Fiat Chrysler is doing something remarkable — and taking a lead in the auto industry (FCAU)

Jeep

On an call with analysts after Fiat Chrysler Automobiles announced second-quarter earnings last week, CEO Sergio Marchionne made a stunning announcement:

"All of our production assets in the United States, if we exclude Canada and Mexico from the fold, all those US plants will be producing either Jeeps or Rams. There will be no passenger cars that will be produced in the US. And therefore our expectation is that that concentration will give us a possibility to get to very close to those numbers that you mentioned earlier."

That's right: A car company will no longer build any actual cars in the United States. After decades of manufacturing cars and trucks, FCA is going all in on trucks and SUVs.

Marchionne has been leading FCA in this direction for a while, but it was still remarkable to finally hear the words. Earlier this year, he opined that a permanent structural shift is underway in the US, and that SUVs are in the process of displacing cars as Americans' vehicles of choice.

It does look as if the market is trending decisively in that direction.

But neither Ford nor General Motors is ready to take the same plunge as FCA.

Here's an exchange between Morgan Stanley auto analyst Adam Jonas and Ford CEO Mark Fields from last week's earnings conference call. (Ford missed on profit expectations, by the the way, although the automaker had a profitable quarter overall.)

Jonas: Are you at least somewhat sympathetic to what Mr. Marchionne is saying? How much money do you actually make in small and midsize cars in the US and can one make the case that, over time, Ford, too, could be carless in your US plants?

Fields: Well, I think overall as you can expect, Adam, we look at how we spend our capital very, very carefully to make sure that we're earning a good return on it. When it comes to our portfolio, we've said very clearly, it's important to have a full portfolio in cars in particular to adjust to any changes we see in consumer demand, in terms of the economy, in terms of the regulatory environment. So those are just a few of the things that we look at as we're making investment decisions across our portfolios including small vehicles.

So an interesting divide is emerging in the industry between FCA, bailing on car production in the US, and its Detroit brethren, who are showing no sign of following FCA's lead.

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