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Below are Mr. Marchionne's exact words, taken from the transcript of the conference call. Please note that he does not blame the vehicles or platform themselves for their lack of profitability, and he does not suggest that FCA will no longer invest in development of C- and D-segment sedans. All he says is that FCA US production capacity will no longer be dedicated to these segments because FCA US lacks the production capacity to meet the demand for SUVs, CUVs, and pickups.
There has been, in our view, a permanent shift towards UVs and pick up trucks and we have seen, certainly in terms of our ability to meet market demand some severe restriction in terms of the dexterity of our manufacturing system to accomplish that end.
And so, one of the things that we have decided to do is to effectively defocus from a manufacturing standpoint in the US to defocus the passenger car market. There are two cars in particular the Dodge Dart and the Chrysler 200 which will run their course. But without creating additional capacity in the United States, we need to re-utilize those plant infrastructure to try and deal with the development of both Jeep and the Ram brands.
So there will be a number of things that will be put in place in the next 18 months, things that have been agreed and detailed effectively. We draw the current Chrysler 200 and Dodge Dart from the marketplace over for a long period of time during which we will becontinuing discussions with potential partners that will be able to allow us to access that architecture an[d] effectively provide us the product from their facilities that will allow us to continue to cover the market.
The important thing is that as we transition to these new vehicles, the new Wrangler that’s coming out of Toledo in 2017, the continuation of the Cherokee, which as you well know is essential to the development of the brand especially in NAFTA.
These things happen with us – without us losing any volume in the Jeep or the Ram brands. These are things which are fundamental and I think that they have obviously had some cost in terms of the achievement of the objective, but it is a cost that is managed and certainly justified in terms of the margin generation associated with the shift.
So we continue to work with our partners, hopefully in the relatively short period of time, we will be able to detail the cooperation plan going forward. I think the important thing for us to reinforce is the fact that the Wrangler in its new home in Toledo will have additional production capacity available to try and meet demand on a global scale.
And I think it’s important for us to have found the home for the Grand Wagoneer family both the GrandWagoneer and the Wagoneer in whatever shape they come and then we find that space without creating additional production capacity. I think we’ve been able to accomplish that as a result of the realignment decision that we’ve made. I think we have taken a one-off charge in 2015 to account for some of the costs associated with that realignment we think that the cost that will justify the view of the significant expansion of margins that we will be able to obtain from the US.
There has been, in our view, a permanent shift towards UVs and pick up trucks and we have seen, certainly in terms of our ability to meet market demand some severe restriction in terms of the dexterity of our manufacturing system to accomplish that end.
And so, one of the things that we have decided to do is to effectively defocus from a manufacturing standpoint in the US to defocus the passenger car market. There are two cars in particular the Dodge Dart and the Chrysler 200 which will run their course. But without creating additional capacity in the United States, we need to re-utilize those plant infrastructure to try and deal with the development of both Jeep and the Ram brands.
So there will be a number of things that will be put in place in the next 18 months, things that have been agreed and detailed effectively. We draw the current Chrysler 200 and Dodge Dart from the marketplace over for a long period of time during which we will becontinuing discussions with potential partners that will be able to allow us to access that architecture an[d] effectively provide us the product from their facilities that will allow us to continue to cover the market.
The important thing is that as we transition to these new vehicles, the new Wrangler that’s coming out of Toledo in 2017, the continuation of the Cherokee, which as you well know is essential to the development of the brand especially in NAFTA.
These things happen with us – without us losing any volume in the Jeep or the Ram brands. These are things which are fundamental and I think that they have obviously had some cost in terms of the achievement of the objective, but it is a cost that is managed and certainly justified in terms of the margin generation associated with the shift.
So we continue to work with our partners, hopefully in the relatively short period of time, we will be able to detail the cooperation plan going forward. I think the important thing for us to reinforce is the fact that the Wrangler in its new home in Toledo will have additional production capacity available to try and meet demand on a global scale.
And I think it’s important for us to have found the home for the Grand Wagoneer family both the GrandWagoneer and the Wagoneer in whatever shape they come and then we find that space without creating additional production capacity. I think we’ve been able to accomplish that as a result of the realignment decision that we’ve made. I think we have taken a one-off charge in 2015 to account for some of the costs associated with that realignment we think that the cost that will justify the view of the significant expansion of margins that we will be able to obtain from the US.
