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July 2016 Sales For FCA: Wild Swings Beneath The Flat Surface

|Includes: Fiat Chrysler Automobiles NV (FCAU)

FCA (NYSE:FCAU) reported U.S. 2016 July month sales:

http://www.fcagroup.com/en-US/media_center/fca_press_release/FiatDocuments/2016/august/JULY_2016_FCA_US_SALES_IN_USA.pdf

The good news was that unlike Ford and GM, FCA was not down in July.

The bad news is that FCA wasn't really up either.

Jeep's growth rate slowed materially, down to 5%, leaving the year at 14% thus far. Yes, I know, most automakers would give a limb for a 5% growth number right now, but this is Jeep.

The standout performer is the joint-Fiat -- and built in Italy -- Renegade model, the newest Jeep in the portfolio. It was up 57% for the month and 211% for the year to date.

Amazingly, the ancient and soon-to-be discontinued Compass model is also doing extremely well at 31% for the month and 72% year-to-date.

Cherokee and Wrangler were down for July and for the year to date. Most likely, the Renegade cannibalized these sales.

Chrysler sales were down "only" 4% thanks exclusively to the Pacifica minivan model. It's now almost half of overall Chrysler sales, and should be over half by the end of this quarter. As we exit 2016, there may only be two Chrysler models left -- the 300 and the Pacifica.

Dodge was down 10%, leaving the year at up only 3%. The only model that's doing consistently well, is the age-old Caravan minivan. That model is set to cease production some time in 2017, although I would not be surprised if FCA finds some way to rethink its minivan portfolio. The Dodge Caravan is advertised in the papers at under $17,000 while the Chrysler is advertised in the paper at around $26,000, so that's nearly a $9,000 gap that needs to be bridged or at least minimized, in order for FCA to not suffer. I imagine we will hear more about this no later than the first quarter of 2017.

RAM was up 5% with essentially all models doing well, especially the vans. The pickup trucks were barely up, though. It will be interesting to see what impact a future 2018 model year Jeep pickup truck will have on FCA's portfolio, including RAM.

Fiat was down 14%, and the surprising part is that the 500x can't seem to grow much, if at all, despite being essentially the same car as the Jeep Renegade, which is the group's star performer.

FCA is scraping by at zero growth in the U.S. right now, but there are challenges beneath the flat surface. Some models are going away, some are being replaced by all-new vehicles, and some are not being replaced at all. There is not a lot of room for error here.

Disclosure: I am/we are long FCAU.

Additional disclosure: At the time of submitting this article for publication, the author was long GOOGL and FCAU. However, positions can change at any time. The author regularly attends press conferences, new vehicle launches and equivalent, hosted my most major automakers.