The auto industry faces an uncertain future as President Donald Trump rips up the Trans Pacific Partnership, pledges to renegotiate NAFTA and change the focus of the Environmental Protection Agency. But one automaker seems poised to benefit more than its competitors: Fiat Chrysler (FCA).
The company has been saddled by poor sales of small and midsize cars, overreliance on trucks, poor performance outside of the United States and a lack of alternative energy offerings. Trump's policies, however, are making up for key weaknesses in the Italian/American conglomerate's portfolio. These weaknesses may become strengths as Trump's policy unfolds.
Though the Fiat brand is known for efficient microcars, FCA draws almost all of its profit from trucks and SUVs sold under the Ram and Jeep brands. Across all seven U.S. market brands under their umbrella, Fiat Chrysler offers only one plug-in hybrid and one electric vehicle. FCA does sell a lot of small cars globally, but in the current climate, truck and SUV margins industry-wide dwarf small-car margins.
"Amongst all major global auto manufacturers, FCA is the closest thing to a pure play on the U.S. light truck/SUV market," Morgan Stanley analyst Adam Jonas wrote in a report. "They were also inarguably in the most vulnerable position with respect to fuel economy standards which may have a more relaxed cadence/target level under the new administration."
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Ram is the biggest moneymaker in the United States, while Jeep is globally its most profitable brand. Fiat, Chrysler, Dodge and Alfa Romeo are all valued negatively by Morgan Stanley.
FCA derives around 75 percent of its profit from North America.
U.S. auto market sales did cool off in January (FCA led the decline and its shares went lower on Wednesday) but FCA stock is reflecting bullishness relative to the other major U.S. automakers, up more than 50 percent since the November election results. It's a run made even more notable by the fact that it faces a new EPA case over allegations of flawed diesel emissions technology.