Fiat Chrysler is shifting to produce more trucks and fewer cars based off the assumption that low oil prices are permanent. While others speculate whether or not the FCA may have jumped the gun, FCA has now put themselves ahead strategically.
Committing to the long-term belief that oil supplies will outstrip demand and depress wholesale and retail prices, indefinitely. It’s unclear whether limited resources prompted FCA’s move or it’s because, as CEO Sergio Marchionne has said, the automaker has fewer economies of scale and more debt than other competitors.
While this new strategy is beneficial now, FCA may be in trouble if: the price of oil rises, oil availability is compromised (as it was in the 1973 and 1979 energy shocks or if the goring environmental awareness shifts consumer demand.