COLUMNS: What’s Next for Fiat and Chrysler?

January 29, 2014
2015 Chrysler 200 C Front View On Stage
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Fiat now owns all of Chrysler, and by the time you’re reading this, the world’s seventh-largest automaker will have announced fiscal year 2013 financial results. You can bet that the Chrysler side of the ledger has more black ink than the Fiat side, largely because the U.S. economy has been in better health than the European economy.
Chrysler has been in better health than Fiat for most the past five years, and the smallest of what we used to call the Big Three is scratching its way back to its pre-bankruptcy U.S. market share. Chrysler ended 2013 with an 11.55 percent share of the market -- up slightly from 11.4 percent in calendar year 2012 -- and between third-place Toyota and fifth-place Honda in U.S. sales. More important, it sold 174,275 Jeep Grand Cherokees last year, compared with 154,734 the year before, topping Volkswagen Jetta sales and more than double the sales of the entire Lincoln Motor Company. Surely, much of Chrysler Group’s recent success can be attributed to Jeep, which also sold 155,502 Wranglers last year. This is the one brand that would have survived if Chrysler had gone under in 2009, because some other global automaker surely would have purchased its remains.
In his North American International Auto Show press conference earlier in January, CEO Sergio Marchionne affirmed that going forward, Jeep and Alfa Romeo would be Fiat-Chrysler’s international brands. I could consult with a Wall Street analyst and try to describe what Fiat-Chrysler management needs to do in order to thrive in the coming years, but we all know that it comes down to one thing: product.
So, what’s next for Fiat-Chrysler? Here’s how I see it progressing, broken down by individual brands.
2014 Fiat 500L Front Left View

Fiat

The Fiat 500 and 500L are relatively successful as global models. No, really. Fiat sold 35,834 500s last year and another 7402 500Ls, for total sales equaling about two-thirds of Mini’s, which has a more extensive lineup. But other than the retro icon and the unusual, small-box L with the fairly capacious exterior, Fiat doesn’t have anything that would resonate here, much less in the global market. Fiat will remain a regional brand serving its home country and sizeable parts of southern and central Europe, but it’s not going to rival Volkswagen any time soon.
2015 Chrysler 200 S Front View 04

Chrysler

Marchionne is retrenching on the Lancia tie-up, so the Chrysler brand essentially will become a regional (North American) brand. The CEO is on record as saying that Chrysler is not a premium brand but a “value” brand. He’s confirmed that there will be a next-generation Chrysler-branded minivan with production remaining in Windsor, Ontario. I’d say they should “pull a Buick” with the Chrysler 300, eliminating the entry trim levels and selling only the premium trim levels to make for less overlap with the Dodge Charger. Build the minivan only as the Chrysler Town & Country – Dodge has the Journey and the Durango. The new Chrysler 200 covers the front-wheel-drive, mid-size range from about $22,000 to just under $30,000. It’s not a premium car, although it’s available with a 295-hp, 3.6-liter V-6 and all-wheel drive, so it can still serve as a steppingstone to a $40,000 Chrysler 300.
2014 Alfa Romeo 4C Front Right View

Alfa Romeo

The latest delay of its return to the United States came when the mid-engine 4C, which was supposed to arrive before the end of 2013, was rescheduled for the second quarter of this year. That delay makes me worry about Alfa’s ambitious plans to return most of its lineup to rear-wheel-drive platforms and compete as bargain-priced BMWs. After the 4C, the Mazda Miata-based Spider is expected by 2015. Then, if the plan holds, we’ll get BMW 3- and 5-series size sedans on a new RWD platform that’s shorter than the Chrysler 300 LX platform. We’ll probably see a new FWD compact hatchback targeting the Volkswagen Golf. Recognizing that premium cars are grabbing more market share from commodity brands, Marchionne says he doesn’t want Daimler chief Dieter Zetsche’s share of the premium market: “I just want my share.”
Jeep Jeepster Prototype Spied Front Three Quarter 1

Jeep

While Alfa Romeo benefits from Chrysler's RWD platform first derived from components from former owner Daimler, smaller Jeeps -- beginning with a B-segment model soon to be unveiled -- will benefit from FWD Fiat platforms. The RWD-based Wrangler and Grand Cherokee will continue to anchor the upper end of the brand’s lineup. Jeep should still be able to maintain its World War II-bred attributes even with transverse-mounted engines, just as Land Rover has with the Range Rover Evoque. As B- and C-segment crossover/utilities continue to take over the road, from China to Europe to North America, this brand ought to remain the automaker’s biggest cash cow.

Ram

Like Ford trucks, this brand going forward is a combo of American-style pickup trucks and European-style delivery vans, in this case rebadged Fiats. The diesel Ram 1500 pickup ought to help it meet Corporate Average Fuel Economy standards for the short term. For the long term, it’s going to have to do something more radical in order to meet future CAFE standards, and that probably means aluminum body panels.

Lancia

Marchionne says production of Chrysler-based Lancias is over. That leaves just the Fiat 500-based Ypsilon, a fashionable premium hatchback. That’s a pretty thin lineup, even for just a handful of dealers mostly in Italy. Ending the tie-up with Chrysler doesn’t rule out a Lancia based on the FWD, mid-size Chrysler 200’s platform, which after all is a Fiat platform. Give it distinctively Lancia-esque sheetmetal, and there’s a very limited future, but a future nonetheless, for the brand in its home country.
2014 SRT Viper GTS Anodized Carbon Edition Front Three Quarters

SRT

I’m still hoping that Ralph Gilles’ dream for a Barracuda coupe on the new, shorter RWD platform can come true. Combined with the SRT Viper and with the AMG-like Chrysler and Dodge SRT8 models, this should be enough for the performance brand. Remember, Chrysler started its program to get all its North American brands under one dealer network more than a decade ago, so less overlap between these brands is better than more overlap. Which brings us to Chrysler’s potential problem child …

Dodge

There has been a lot of speculation that a rumored study to eliminate this brand, which is nearly a decade older than Chrysler itself, might send it to the afterlife with Oldsmobile, Mercury, and Plymouth. At NAIAS ’14, Marchionne confirmed there will not be a Dodge Avenger based off the new Chrysler 200. He also said that the one remaining volume model that’s overdue for a major update is the Dodge Journey. The Dodge Durango, once a candidate for the chopping block, has had a successful 2013, especially after a refresh and resulting ad campaign. It’s very likely a new Dodge sedan will slot into the Dodge Avenger’s size category; it will be built on the new, smaller RWD platform and will be priced as a Dodge. Think of the Dodge version of the more upscale Alfa Romeo sedan as similar to Charger vs. 300. Chrysler also needs to keep building the Dodge Charger to retain volume (including cop car sales) in the LX platform. It doesn’t need an all-new Challenger if the SRT Barracuda is still on tap. And the Chrysler brand doesn’t need a compact to share showrooms with the new 200 and the Dodge Dart.
I’m not going to bother with Maserati and Ferrari, because they’re part of a different unit of Fiat SpA, but I think Fiat dealers ought to get preference over Maserati dealers in handling Alfa Romeo. Marchionne says the new Alfas will be sold in Maserati dealers and “select” Fiat dealerships.
What kind of Fiat-Chrysler do you want to see?
2014 Fiat 500L Top Front Right View

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