Despite Strong Performance By Ram Pickups, FCA Reports Lower Q1 Results
Friday May 3, 2019
FCA released Q1 financial results today, Friday, a day often saved for bad news. And while the news is not all bad, it was not great either. Ford and General Motors shared Q1 results during the past week and both delivered solid numbers in tough conditions. Ford even surprised a few analysts.
Auto sales are down across the industry in the all-important, profitable U.S. market, and FCAs volume in Q1 was reflective of the slowing industry. In all, FCAs U.S. sales volume decreased by 3.2% versus year ago levels in the U.S. according to Kelley Blue Book, roughly in line with the industry. Only the Ram brand showed an increase in volume. The other five FCA brands declined, significantly in the case of Chrysler and Fiat.
Jeep and Ram are the engine that power the companys revenue performance. According to Kelley Blue Book data, transaction prices were up with five of the six FCA brands. Ram brand saw transaction prices up nearly 6% versus year-ago level. Transaction prices for the all-important Ram pickup, which outsold rival Chevrolet Silverado in Q1, were up over 7%. Still, Rams growth, coupled with higher transaction prices, was not enough to offset drops elsewhere. Unlike Ford in Q1, which saw an increase in revenue in North America despite lower volumes, higher revenue at FCA brands were not enough to offset the lower volume. Overall, revenue dropped in Q1 vs 2018.
In Q1 2019, rivals Ford and GM were also able to significantly reduce incentive spending, with Ford dropping nearly 8% and GM cutting spend by more than 15%. FCA, on the other hand, struggled with incentive spending. Three of the companys 6 brands saw spending increases. While spending was down for Jeep and Ram, which helped deliver an overall incentive decrease of 1% in the quarter, it was not enough. In North America, overall earnings for FCA dropped.