DETROIT — Chrysler emerged from bankruptcy in 2009 as a weak automaker with few new cars and trucks in its pipeline, leaving many to doubt whether the company could survive — let alone boost sales and gain market share.
But for nearly five years, the automaker, which has been renamed FCA US, has done just that.
Every month, for the past 56 months, FCA US has sold more new cars and trucks than it did in the comparable month from the prior year. It’s a record the Auburn Hills automaker is proud of.
“Back in the summer of 2009, when we emerged from bankruptcy, and going into 2010 … a lot of people had Fiat Chrysler completely written off,” said Reid Bigland, head of U.S. sales. “And yet we continued to keep our head down.”
At the time, many analysts and competitors dismissed the automaker’s gains as somewhat expected given how far the company’s sales fell during the recession.
Others said the sales gains were driven by big incentives. Another often cited factor was FCA US’ dependence on fleet sales.
And while there was some truth to each of those points, those explanations also don’t tell the full story.
“I think the conversation is really now starting to shift to our product,” Bigland said. “Because … when you have gone almost five years, it silences a lot of people who have alleged you have easy comparisons.”
FCA US’ share of U.S. auto sales has increased from 8.9 percent in 2009 to 12.6 percent for the first 11 months of this year.
New, redesigned models
Bigland said the automaker should get credit for a series of well-timed new or redesigned models that have proven to be popular.
The modern-looking Cherokee, which debuted in the fall of 2013, replaced the company’s boxy, gas-drinking Liberty. Its looks were roundly criticized by Jeep enthusiasts but have proven to be a hit with mainstream consumers.
Through November, consumers bought 160,793 Jeep Cherokees, putting to rest most of the complaints by enthusiasts about its design. Sales of the Jeep brand were up 43 percent over the first 11 months of the year.
Meanwhile, Ram has been sneaking up on its rivals over the past several years. Ram’s share of full-size pickup sales in the U.S. has grown from 11.6 percent in October 2009 to 22.4 percent. The gain was helped by the introduction of a redesigned Ram 1500 in 2012 and a diesel engine option introduced earlier this year.
This year, competitors have complained about Ram’s aggressive incentives. Currently, Chrysler is offering incentives that total $4,700 off of the 2014 Ram 1500 Big Horn, which starts at $30,590.
For the year, Bigland argues that Ram’s incentives aren’t much higher than the Ford F-Series or Chevrolet Silverado incentives.
“From an incentive spend per unit, Ford, GM and Ram are generally right on top of each other,” Bigland said.
Chrysler 200
The all-new Chrysler 200 also has helped the automaker this year. Sales of the Chrysler 200 topped 14,000 in November.
That’s still only about half of monthly volume for top-selling midsize sedans such as the Toyota Camry, Honda Accord and Nissan Altima.
Still, 11,000 of the Chrysler 200s sold last month were purchased by retail customers rather than less-profitable fleet customers. And, Bigland said, the Chrysler 200’s sales momentum continues to build every month.
FCA US has achieved its sales gains while cutting back dramatically on its fleet sales.
For the three months ending Sept. 30, only 18 percent of Chrysler’s sales came from fleet buyers.
That’s much less than Ford and GM. So far this year, 28 percent of Ford’s sales have been to fleet buyers, while 24.5 percent of GM’s sales have been to fleet buyers.
“Six or seven years ago … we had a lot of fleet,” Bigland said, but so far this year, Chrysler’s retail sales are up 18 percent. “So, the strength has really come at retail. … And our share growth has really come from our retail sales growth as well.”
Dart disappoints
To keep the sales record going, FCA US also had to overcome some disappointing new cars.
It took the company much more time than expected to build up its dealer network and to establish its Fiat brand, which was launched in 2011. The quirky Fiat 500L, launched last year, provided little relief. Only 10,900 500Ls have been sold over the first 11 months of this year.
The Dodge Dart, launched in 2012, never hit the sales targets the company was aiming for. And this year, sales of the compact car have declined 1.3 percent to 76,977.
The entire auto industry has spent several years trying to figure out how Chrysler has kept its sales streak going, said Jessica Caldwell, senior analyst for Edmunds.com.
Part of the answer, Caldwell said, is that the company has been willing to provide car loans and leases to people with subprime, or risky, credit scores.
In November, about 22 percent of Dodge cars and trucks were financed at an interest rate of 10 percent or higher, Caldwell said. The automaker’s Chrysler and Fiat brands also have a higher percentage of customers financing their purchases with high-interest loans than the overall industry.
“What that tells me is they are definitely attracting a customer with less than stellar credit rating,” Caldwell said. “Nobody wants to be doing this volume of business in this space over the long term.”
Caldwell also said FCA US, which still has a truck-heavy lineup, has benefited from low gas prices that have fueled sales of its pickups and SUVs.
Next year, it will likely get more difficult for FCA US to keep its sales streak alive.
For the past five years, the company’s gains have been helped by an automotive industry that has been rebounding and growing at a rapid rate. Next year, the rate of industry sales is expected to slow.
Next year, the company’s Ram 1500 pickup also will face much stiffer competition, with Ford launching an all-new F-150 and with sales climbing for General Motors’ midsize Chevrolet Colorado and GMC Sierra midsize pickups.
“I feel the Ram 1500 is still by far the best pickup truck on the road,” Bigland said. “I feel very confident that we can continue to grow share and grow sales in the pickup truck segment.”
FCA also will launch the Jeep Renegade and the Fiat 500X next year. Both are subcompact crossover SUVs that will hit the market just as crossovers have become the hottest segment in the industry.
Aside from those two new crossovers, FCA US hasn’t announced any other new vehicles or major model redesigns for its core brands. Generally, the automakers who introduce the most new cars and trucks have the easiest time selling more vehicles.
But Bigland has heard all of this before. A year ago, skeptics were asking him how FCA US would keep its streak going with the Chrysler 200 as the only all-new model the company had in its arsenal.
Next year, Bigland said, “I am optimistic that additional products we do have will continue … to keep us competitive in the marketplace.”
