Killing the Dodge Dart and Chrysler 200 could allow FCA US to take advantage of an intriguing quirk in the next decade's fuel economy regulations. By increasing its ratio of trucks versus cars, the automaker might not need to worry so much about hitting the more stringent efficiency rules.
At first thought, it might seem harder for an automaker with a ton of trucks to meet the government's mandated 54.5 mile per gallon corporate average fuel economy for 2025. However, every company doesn't need to hit that lofty figure, according to The Detroit Free Press. The exact target varies by the product mix between trucks and cars. "While passenger car and light truck categories have separate CAFE targets, it's still true that more trucks versus cars in a company lineup means a lower combined CAFE target," Brandon Schoettle, Project Manager Sustainable Worldwide Transportation at the University of Michigan Transportation Research Institute, told Autoblog.
Modern crossovers also aren't gas guzzlers like older SUVs, which could make it easier to hit the fuel economy target. "Utilities offer practicality and versatility that cars do not, and now, built on car architectures, they do not penalize consumers on fuel economy as they once did," AutoTrader Senior Analyst Michelle Krebs told Autoblog.
Schoettle warns that FCA is still making a gamble by killing the small sedans. "Depending on the previous sales volumes and how much these vehicles might have exceeded their specific CAFE targets, it's possible that these cars helped earn CAFE credits for FCA that they could bank for future use," he said. "Future sales breakdowns [car vs. truck] and CAFE performance of the remaining individual vehicle models will ultimately determine if FCA comes out ahead after dropping these two vehicles."
FCA US sees the switch from cars to crossovers as a "permanent shift in demand," and getting rid of these sedans frees up factory space to build more CUVs. Long-term cheap gas could keep these models popular for at least the next decade, too. Future small four-doors would likely be a collaboration with another automaker, similar to Mazda's work on the MX-5 Miata and Fiat 124 Spider. "FCA is shopping for a partner to supply them with cars. They are abandoning the idea of developing and building them, but not selling them altogether," Krebs said. "Collaboration increasingly will be a strategy that automakers use in the future because of the high cost of developing vehicles, especially as they go more high-tech and require expensive solutions for improved fuel economy and emission standards."
Autoblog editor-in-chief Michael Austin already considered the "mad genius" of Marchionne's gamble to kill off the 200 and Dart. Beyond fuel economy, this could be a clever strategy for FCA US.
At first thought, it might seem harder for an automaker with a ton of trucks to meet the government's mandated 54.5 mile per gallon corporate average fuel economy for 2025. However, every company doesn't need to hit that lofty figure, according to The Detroit Free Press. The exact target varies by the product mix between trucks and cars. "While passenger car and light truck categories have separate CAFE targets, it's still true that more trucks versus cars in a company lineup means a lower combined CAFE target," Brandon Schoettle, Project Manager Sustainable Worldwide Transportation at the University of Michigan Transportation Research Institute, told Autoblog.
FCA US' current product blend has 80 percent pickups and CUVs, which means the company stands to benefit from a lower fuel economy target. It might not seem entirely fair environmentally, but this is a great move from a business perspective. The new CAFE rules aren't set in stone, according to The Detroit Free Press, but potentially taking advantage of the regulation is just one more reason to cut the Dart and 200."While passenger car and light truck categories have separate CAFE targets, it's still true that more trucks versus cars in a company lineup means a lower combined CAFE target."
Modern crossovers also aren't gas guzzlers like older SUVs, which could make it easier to hit the fuel economy target. "Utilities offer practicality and versatility that cars do not, and now, built on car architectures, they do not penalize consumers on fuel economy as they once did," AutoTrader Senior Analyst Michelle Krebs told Autoblog.
Schoettle warns that FCA is still making a gamble by killing the small sedans. "Depending on the previous sales volumes and how much these vehicles might have exceeded their specific CAFE targets, it's possible that these cars helped earn CAFE credits for FCA that they could bank for future use," he said. "Future sales breakdowns [car vs. truck] and CAFE performance of the remaining individual vehicle models will ultimately determine if FCA comes out ahead after dropping these two vehicles."
FCA US sees the switch from cars to crossovers as a "permanent shift in demand," and getting rid of these sedans frees up factory space to build more CUVs. Long-term cheap gas could keep these models popular for at least the next decade, too. Future small four-doors would likely be a collaboration with another automaker, similar to Mazda's work on the MX-5 Miata and Fiat 124 Spider. "FCA is shopping for a partner to supply them with cars. They are abandoning the idea of developing and building them, but not selling them altogether," Krebs said. "Collaboration increasingly will be a strategy that automakers use in the future because of the high cost of developing vehicles, especially as they go more high-tech and require expensive solutions for improved fuel economy and emission standards."
Autoblog editor-in-chief Michael Austin already considered the "mad genius" of Marchionne's gamble to kill off the 200 and Dart. Beyond fuel economy, this could be a clever strategy for FCA US.
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