To a round-table lunch in Soho dominated by the pundit prince, Professor Garel Rhys. The Cardiff University car sage was doing his stuff on global auto industry trends when Fiat’s name unexpectedly occupied one of his sentences. “Fiat has just committed suicide,” he reflected. “Couldn’t make one company work so it is going to try two.”
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Back to the office to join the Fiat half-year results conference call with Sergio Marchionne, the canny career banker who has improved Fiat’s finances quarter by quarter for the last four years.
Marchionne has no doubt that he has the recipe for a successful car group: it needs to make six platforms to cover the full range of sizes; each platform has to sell a million copies to make back its development costs; the brands must have fully developed delivery channels and a global market.
Thus Fiat will major on the small end and Chrysler will do larger platforms. The first new model off the C platform is likely to be the Linea also produced by the newly-signed partner, the Guangzhou Automobile Group. This brings a third partner – significantly an Asian partner – into the alliance. There is still room for General Motors Europe if current talks with two other competing bidders fail, says Marchionne
Marchionne has no doubt that he has not been getting sufficient brownie points for Fiat’s progress in recession. He’d noticed the reaction to the published stock exchange results in the few hours between their publication and the conference call. He’d messed up in communicating the significance of his achievements in quarter two, he reckoned: “We have done an outstanding job….some of you have underestimated our traction.”
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By GlobalDataHe has to get that point over. It is crucial for Marchionne to get support for his lead management role at Chrysler. He holds 20% of its shares, will pay no cash and will contribute only technology transfer. “We are actively engaged there…the new board meets Monday, Tuesday and Wednesday (of next week)…our measures will pull Chrysler out…the platform strategy will begin to benefit in the second half of next year.”
So who’s right then? The Prof can’t be wrong? But then Marchionne has been walking on water since he joined the car game.
The strength of the Prof’s case is the weakness of the two sets of brands. Who would want to be limited to a choice of only Alfa Romeo, Chrysler, Dodge, Fiat, Jeep and Lancia? One of the world’s most extensive consumer surveys, the UK Consumer Association’s Which?Car, has just consulted 84,000 owners of 39 car brands. The bottom five for owner satisfaction are Fiat, Chrysler, Renault, Chevrolet and Jeep.
It’s not impossible to get a better reputation. It’s not unheard of for a brand to shift from utility to premium. It’s been known for bust companies to come back to life (Chrysler’s the expert; it has come back from the dead three times already.)
But to do it all during the worse recession in a working life-time? That takes a superman.
Marchionne has already switched from banker’s suit to trademark jeans and blue jummy. It’s time for him to measure up for the cape and tight overpants.
Then we can visualise an heroic success.
Rob Golding
