2014 has been a booming year for the United States’ auto industry, with automakers selling over 780,000 more vehicles than at this point last year. Overall, sales are on pace to be at 16.4 million by the end of this year, which would be the highest since 2006.
Not surprisingly, nearly every company has experienced growth and reaped the rewards of the surging industry. But one company in particular, Fiat Chrysler, is experiencing the largest increase, and this mostly stems from the ever-increasing popularity of their Jeep brand.
Nick Bunkley of Automotive News says, “Jeep’s big year has helped Fiat Chrysler grow at four times the pace of the rest of the industry, gaining momentum as the U.S. market shows signs of starting to plateau. Last month, it posted a bigger volume increase than all other automakers combined: 28,884 incremental units for Fiat Chrysler vs. 28,582 for everyone else.”
Overall, Fiat Chrysler’s sales are up 16% this year, which is about quadruple the increase seen in the rest of the industry.
The Jeep brand alone, however, has spiked their sales by an astonishing 44 percent in 2014, accounting for about three-quarters of Fiat Chrysler’s 2014 increase. There has been much speculation as to why Jeep has experienced this sudden growth, and there are a number of possible explanations.
The top reason, though, seems to be the recent dip we’ve experienced in gas prices. For a bulkier, gas guzzling ride, this is an important financial factor that can not be underestimated.
“By any measure, households are reaping significant disposable income gains each week at current gas prices,” said Emily Kolinski Morris, Ford’s chief economist, in an interview with Bloomberg. “With U.S. gasoline consumption of over 360 million gallons a day, that represents a total savings of about $180 million per day now versus September.”
Fortunately for Fiat Chrysler, this was a scenario that they have been banking on. In fact, heading into 2014, Fiat Chrysler had re-upped their investment in the Jeep and SUV departments, a decision that is now paying off.
However, Jessica Caldwell– a senior analyst at Edmunds– warns that while the strategy is successful, it is “not invincible. In an interview with the New York Times, she says, “If there is a spike in gas prices, Chrysler’s weak small car lineup may not be able to fully absorb the blow.”