With gas prices fast approaching a national average of $4.00 per gallon, fuel-efficiency is the name of the game in Detroit – and any other city where cars are made, for that matter. Fiat and Chrysler CEO Sergio Marchionne quelled concerns that rising fuel prices will ultimately hurt Chrysler, by virtue of the abundance of trucks in its product portfolio. He said that Chrysler’s fleet efficiency has improved by 40% since he took the reigns, and that more improvements are on the way.
“We have not stood still in terms of improving the fuel efficiency of our fleet,” he said.
“In the mind of the consumer, you don’t think of Chrysler as an automaker that is offering fuel-efficient vehicles,” IHS analyst Rebecca Lindland said.
Lindland did offer her praise of Chrysler however, highlighting the fact that Chrysler refreshed or redesigned 16 of its models in just over a year, and by recognizing the discipline with which this incarnation of Chrysler is operated.
The company saw a worldwide increase in sales volume of 18% during the first three months of 2011. A $200 – $500 million profit is expected this year, after a $652 million loss in 2010.
Grand Cherokee and 200 sales are way up, incentive cost per vehicle is on the decline, and fleet sales are down from 44% of total volume to 31%. “We need to see that number coming down systematically over the last four quarters,” Marchionne said. Fleet sales are much less profitable than retail sales, and are often hurtful to residual resale value, which means more expensive leases – two factors that undoubtedly deter buyers.
-By: Stephen Calogera