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Fiat Chrysler out-selling Ford in stores shows scope of SUV boom

[SOUTHFIELD] Fiat Chrysler Automobiles NV sold more vehicles to regular US consumers than Ford Motor Co last month, a rare victory that shows the strength of America's SUV boom.

Soaring deliveries of Jeep sport utility vehicles - including a more than sixfold jump for the redesigned Compass model - carried Fiat Chrysler to a 14 per cent surge in total March sales. The automaker beat estimates and topped crosstown rival Ford when excluding shipments to rental-car companies and other fleet customers.

The sales results are the latest indication that the explosion in SUV demand the last few years is here to stay. Ford Chief Executive Officer Jim Hackett is taking a page out of the playbook of Fiat Chrysler's Sergio Marchionne by cutting some cars from the lineup and retooling factories to build more of the crossovers, off-roaders and big rigs that American consumers crave.

"Marchionne looks like the smartest guy in the industry right now," Maryann Keller, a longtime auto industry analyst and consultant in Stamford, Connecticut, said by phone. "Why beat yourself over the head selling cars no one wants?" Ford, General Motors Co and Honda Motor Co also reported bigger-than-expected bumps in March sales, sending US automakers' stocks higher.

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"It was a blockbuster month and beyond what was anticipated," Michelle Krebs, a senior analyst with Autotrader, said by phone. "This could blow past the forecast. There were some incentives, but tax refunds are coming in and the economy is good." GM's deliveries surged 16 per cent in March, triple the percentage gain analysts had been expecting. The company is throwing a wrench in the industry sales reporting process by announcing a plan to end a 25-year-long practice of disclosing monthly results and shifting to quarterly releases. The move will better separate "real" demand trends from "short-term fluctuations," said Kurt McNeil, US vice president of sales operations.

Ford's light-vehicle sales rose 3.5 per cent, as record March deliveries of the company's SUVs helped to outpace the 0.8 per cent gain analysts had been forecasting. The company will be better off after replacing the Escape crossover and Explorer SUV with redesigned versions soon, Mark LaNeve, Ford's US sales chief, said on a conference call Tuesday.

"There have been months on occasion where FCA outsells us on a retail basis - in any given month a lot of different things can happen," Mr LaNeve said. "We're not going to blow our brains out on incentives on these products at the end of their life cycle and damage the brand health." Mr Hackett, 62, is planning to shrink Ford's passenger-car lineup. The only sedans and coupes that will survive will be low-volume, higher-priced models that'll help toward the company's goal to boost profit margins.

Mr Marchionne, 65, has already killed off the Dodge Dart and Chrysler 200 to reorient Fiat Chrysler around Jeep SUVs and Ram pickups. The company's blowout sales in March snapped an 18-month streak of total US deliveries declines, in part due to the challenge of converting car factories over to manufacturing Jeeps and Rams instead.

Ford is already following suit. About 2,000 workers at the company's assembly plant in Wayne, Michigan, will be temporarily dismissed for more than five months this year to shift from making slow-selling Focus compact cars and C-Max hybrids to Ranger pickups and the revived Bronco SUV.

Most automakers were expected to report small increases for March, which had one more selling day than the year-earlier month. Analysts were projecting the annualized pace of sales, adjusted for seasonal trends, was about 16.8 million vehicles. That would match the rate in March 2017 and would be the weakest since Hurricane Harvey ravaged dealerships across the Texas Gulf Coast in August.

GM said in a statement that the sales rate may have accelerated to 17.2 million.

"Healthy first-quarter numbers indicate the industry is on solid ground, but that doesn't mean we can expect another banner year for new car sales," Jessica Caldwell, Edmunds executive director of industry analysis, said in a statement. "We could potentially see sales start to tumble in the high-volume summer months when shoppers aren't seeing the deals they are looking for."