France's PSA Peugeot Citroen , which has emerged in recent days as a possible buyer for Opel, also lagged the market's growth with a 6.5% gain.

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John Rosevear owns shares of F and General Motors. The Motley Fool owns shares of and recommends F. The Motley Fool recommends General Motors. 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.

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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