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Here’s What Drove Fiat Chrysler’s 2Q17 Profit Margins

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Fiat Chrysler’s profit margins

Fiat Chrysler’s (FCAU) has a bad reputation for having low profit margins. Next to peers (FXD) General Motors (GM), Ford Motor (F), and Volkswagen (VLKAY), FCAU’s profit margins are the lowest.

But FCAU’s margins continued to expand on a YoY (year-over-year) basis in 2Q17—for the fifth quarter in a row. The company’s adjusted EBIT (earnings before interest and tax) stood at nearly 1.9 billion euros, or ~$2.2 billion, and its 2Q17 EBIT margin expanded to 6.7% from just 5.8% in 2Q16.

FCAU’s adjusted net profit came in at 1.1 billion euros, or about $1.26 billion, with a net profit margin of 3.9% in 2Q17. This net profit margin was far better than its margin of just 1.2% 2Q16. Fiat Chrysler reported a net profit of 709 million euros, or about $828 million, in 2Q16.

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Key factors

Nearly flat consolidated global shipments and favorable product mix were the two primary factors for FCAU’s margin expansion in 2Q17. FCAU’s Maserati Levante and Ram brands delivered solid performances in the key markets of North America, Europe, and Asia-Pacific.

Notably, the company’s margins from heavyweight and luxury vehicles such as Ram and Maserati brands tend to be higher than other small cars.

Continue to the next part of this series for a look at the 2Q17 performance of FCAU’s Maserati brand.

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