Weak outlook sends Fiat Chrysler (FCAU, $14.93) shares down 12%

Italian-American automaker Fiat Chrysler saw its share price drop by nearly 12% last Thursday, after the company’s forecast of a weaker outlook for 2019. The automaker expects total industry sales for North America to decline in 2019 to 17.2 million, down from 17.7 million in 2018.

Chrysler attributes this downsized sale partly to its decision to not sell two generations of the Jeep Wrangler side-by-side, as it did in 2018. The company is also looking at retooling factories to gear up for the launch of the plug-in hybrid version of the iconic off-road machine in early 2020.

Other challenges include higher-than-expected capital expenditures that could see the company shelling out nearly 500 million euros related to U.S diesel emissions cases. Due to changes in the U.S tax rate, the company is likely to pay taxes at a rate which is effectively 25% higher than what it was in 2018, which in turn might impact profitability.

However, the automaker is optimistic that the recently released Jeep Gladiator midsize pickup truck and its heavy-duty Ram pickup trucks, both introduced at the Detroit auto show, will help pick up sales in the second half of the year.