Chrysler's big year off to a strong start


Fiat Chrysler reaffirmed its full-year profit targets after posting first-quarter income of $486 million, excluding the impact of one-time charges linked to the merging of Chrysler and Fiat.

The results are the latest indication that the automaker has gone from stabilizing operations after bankruptcy and transitioned into a company on the verge of major growth, especially outside North America.

"It's a whole new ball game for Chrysler," said Alec Gutierrez, senior market analyst at Kelley Blue Book. "Almost every vehicle in the portfolio has been or will be revamped, and buyers are noticing."

Jeep vehicles are offered for sale at the Marino Chrysler Jeep Dodge dealership in Chicago, Illinois.
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In the U.S., Chrysler's market share climbed to 12.5 percent in the first quarter, a sizable increase from the first quarter of last year, when it was 11.4 percent.

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Last week, Chrysler CEO Sergio Marchionne set a target of 15.8 percent share in the U.S. by 2018. That share target would include sales of Fiat, Ferrari and Maserati in the U.S.

However, Jeep has emerged as the real growth engine for Chrysler, thanks to a refreshed lineup and more new models scheduled to come later this year.

The brand's sales are up 46.5 percent domestically through April, according to Autodata. That includes a 17.4 percent increase for the Grand Cherokee, 16.2 percent for the Patriot and 10.5 percent growth for Wrangler.

Read MoreJeep plots global boom

Still, Jeep is just barely scratching the surface in terms of international growth. Overall, Fiat Chrysler sold 732,000 Jeeps last year, with the overwhelming majority being in the U.S. and Canada. By 2018, the company is targeting worldwide sales of Jeeps to hit 1.9 million, with much of that growth coming from overseas.

"The Jeep brand is knocking it out of the park right now," Gutierrez said. "Look at the new Cherokee. It is absolutely getting the attention of buyers in a very competitive small SUV market."

Over the next couple of years, Jeeps will be built in five additional countries, not just in the U.S.

Another indication of how strong Jeep sales are right now: its plants are running at full capacity.

Jeep Renegade and Chrysler 200 coming

During the company's earnings call, Chrysler executives spelled out several reasons why they are optimistic about meeting full-year profit targets.

Two of those targets stood out:

• Worldwide shipments this year are expected to reach 2.8 million.

• Adjusted net income is expected to be between $2.3 billion and $2.5 billion.

Chrysler plans to double global sales by 2018

As a company, Chrysler has momentum now thanks to the Jeep lineup. That should continue in the second half of the year with launch of the new Renegade, a compact SUV. It will be 16 inches shorter and 2 inches narrower than the Cherokee, which will make it the smallest Jeep. Still, Chrysler executives believe there will be strong demand for the Renegade given the growing popularity of small SUVs.

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Meanwhile, the Chrysler 200 will soon be in showrooms.

The 200 is a midsize sedan that replaces the Sebring and is going into a segment where sales are being pressured on a number of fronts. Year to date, Chrysler's midsize sedan sales are down 22.3 percent, while overall midsize sedan sales for the industry are down 5.4 percent.

The vehicle is also expected to boost the company's car sales, which have been a weak spot for years. Year to date, Chrysler car sales are down more than 10 percent.

Gutierrez said he is optimistic the 200 will do well for Chrysler. "I'm a big fan of the 200. It's a huge improvement in a category that is very competitive right now," he said.

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