Fiat Chrysler is bucking the trend, and is currently planning a brand-new auto plant in Detroit. This plant could provide much needed jobs in Michigan and will create confidence for those invested in the wider auto industry.
Recent news of Ford and General Motors restructuring projects has led many investors to speculate that the US auto industry is in decline. Ford is shrinking its lineup to cut costs, and GM is doing the same, resulting in plant closures and thousands of jobs lost.
Fiat Chrysler Confidence for SUV Market
There has been a dramatic shift in car-buying patterns this year. Compact car and sedan sales are declining, while trucks and SUVs are trending upwards. Models like the Ford F-150 and Toyota Tacoma have been extremely popular, and SUVs now represent the largest growth area for the American market.
Fiat Chrysler is responding to the change in consumer tastes, and its new Detroit factory will focus specifically on SUV and truck models. The planned Detroit plant will be the first major assembly plant built by a US manufacturer in ten years.
Existing SUV and truck factories owned by Fiat Chrysler are currently running 24 hours at full production. The company has cut almost all its small and mid-sized vehicle products in the last two years. Models like the Jeep Wrangler, Cherokee, and Dodge Ram are performing exceptionally well at retail.
The company has doubled down on its commitment to larger vehicles, announcing last month that it will produce a new Jeep pickup truck, the first of its kind since the Comanche was discontinued in 1992.
Chrysler’s Move Will Likely Impress Trump and Investors
President Trump has made no secret of his disdain for auto makers that downsize their US production capabilities. In an interview with the Wall Street Journal last week, Trump said of GM’s plant closure that “They better damn well open a new plant there very quickly. I love Ohio. I told them, ‘You’re playing around with the wrong person.’”
Trump has not yet spoken about Chrysler’s decision to open a new plant, but his recent comments suggest that he would be incredibly happy with the creation of new jobs.
Investors will also be optimistic as a stronger manufacturing presence in the US indicates potential in the auto market. If car makers can capitalize on the higher demand for SUVs, while shedding their unpopular product lines, it could result in stronger performance in the coming years.
Fiat Chrysler (NYSE: FCAU) is currently an affordable option on the New York Stock Exchange. While prices are down 10% year to date, the prospect of a stronger future could be enough to bring investor confidence up to healthier levels.
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