Despite suggestions that its factory might be maxed out, the Jeep Grand Cherokee managed an impressive 23% sales gain in September. Image source: Fiat Chrysler Automobiles.
Fiat Chrysler Automobiles said on Thursday that its U.S. sales rose 14% in September on continued strong demand for its extensive range of SUVs.
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That gain was roughly in line with analyst estimates, as the overall industry appeared to be shaping up to report a blockbuster sales month.
It was a bright spot of news for FCA, which has been dealing with labor challenges recently. And it seems to set the company up for a good third-quarter result.
Big gains for SUVs, but pickup sales were flatFCA said that Jeep sales rose 40% in September. Despite concerns that FCA may be bumping up against production limits of some Jeep models, nearly every Jeep in the lineup managed an outsized year-over-year sales gain in September.
Compass? Up 54%. Wrangler? Up 26%. Cherokee? Up 38%, for its best month ever. The big (and highly profitable) Grand Cherokee, which has had a subdued 2015? Up 23%. The new-for-2015 Renegade added almost 8,000 additional sales. Only the compact Patriot lagged.
FCA's Dodge brand lost some key products in a brand realignment last year. The changes have made year-over-year comparisons tough -- but it managed a 3% gain in September, a good result in context. Strong jumps for the Journey crossover (up 45%) and the big Challenger muscle coupe (up 26%) helped drive the gain.
Sales of FCA's SUVs have soared this year, but its Ram pickups haven't. Both of the Ram's big rivals posted good sales gains in September, but Ram pickup sales were flat year over year -- and they're up just 3% for all of 2015.
That may not be all bad news: Early this year, FCA CEO Sergio Marchionne hinted strongly that the company would cut back pickup incentives in an effort to improve margins. If FCA held sales constant year over year while making more money per truck, that's still a win.
A Labor Day boost probably supercharged Jeep's resultsThis was the 66th straight month of year-over-year U.S. sales gains for Fiat Chrysler. It's a tremendous streak that has had a number of important contributors -- but none have been quite as important as the company's iconic SUV brand, Jeep.
It's no secret that SUV sales are soaring all over the world. Modern car-based "crossover" SUVs are more comfortable and fuel-efficient than the big truck-based SUVs of old -- but they retain the spaciousness and all-weather advantages of their forebears.
Jeep has been in an ideal position to profit from this trend, and the brand's leadership hasn't missed the opportunity. Jeep's year-over-year gain made September the brand's second-best sales month ever.
Its first-best ever? This past May. Just as Memorial Day sales events gave Jeep (and many rivals) a big boost in May, Labor Day sales appear to have done the same across the board in September.
The upshot: A good-looking third quarter from a U.S. sales perspectiveWhether FCA can translate these sales gains into profit gains (and profit margin gains) remains an open question. But with big sales of profitable SUVs and reduced pickup incentives, the company seems to have set itself up for a very nice third quarter in North America. We'll find out in a few weeks.
The article Will Big Jeep Sales Mean Fatter Profits for Fiat Chrysler? originally appeared on Fool.com.
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