Fiat Chrysler accelerates NAFTA shift from passenger cars

May 3, 2016 – Fiat Chrysler Automobiles (FCA) CEO Sergio Marchionne gave out pieces of the plan to exit the small- and midsize car business in the U.S. and shift factories to hotter-selling SUVs and trucks. They will keep selling muscle cars like the Charger, Challenger and 300 and premium brands like Alfa Romeo.

Marchionne said the plan would create more jobs, but whether the U.S. will lose employment is not clear.

He has said previously FCA would be adjusting to the U.S.’s market shift to trucks and SUVs, as aided by lower gas prices.

“It has gotten a lot stickier on the passenger car side,” he said. “I think the call that we made to exit those businesses as producer in the United States in hindsight was probably one of the best calls we made.”

The production changes will bring an increase in North American jobs, but some of the production will be moved to Mexico, Marchionne said.

Some temporary layoffs will take place as plants are retooled from cars to trucks, he told analysts on a conference call. Marchionne called the transition painful but said it would be finished by early 2018.

Here’s what we know about the production plans so far:

• FCA will retool a factory in Sterling Heights, Mich., so it can make a new Ram pickup truck that will come out early in 2018. The plant, with 3,000 production workers, now makes the Chrysler 200, a slow-selling midsize car that is among the segments that FCA plans to exit.
• A factory in Warren, Mich., that now makes the Ram pickup will be retooled to make the Jeep Wagoneer or Grand Wagoneer. The plant with 4,000 production workers, would keep making the Ram until Sterling Heights begins making the new truck.
• Production of the aging Jeep Compass and Patriot compact SUVs would move to Toluca, Mexico, when a new version comes out. Those are now made at a 4,000-worker factory in Belvidere, Ill. The plant also makes the Dodge Dart compact car, a market that FCA also wants to exit, so its future may be in peril.
• FCA will continue to make larger rear-wheel-drive muscle and luxury cars and should be able to grow in that area, Marchionne said. But it’s possible, he said, when the plans are finished that “the true passenger car side will represent the lesser portion of our portfolio than it does today.”

The automaker recently announced a $74.7 million investment at its Trenton, Mich., engine plant so it can build a future four-cylinder engine. The move doesn’t create new jobs but retains 245. The company gets a $770,000 state tax break.

— With files from Colleen Barry And Tom Krisher, The Associated Press