Impressive plans have been laid out at many previous Fiat and Chrysler investors’ briefings. Yet somehow, things never seem to go according to schedule. Will it be different this time?
The detail in FCA chief executive Sergio Marchionne’s latest roadmap for the group’s product direction is mostly good, if patchy here and there. The best news was a commitment to spend EUR55bn (US$77bn) on capital investment and R&D, though there are big questions over how the heavily indebted firm will be able to fund this.
Go deeper with GlobalData
Here’s just one not insubstantial detail: can splashing out $7bn on eight Alfa Romeo cars and SUVs be justified? Overall, group product lines will be reduced, which mostly makes sense, and there is the presumption that as much as $2.1bn will be saved from that alone. There are some worries – market share was mentioned a lot, with a gain of 4.5% expected in North America between now and 2018.
Some logical decisions have been taken: cutting unnecessary brands such as SRT is a great idea but you have to wonder why this model grade ever became anything more than that. And there has been a lot of hype about rear-wheel drive Alfa Romeos. Do buyers care? No they don’t. Ask Audi. If you have FWD-based models, which used to be a weakness in premium segments, then allow your customers the option of adding all-wheel drive at extra cost. Just give it a snazzy name – quattro – and those who feel they need better traction can have it. Let’s hope for FCA’s shareholders’ sake that the trademarked Q4 label will be applied to future RWD Alfas as a way of mirroring what most premium brands, including Mercedes-Benz (4MATIC) and BMW (xDrive) do.
In addition to Alfa, Jeep and Chrysler are seen as the two brands which must massively outperform themselves. Lots of new products are coming but most of these were already known about. In many cases, these vehicles face multi-year launch delays compared to what had previously been stated. Not that any of the brand bosses speaking in Auburn Hills on 6 May mentioned that.
A case in point is the so-called ‘C-SUV’ which had once been due for launch in early 2013 but won’t now be seen until 2016. What no-one at FCA is saying is what this therefore means for the existing Jeeps Patriot and Compass – that they will be expected to struggle on for another two years. Toyota and Honda usually replace the rival RAV4 and CR-V after five years, but the two Jeeps will be ten at the time of replacement. And that’s presuming that C-SUV is launched on time.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataOther Jeep projects running late include the next Grand Cherokee (project WM) – the last two have had six-year life cycles but the current one will be built for seven, and the Grand Wagoneer. The delays to the latter are shocking. Let’s remind ourselves of the history of this project. The Commander went out of production in 2010 so there has been no full-sized seven-seater SUV from the brand since then. Big vehicle, big price, big return on investment. So why would FCA push this model back? The then Chrysler Group announced the Grand Wagoneer at the Detroit auto show in January 2011: a 2013 release was mentioned. And now? 2018. Extraordinary. Not only Daimler (GL-Class), BMW (X7), Land Rover (Range Rover Sport), Toyota (Lexus LX) and Nissan (Infiniti QX80) will be thrilled by this news: just imagine what Great Wall’s Haval brand might be doing in this segment of the Chinese market by then.
We should also consider the case of Dodge. Have the brand people been given too much power in their determination to make this a performance vehicles division? What happens when the US experiences its next oil price surge? Who will then buy all the big RWD/AWD sports sedans and coupes which are to be the signature of Dodge?
Ford’s new Mustang and next year’s Chevy Camaro will likely eat the Dodge Challenger alive but it must now hang on until 2018 until the replacement (codename: LA) arrives. What about a convertible to help it compete? And why wasn’t one part of the car’s launch range six years ago, especially now that the LX27 series coupe will be ten years old by the time a successor is launched? There is a facelift for the 2015 model year so last year’s US market sales of 51,462 should rise in 2014 but after that…?
It’s similar story for the closely related Charger sedan, which saw its US sales rise by an identical 19% in 2013 to 98,336 units. Why expect a high-margin model series such as this one, doing that sort of volume, to stay competitive against all-new rivals, and for another four years? It’s hard to imagine that even before 2014 turns into 2015 that there won’t have to be some big-number and therefore margin-destroying incentives to move these cars off dealer lots.
There is still no word on where the next Challenger and Charger will be made – will Brampton be closed and the next Chrysler 300 and Dodge Charger/Challenger shifted to Toluca in Mexico? If that’s the plan, no-one is saying but it might not now happen, what with the news of a one-year delay to these cars’ launch date. FCA may instead decide to build a RWD Alfa Romeo model or two in Canada, placing all these cars on the so-called ‘Giorgio’ architecture that’s now in the development phase.
Returning to Dodge, its Grand Caravan minivan sells extremely well in the US and Canada but still, it won’t be replaced. Let’s hope the future single model for FCA in this segment is exactly right. We saw initial thoughts in the form of the 700C concept at the 2012 Detroit show. US sales for its Chrysler Town & Country twin totalled 122,288 in 2013, while the GC’s equivalent number was 124,019. That’s a lot of volume to give up and potentially hand to Toyota (Sienna) and Honda (Odyssey). This raises questions about what else might be going into Windsor in or after 2016 – if you don’t consider the PHEV version of the T&C replacement as a separate model, the Ontario plant will then be making just one vehicle.
I’m sad to say there will be no replacement for the Chrysler T&C’s Lancia Voyager twin – not because it’s a great vehicle but rather that Lancia is being wound down in all markets outside Italy. The Ypsilon will soon be the brand’s only model and I wouldn’t expect it to be replaced once production ends in 2018. There’s a case study waiting to be written on the failure of Fiat to nurture this nameplate. Yet, like Oldsmobile under old GM, the decline has been decades in the making. And great cars such as the Delta Integrale were a long time ago.
It’s worth musing on what, say, the Volkswagen Group would have done with not just Lancia, but Alfa Romeo had it taken Fiat’s horribly neglected adoptees under its wing a few years ago. Who knows, Lancia isn’t dead yet. It may one day find a rich, Chinese sugar daddy. After what has happened to Saab, who would rule that out?
Having touched on Chrysler a few paras ago, now let’s have a look at some more detail. It’s expected to make a major sales gain and reach an optimistic 800,000 vehicles a year by 2018. How will this happen? Extra models have been ordered, including the 100, which we first heard about a few years back, let us not forget. This compact sedan had been expected to share its platform with the Dodge Dart and Fiat Viaggio, with a prototype shown to US dealers at a special event in September 2012. Originally due for launch in 2013, it’s now back in the future models pipeline but not due to appear until 2016. One year later comes a large crossover. Let’s hope it sells better than the Aspen, which was axed in 2008 after only two and a bit years of production.
In 2017, Chrysler will gain a mid-sized crossover with which to take on the next Chevy Equinox. Then in 2018 comes the next generation of the 300 sedan. It’s worth noting that the previous model was replaced just as it reached its sixth birthday. But here again is FCA preserving cash without saying so, choosing to keep a big-volume model in production for eight long years. US market sales of the 300 sank to just 57,724 units in 2013, a 32% drop from the 70,747 sold in 2012. And now this model has to survive for another three-four years. Hmm. You’d like to know sales for 2014 before doubting my thinking, or perhaps even agreeing with me? Of course. Down 12% to 17,795 for the year to the end of April.
In contrast to sales of certain current Chrysler models, Maserati and Ferrari seem set for even brighter futures than their presents. In the case of Ferrari, the existing strategy won’t be tampered with – major facelifts and name changes every four years (e.g the F149 California has just gained a new engine and became the California T). That sounds good to me. The question I have regarding the ongoing sales boom for Maserati is where will all the expected new cars be built? The Levante is the first additional vehicle (2015), then comes the Alfieri in hatchback and convertible forms (2016), to be followed one year later by a replacement for the GranTurismo. There is no mention of a follow-up to the GranCabrio in FCA’s statement.
Finally, Fiat. Obviously, the 500X will be the first new vehicle (2014) and this brother to the Jeep Renegade will also go to the US in 2015. Melfi is about to start making the Renegade and admirably, Fiat wants that launch to be 100% right before the first units of the 500X roll off the line there. Don’t be surprised if this B segment crossover/SUV is made alongside the Renegade at the forthcoming Goiana plant in Brazil too.
A ‘speciality vehicle’ Fiat follows – likely the roadster which Mazda was planning to build for Alfa Romeo in Japan is now being rejigged as the future Barchetta. There will also be a new line of value models to compete with what PSA has planned for Citroen’s Cactus models. A small sedan comes first (late 2015), and then hatchbacks and wagons. These will be the effective replacements for the Linea and Bravo and should be based upon the Dodge Dart/Fiat Viaggio & Ottimo.
No surprises for hearing Olivier Francois say that Fiat is to become more or less the Panda and 500 brand, with more models to be spun off those model names. And pleasing also to learn that the next Panda is on schedule for launch in 2018. A replacement for the Punto will finally arrive in 2016 too – the current car will be eleven by then.
Can Fiat hit its target and sell 1.9 million vehicles in 2018 (that would be 400,000 more than in 2013)? It seems possible, as long as Brazil’s economy can be relied upon to expand at a strong pace. This brand has hugely underperformed in both China and India so if things improve in these two markets, that extra 400,000 cars and crossovers might just be realistic. But the new products will need to be perfect.
FCA’s plans are, as expected, ambitious. A rise in US sales to 3.1 million by 2018, which is a million more than in 2013 and includes 150,000 Alfa Romeos per annum, and seven million worldwide at a group level by the same year (that would be a gain of 2.5 million over last year). Jeep’s Chinese market sales must rise by 500% compared to the 130,000 sold in 2013 for it to reach the 850,000 units per annum goal. What about new production plants? On this topic, nothing was said at the investors’ briefing, only that the capacity at existing factories and previously announced new-builds will be maximised.
Following on from the expected sales volume gains, the company has specifically stated that it wants to rise one place and become the world’s sixth largest vehicle manufacturer. Wouldn’t it be best to instead focus fully on lifting ROI, especially when one half of this firm was bankrupted after pursuing volume not too long ago?
Sergio Marchionne says he’ll stay in the driving seat until 2018 which is two years longer than had been expected. John Elkann is of course the man who continues to set out where his family’s firm wants to be heading. He is both bright enough and smart enough to let the CEO take the heat and the glory where appropriate. Some believe the overall, never-spoken strategy is to get FCA into a sustainable profits groove, allowing the Agnellis an eventual exit from the car making business via a flotation or sale. Was that the big thing which went unsaid during the 6 May investors’ briefing?
