Tariffs Would Slam the Jeep Renegade, Force FCA to Weigh Options

Steph Willems
by Steph Willems

Jeeps smallest U.S. offering stands to be hit hard by proposed import tariffs, according to calculations from an investment advisory firm, and the volume of vehicles Fiat Chrysler brings in from outside U.S. borders would see the automaker take it on the chin.

With the Trump administration mulling a range of tariffs, the firm tabulated just how much the import duties could cost FCA. If the tariffs come to pass, expect to see fewer Jeep Renegades on your local dealer lot.

Data from Evercore ISI, published by Automotive News, reveals that a 25-percent tariff on vehicles built outside U.S. borders would cut into FCA’s profits to the tune of $866 million a year. That’s the worst-case scenario.

If instead Trump goes ahead just with his 20-percent tariff on European Union imports, FCA’s loss isn’t as great, but it’s still hefty. $613 million. The bulk of the loss stems from a single model FCA trucks in from Italy — a subcompact, Fiat-based crossover that made up roughly two-thirds of the 158,553 vehicles FCA imported from non-NAFTA countries in 2017: the Jeep Renegade. Last year, Americans bought 103,434 Renegades — a slight decrease from 2016’s volume.

In total, FCA imported 136,827 vehicles from EU nations last year. The entirety of vehicles sold under the Alfa Romeo, Maserati, and Fiat banner also originate outside the U.S., though FCA surely isn’t concerned all that much by the latter brand. Models not hailing from NAFTA countries and the EU include the Fiat 500L, Ram Promaster City, and Fiat 124 Spider.

While a steep tariff would raise the Renegade’s sticker price, FCA has a number of routes it can take to lessen the impact.

“FCA will be examining a variety of options,” said George Galliers, an Evercore analyst. “These could include a push to upsell consumers into NAFTA-sourced vehicles, including the Compass and Cherokee models; keeping the European-sourced Renegade in the market but focusing on higher-specification versions; and looking to source Renegades for the U.S. market from Brazil, where it is also produced, or potentially localizing it in the U.S.”

[Image: Fiat Chrysler Automobiles]

Steph Willems
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  • R Henry R Henry on Jun 28, 2018

    Indeed, any sort of change in the business/economic climate illicits howls of protest. The status quo has great inertia. Thing is, business conditions are always in a state of change. Well managed firms adjust their operations to take advantage of new opportunities and to reduce risk from changing economic conditions. If the stated objective of a tariff is increased domestic employment and production, of course foreign produced product is likely to become more expensive...that is how tariffs work.

  • Kjh8 Kjh8 on Aug 22, 2018

    Can we seriously get back on topic? None of us are in office anyways to make any decisions so we have to deal with what we get. We can't control President Trump and whether or not anyone likes him as a president, he's still our president that can do whatever he wants -- whether we like it or not. What's ranting on about his decisions going to do? Instead let's look into what the reality might be. Honestly though, reading these comments makes me wonder if anyone here is a mature adult. It's downright ridiculous and embarrassing, and also humiliating. Yeah, you may rebuttal my post about how ridiculous this rant even might be, but come on though, I read these comments with the notion of someone giving insight as to how the prices would effect this Jeep model -- like what the original post is all about -- but instead I find trivial commentary and verbal junk non-relating to what the original author posted. Have some sense. I'm surprised some of you passed English in school. What really is a considerable question is whether or not buying a vehicle like this one, the Jeep Renegade, before his new tarrifs, would effect the price of repairs after his tarrifs got passed. So I'm looking into getting a Jeep -- used, pre-owned or even certified at a Jeep dealership -- before his tarrifs get passed. Now, if I buy a model like the Renegade (for example), and the tarrifs did get passed, would I then have to pay more for repairs since the parts are from out of the U.S. (to my understanding, though I could be wrong) -- is my curiosity? And also, when is the best time to get a vehicle and should it be from either a FORD, GMC, or FCA since they are American brands? If anyone who can answer logically without cynicism and hold a mature conversation, I would appreciate it. And please, just stick to the questions without any immaturity.

  • Pau65792686 I think there is a need for more sedans. Some people would rather drive a car over SUV’s or CUV’s. If Honda and Toyota can do it why not American brands. We need more affordable sedans.
  • Tassos Obsolete relic is NOT a used car.It might have attracted some buyers in ITS DAY, 1985, 40 years ago, but NOT today, unless you are a damned fool.
  • Stan Reither Jr. Part throttle efficiency was mentioned earlier in a postThis type of reciprocating engine opens the door to achieve(slightly) variable stroke which would provide variable mechanical compression ratio adjustments for high vacuum (light load) or boost(power) conditions IMO
  • Joe65688619 Keep in mind some of these suppliers are not just supplying parts, but assembled components (easy example is transmissions). But there are far more, and the more they are electronically connected and integrated with rest of the platform the more complex to design, engineer, and manufacture. Most contract manufacturers don't make a lot of money in the design and engineering space because their customers to that. Commodity components can be sourced anywhere, but there are only a handful of contract manufacturers (usually diversified companies that build all kinds of stuff for other brands) can engineer and build the more complex components, especially with electronics. Every single new car I've purchased in the last few years has had some sort of electronic component issue: Infinti (battery drain caused by software bug and poorly grounded wires), Acura (radio hiss, pops, burps, dash and infotainment screens occasionally throw errors and the ignition must be killed to reboot them, voice nav, whether using the car's system or CarPlay can't seem to make up its mind as to which speakers to use and how loud, even using the same app on the same trip - I almost jumped in my seat once), GMC drivetrain EMF causing a whine in the speakers that even when "off" that phased with engine RPM), Nissan (didn't have issues until 120K miles, but occassionally blew fuses for interior components - likely not a manufacturing defect other than a short developed somewhere, but on a high-mileage car that was mechanically sound was too expensive to fix (a lot of trial and error and tracing connections = labor costs). What I suspect will happen is that only the largest commodity suppliers that can really leverage their supply chain will remain, and for the more complex components (think bumper assemblies or the electronics for them supporting all kinds of sensors) will likley consolidate to a handful of manufacturers who may eventually specialize in what they produce. This is part of the reason why seemingly minor crashes cost so much - an auto brand does nst have the parts on hand to replace an integrated sensor , nor the expertice as they never built them, but bought them). And their suppliers, in attempt to cut costs, build them in way that is cheap to manufacture (not necessarily poorly bulit) but difficult to replace without swapping entire assemblies or units).I've love to see an article on repair costs and how those are impacting insurance rates. You almost need gap insurance now because of how quickly cars depreciate yet remain expensive to fix (orders more to originally build, in some cases). No way I would buy a CyberTruck - don't want one, but if I did, this would stop me. And it's not just EVs.
  • Joe65688619 I agree there should be more sedans, but recognize the trend. There's still a market for performance oriented-drivers. IMHO a low budget sedan will always be outsold by a low budget SUV. But a sports sedan, or a well executed mid-level sedan (the Accord and Camry) work. Smaller market for large sedans except I think for an older population. What I'm hoping to see is some consolidation across brands - the TLX for example is not selling well, but if it was offered only in the up-level configurations it would not be competing with it's Honda sibling. I know that makes the market smaller and niche, but that was the original purpose of the "luxury" brands - badge-engineering an existing platform at a relatively lower cost than a different car and sell it with a higher margin for buyers willing and able to pay for them. Also creates some "brand cachet." But smart buyers know that simple badging and slightly better interiors are usually not worth the cost. Put the innovative tech in the higher-end brands first, differentiate they drivetrain so it's "better" (the RDX sells well for Acura, same motor and tranmission, added turbo which makes a notable difference compared to the CRV). The sedan in many Western European countries is the "family car" as opposed to micro and compact crossovers (which still sell big, but can usually seat no more than a compact sedan).