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How Fiat Chrysler Stock Tripled: 3 New Products, In 3 New Locations, In Q1 2018

Apr. 09, 2018 11:01 AM ETStellantis N.V. (STLA)TSLA, F, GM, NSANY, NSANF, TM23 Comments
Anton Wahlman profile picture
Anton Wahlman


  • FCAU stock went from under $6 to more than $22 in less than two years. What caused this re-evaluation of the company’s prospects?
  • I argue that it was because FCA ended the production of small/midsize cars in the U.S. in favor of new and refreshed SUVs and pickup trucks.
  • Several factories were shut down for retooling, which harmed sales in late 2016 and all of 2017. However, those numbers returned with a vengeance in March 2018.
  • I describe the three major 1Q 2018 product launches in detail: Jeep Wrangler, Jeep Cherokee and RAM Pickup Truck 1500.
  • Jeep Wrangler grew 70% in March 2018, Jeep Cherokee 63%, and we should see a very strong rest of 2018.  SUVs and pickup trucks are where you find the automotive industry profits.

For all the talk about how Tesla (NASDAQ:TSLA) has been a great stock, FCA (NYSE:FCAU) has done much better in the last two years. It’s gone from under $6 per share to over $22. What’s behind this monster move?

The answer resides in three new products that eventually hit U.S. dealerships in January, February and March 2018, respectively. I’ll tell you more about these products below, but first some background.

It was two years ago when FCA started outlining its plans to not only exit some business lines and enter new ones, but also to repurpose its factories. The plan was basically six-fold:

  1. Exit the Dodge Dart and Chrysler 200.

  2. Add a new Jeep pickup truck and a new larger Jeep SUV (Wagoneer).

  3. In the meantime, come out with a new Jeep Cherokee.

  4. Also, come out with an all-new Jeep Wrangler.

  5. Also, come out with an all-new RAM 1500 pickup truck.

  6. Do all this by repurposing a combination of four factories in and near Michigan.

Let’s first start with FCA’s Belvidere, IL, plant. It had been making the Dodge Dart until October 2016, when it was discontinued. At that point, the plant was reconfigured to produce the Jeep Cherokee instead: here.

During the eight months that followed, this Belvidere, IL, plant was reconfigured to make the Jeep Cherokee. The Cherokee production had previously taken place in Toledo, OH. Production of the Jeep Cherokee in the Belvidere, IL, factory started on June 1, 2017.

Now, as of that production start - June 1, 2017 - it was still the old Jeep Cherokee. Seven months later, in January 2018, production of the meaningfully refreshed Jeep Cherokee took over. More about that new Cherokee model later in the story.

So what happened to the old Cherokee production location in Toledo, OH? It was cleared

This article was written by

Anton Wahlman profile picture
I am a former sell-side analyst -- UBS 1996-2002, Needham 2002-2006 and ThinkEquity 2006-2008. These days I review automobiles and other technology products, as well as analyze the automotive and technology industries, and coming up with long/short ideas. I also continue to write (less frequently) on macroeconomics and politics.

Analyst’s Disclosure: I am/we are short TSLA. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

At the time of submitting this article for publication, the author was short TSLA and long GM and GOOGL. However, positions can change at any time. The author regularly attends press conferences, new vehicle launches and equivalent, hosted by most major automakers.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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