Fiat Chrysler unveils its 5-year game plan

Ambitious plan calls for Jeep brand’s rapid growth

A LaFerrari is displayed alongside Fiat and Chrysler vehicles in Auburn Hills, Mich. Fiat owns the Ferrari brand. Fiat Chrysler Automobiles’ plan includes investing big in re-establishing Alfa-Romeo.

ASSOCIATED PRESS

A LaFerrari is displayed alongside Fiat and Chrysler vehicles in Auburn Hills, Mich. Fiat owns the Ferrari brand. Fiat Chrysler Automobiles’ plan includes investing big in re-establishing Alfa-Romeo.

Chrysler Group LLC Chairman and CEO Sergio Marchionne speaks to investors Tuesday at the automaker’s world headquarters in Auburn Hills, Mich. about its plans as a combined entity.

AUBURN HILLS, Mich. — By 2018, Jeep expects to more than double its total annual sales to 1.9 million vehicles, with more than half of them going to buyers outside North America.

Jeep’s rapid growth is one of the key parts to an ambitious plan laid out Tuesday by Fiat Chrysler Automobiles that also calls for expanding the Chrysler brand from three models to six, refocusing Dodge on performance vehicles, and investing big in re-establishing Alfa-Romeo.

The unusually detailed plan is to serve as a road map for the now fully integrated automaker’s next five years.

“Today is much more than a new chapter. We are beginning to write a completely new book,” Chief Executive Officer Sergio Marchionne told a gathering of 400 analysts, media, and other attendees. “This is the first time that Fiat and Chrysler are presenting themselves and their future plans as a combined entity.”

Those plans call for FCA, currently the world’s seventh-largest automaker, to sell 7 million vehicles worldwide in 2018, up from 4.4 million last year.

To get there, a lot of things have to go right.

However, the company has shown a track record of meeting these sorts of goals. Though not everything presented in the last five-year update came to fruition, Chrysler Group looks today remarkably like officials said it would back in 2009.

One of the most important targets FCA needs to hit going forward are its plans for Jeep.

Officials said Tuesday the Toledo-built Jeep Cherokee, which just went on sale last fall, will be updated in 2016, the same year Jeep celebrates its 75th anniversary. The company also will end production of the Patriot and Compass models in 2016, replacing the two compact sport utilities with a single model. An all-new Wrangler, the heart and soul of the Jeep brand, is due for 2017. Jeep also plans to revive the three-row Grand Wagoneer nameplate in 2017.

The company is also embarking on a major push to build more Jeeps where it sells them.

“By 2018 the picture of Jeep’s manufacturing footprint is dramatically different, moving from production in one country of five nameplates to production of six nameplates in six countries,” Jeep CEO Mike Manley said. “This fully opens up key markets around the world that we’ve been constrained in, and I believe that this alone represents one of the greatest opportunities the Jeep brand has had in its recent history.”

Right now, Jeep builds all five of its models in the United States, with the Wrangler and Cherokee being produced in Toledo at Chrysler’s Toledo Assembly Complex.

Last year, the U.S. plants built a little under 800,000 Jeeps. Come 2018, officials say U.S. plants will build about 1 million Jeeps.

At least half of that is likely to come out of Toledo. Late last year, the former plant manager of the Toledo Assembly Complex said the plant was forecast to build a little more than 500,000 Cherokees and Wranglers this year.

The Fiat Chrysler sign is unveiled at Chrysler World Headquarters in Auburn Hills, Mich.

But Mr. Manley said the extra costs and tariffs associated with building Jeeps in the United States and shipping them overseas —particularly to countries such as China — price the vehicles at the top of the market and out of reach for many potential buyers.

Company executives said Tuesday that by 2018, some 500,000 Jeeps a year a year will come out of plants in China and India for consumption in those countries. Production will also be added in Latin America and Europe, where work on the upcoming Jeep Renegade is already under way at a Fiat plant in Italy.

Some exports will continue, however. FCA’s plans don’t call for building the Wrangler anywhere other than Toledo. However, the five-year plan also doesn’t address the company’s production constraints for the Wrangler in Toledo.

“The Wrangler will continue to be as American as apple pie. I get the feeling that Chrysler likes having the capacity issue with Wrangler,” said Dave Sullivan, an analyst with AutoPacific Inc. “It's a good situation to be in.”

The company has squeezed incremental production gains out of the plant the last couple of years, and recently hired an extra 1,000 temporary, part-time workers to keep the plant running full-tilt, while allowing regular employees more time off.

FCA anticipates selling 800,000 Jeeps in North America by 2018, a 44 percent increase from last year’s 557,000 vehicles. The company sold 732,000 worldwide last year, and Mr. Manley said Tuesday the company is on track for its goal of 1 million worldwide sales this year. By 2018, he anticipates sales of 1.9 million.

While FCA has big goals for Jeep internationally, it’s putting a similarly ambitious focus on Chrysler here in North America, with brand head Al Gardner saying he expects North American sales of 800,000 annually by 2018, up from about 350,000 last year.

From 2017 on, the Chrysler brand will have the only minivan. Company officials say they want less overlap between Chrysler and Dodge, taking Chrysler mainstream and making it the volume leader.

Dodge, meanwhile, will focus on performance. That doesn’t exactly scream minivan.

“If we are going to be serious about purifying the Dodge brand DNA, it just makes sense to concede the minivan segment to Chrysler,” Dodge CEO Tim Kuniskis said.

Chrysler will go on with the 200, 300, and Town and Country, which officials say will get the company’s first plug-in hybrid technology, giving it up to 75 miles per gallon.

The company also will unveil a new Chrysler 100 compact car, a full-size crossover, and a mid-size crossover. Dodge, meanwhile, will take over the SRT performance brand, which had temporarily been split off as its own brand.

Contact Tyrel Linkhorn at tlinkhorn@theblade.com or 419-724-6134 or on Twitter @BladeAutoWriter.