The Insider Takes on Chrysler/Fiat

This time around our exclusive opinionator The Insider takes a look into the automotive crystal ball. What’s in store for the Chrysler/Fiat union? Read on for one professional’s opinion…

Still Alive in Five? What Chrysler will look like in 2015

So, with all of the great plans unveiled by Fiat and Chrysler over the past several months and the new found profitability this past quarter, things should look pretty bright for the folks at Chrysler these days. However, I wouldn’t get too secure as I’m not sure the dust has settled in Auburn Hills just yet. I don’t think that Chrysler will exist in its current form five years from now. I think that they still have too many products and brands to support what will most likely be a market share in the 6-8% range.

Chrysler has lost a lot of customers over the past several years with uninspired products and lousy quality. They offer no compelling reason to walk into one of their dealerships right now. There isn’t a single product in their lineup that someone else isn’t doing better, with the exception of the Ram pickup, which is a very good truck (Nissan dealers should be upset they didn’t get a version). Add in the beating Chrysler’s reputation took between the government bailout and the war with their dealers and there isn’t much reason for the public to consider Chrysler products. If you want to buy American, GM and Ford have a ton of great stuff to check out.

There is new stuff coming. Between 2012 and 2014 Dealers have been told to expect several new compact and mid-sized cars and SUV’s based on Fiat platforms, many built in Italy and exported to the US. Starting late next year, you can look for the following:

4 versions of the Fiat 500, built in Mexico or Italy

A mid-sized Sebring replacement sedan built in Italy for Chrysler or Dodge

A compact sedan built in Italy for Chrysler or Dodge

A possible rear drive Alfa roadster built in Canada or Italy

Sub-compacts built in Serbia for Chrysler or Dodge

Small and Large SUV’s for Jeep built in the US

New 300 replacement built in Canada

Restyled minivan built in Canada

A few commercial vans from Fiat built in Europe

Now these are all expected to arrive over the next several years, replacing the relics lying around dealerships today. Add these to the Ram trucks, new Jeep Grand Cherokee coming this summer, and the eternal Jeep Wrangler and you have a pretty crowded showroom. And, with lots of these products built overseas, a pretty expensive one at that. If VW can’t make money on a European-built Golf, how is Chrysler going to make money on their Italian-built cars? And how will they support the Chrysler, Dodge, Jeep, Ram, Fiat, and Alfa brands? The answer is that they can’t and won’t. As soon as they realize that they have too many brands and products, the cuts will come.

My vision of the Chrysler showroom of 2015 will include Chrysler cars, Ram Trucks, and Jeep SUV’s. The only realistic way to adequately market their brands and products is for Chrysler to focus on 3 core brands with a well defined product structure for each:

Chrysler: European designed cars with Italian flair and American value

Ram (or Dodge) Trucks: Commercial grade vehicles for any job

Jeep: Go anywhere capability with American ingenuity

Chrysler lives, Dodge goes away. If Chrysler’s cars are going to be European designed Fiat clones, they won’t be a good match for the Dodge Brand, which doesn’t have much going for it anyway without the Ram trucks. Also, with all the brands under one roof, there’s no need for a Dodge Caravan or SUV. By taking the trucks and minivans away from Dodge, they’ve left it for dead on the side of the road. With the drastic changes in fuel economy regulations around the corner, there’s no future for the Challenger or Charger. Without Dodge, you can build the Chrysler brand around the Fiat based products and try to build a brand image with a coherent design language and product feel.

As Chrysler doesn’t have much positive brand equity left, it’s a perfect time to start fresh with new product lineup and new approach. Remake Chrysler’s image and reposition it in the marketplace. Use the new products to draw attention to the Chrysler brand and change people’s perceptions. Don’t waste the good stuff on brands with one or two products that will never achieve any volume in this market.

Ram (or Dodge) has the potential to be a complete commercial lineup if they bring the right products over from Fiat. The European style vans are finally pushing out the old style cargo vans in this market and Fiat has some good ones. The new pickup is solid and they have a full lineup, good enough to be competitive with Ford and GM. I probably would have kept the Dodge name instead of Ram as no one drives a Ram, they drive a Dodge truck. But that’s just my opinion.

Jeep will live on with the Wrangler, Grand Cherokee, and Liberty. Small, medium, and large should be enough for Jeep and give dealers a good mix of SUV’s to sell next to their Chrysler cars and Ram trucks. Adding more Jeeps to the lineup dilutes the brand and risks the equity that has been built up over decades. As Chrysler found out the hard way, not every vehicle can be a Jeep.

As for the Fiat and Alfa brands, there is a lot of name recognition in those products but not much, if any, brand equity. Both have been gone from this market for so long that anyone under 30 doesn’t even know what they are. For people with memories of the brands, especially Fiat, the memories aren’t usually positive. While I think Fiat makes some really good products today and I am always a sucker for an Alfa roadster, just think what those products could do to revive the Chrysler brand. Why waste time and money trying to revive 2 irrelevant niche brands when you could take the best that they have and recreate Chrysler with fun, attention-getting cars with great Italian styling and fun to drive personalities. Call them Fiats and Alfas overseas and Chryslers over here. It’s easy to change a grill and badge.

I think Sergio Marchionne has his hands full. I fully support his plans to combine product development and manufacturing to create an integrated global company with products that sell all over the world. Where I disagree is in his approach to rebuilding the brands. Chrysler doesn’t have any value overseas and Fiat is dead here. Take the best cars you can build and use the strongest brands you have in each market. Sergio doesn’t have a single global brand like Ford but he does have some strong regional brands to build on. You don’t have to have global brands if you have global products.

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