Jeep gcJeep

On an call with analysts after Fiat Chrysler Automobiles
announced second-quarter earnings last week, CEO Sergio
Marchionne
made a stunning announcement
:

“All of our production assets in the United States, if we exclude
Canada and Mexico from the fold, all those US plants will be
producing either Jeeps or Rams. There will be no passenger cars
that will be produced in the US. And therefore our expectation is
that that concentration will give us a possibility to get to very
close to those numbers that you mentioned earlier.”

That’s right: A car company will no longer build any actual cars
in the United States. After decades of manufacturing cars and
trucks, FCA is going all in on trucks and SUVs.

Marchionne has been leading FCA in this direction for a while,
but it was still remarkable to finally hear the words. Earlier
this year, he opined that a permanent structural shift is
underway in the US, and that SUVs are in the process of
displacing cars as Americans’ vehicles of choice.

It does look as if the market is trending decisively in that
direction.

But neither Ford nor General Motors is ready to take the same
plunge as FCA.

Here’s an exchange between Morgan Stanley auto analyst Adam Jonas
and Ford CEO Mark Fields
from last week’s earnings conference call
. (Ford missed on
profit expectations, by the the way, although the automaker had a
profitable quarter overall.)

Jonas: Are you at least somewhat sympathetic to
what Mr. Marchionne is saying? How much money do you actually
make in small and midsize cars in the US and can one make the
case that, over time, Ford, too, could be carless in your US
plants?

Fields: Well, I think overall as you can expect,
Adam, we look at how we spend our capital very, very carefully to
make sure that we’re earning a good return on it. When it comes
to our portfolio, we’ve said very clearly, it’s important
to have a full portfolio in cars in particular to adjust to any
changes we see in consumer demand,
in terms of the
economy, in terms of the regulatory environment. So those are
just a few of the things that we look at as we’re making
investment decisions across our portfolios including small
vehicles.

So an interesting divide is emerging in the industry between FCA,
bailing on car production in the US, and its Detroit brethren,
who are showing no sign of following FCA’s lead.