With the elimination of the two passenger cars, the company will be able to build more SUVs and crossovers, two vehicle types that are proving to be exceedingly popular among American customers.
Fiat Chrysler Automobiles will keep selling its passenger cars in the USA, but the automaker will build them in Canada and Mexico to keep production costs as low as possible, while profit margins are increased to the levels reached by its competitors.
While slightly ironic that a company that has “automobiles” in its name will stop making passenger cars in the USA, the move will bring FCA on par with General Motors ion the matter of profit margins.
As explained by company representatives at a press conference held in Detroit, SUVs, trucks, and crossovers it will sell usually achieve higher profit margins than sedans and hatchbacks, USA Today reports.
The Sterling Heights Assembly Plant is one of the leading facilities involved in the new plan, as it will receive an investment of $1.49 billion in the form of a retooling that will enable it to build Ram trucks. At the same time, FCA has enhanced production for the Jeep brand, and is focusing on other ways to save money on a large scale.
As Sergio Marchionne, CEO of Fiat Chrysler Automobiles, has explained in a press release, models like the Chrysler 200 and Dodge Dart have small profit margins, which bring uncompetitive results.
Meanwhile, if FCA builds Jeep and Ram models in the USA, those profit margins would sustain the business and reach the same levels of their main competitors, GM and Ford. The passenger cars built by FCA in the USA will be eliminated from the range by early 2017.