Chrysler Group LLC is hoping that improving fuel economy figures will be the key to driving growth and boosting profits. By investing in fuel-efficient vehicles, the automaker believes it will easily hit financial and sales targets.
Although Chrysler just reported its first profit — $116 million — since emerging from bankruptcy in 2009, the automaker is still struggling with falling fleet sales and a low supply of new models, including the Fiat 500 and the Chrysler 300. The March 11 earthquake in Japan also stalled output, forcing to chief executive officer of Fiat SpA, Sergio Marchionne to admit: “Officially, we are behind schedule.”
“We’ve got less than two Chrysler 200s per dealer as of the end of the first quarter,” added Marchionne. “That’s inadequate to try and get traction.”
Chrysler has long relied on trucks and minivans to drive growth. However, according to Fiat Bothell, the automaker is now turning to smaller vehicles and engines to drive growth with the help of Italian partner Fiat. New engines, and new 8- and 9-speed automatic transmissions, are expected to help improve fuel economy by 25 percent by 2014. Additionally, a new compact sedan that’s due to hit showrooms next year will yield 40 miles per gallon.
Until production shortages are sorted out, Chrysler’s growth may soon hit a speed bump. According to Marchionne, the Japanese crisis is expected to cost Chrysler 50,000 to 100,000 vehicles in lost production. Although high mileage vehicles are expected to boost demand, production isn’t expected to meet the needs of car buyers until later this year.