Sergio Marchionne’s Legacy Will be Global Jeeps, Premium PHEVs, and EVs
Thoughts on FCA's next five year plan
Sergio Marchionne studied philosophy in college, went on to save Fiat ahead of the 2008 financial crisis and subsequent Great Recession, then picked up Chrysler from bankruptcy and used that company's strongest brand, Jeep, to save Fiat once again.
He's media savvy and eminently quotable, making him an automotive press favorite even when we question or doubt his methods. Marchionne fought off Ferdinand Piech's advances in trying to snag Alfa Romeo for the Volkswagen Group and then struggled through the first two Five-Year Plans to remake Alfa as the new Italian BMW.
Marchionne unsuccessfully courted various potential partners for Fiat Chrysler as it made substantially smaller profits than his Detroit rivals. He couldn't buy a meeting with General Motors' Mary Barra in one "merger" attempt, and never-confirmed visits from Chinese automakers have gone nowhere, so far. But with a half-year left as CEO of Fiat Chrysler, Marchionne leaves the automaker in much better shape than CEO Alan Mulally left Ford Motor Company.
And on Friday, June 1, he led an outline of where Fiat Chrysler is headed, or at least, trying to head over the next five years. That is, Marchionne & Co. outlined the future of Fiat Chrysler's premium global brands, Jeep, Ram, Alfa Romeo, and Maserati. Some thoughts:
No Boring Cars = Automobiles as a luxury item.
Cars, and even trucks and utility vehicles [UVs as the Five-Year Plan calls them] are becoming luxury items, just as they were before Henry Ford and Ransom Eli Olds commodified them early in the 20th Century. Fiat, Chrysler, and even Dodge do not disappear in this plan, culminating in 2022, but Fiat becomes mostly an electric city car brand. There will be gas-powered models, but mostly for in and around Italy [with the 124 Spider hanging on, at least for now]. Chrysler as a marque survives largely on the strength of its deal to supply "up to" 62,000 Pacificas to Waymo and could soon become the U.S. 's premier ride-share/autonomy brand emphasizing easy ingress/egress for passengers who mostly use the back seats. If I were running the Chrysler marque, the Pacifica's companion model would not be the large midsize sport/utility and front-drive sedan based off the minivan's platform that was announced in the 2014 plan, but rather, some sort of new-style tallish crossover/hatchback sedan with a really nice interior, and that parks easily.
Dodge still has a new Charger and Challenger coming, according to Marchionne, who said that the Giorgio (Alfa Giulia, Stelvio) originally planned for the cars was inappropriate for its sort of performance [the Charger does pretty well with young families looking for a fun, sporty sedan, Dodge says, and of course, there's the cops]. Obviously, this is really about Giorgio's cost more than its dynamic flavor. The good news is there apparently is a future for affordable rear-wheel-drive sedans.
Jeep is the UV brand.
Chrysler began combining all its dealerships way back in the DaimlerChrysler years. Virtually every North American Chrysler store also is a Dodge dealership, Ram dealership, and Jeep dealership, though there's at least one standalone Jeep store in Metro Detroit. Jeep has two new "low" UVs coming [crossovers, perhaps in the Subaru Outback vein], a two-row and a three-row, plus a three-row version of the Grand Cherokee, which soon moves to the Giorgio platform. This leaves no room in these combined dealerships, as far as I'm concerned, for a new Dodge Durango or Journey, which would beat the Jeep models in the same showroom only by price.
Jeep chief Michael Manley also announced an A-segment [smaller than Renegade] model, though it seems Fiat Chrysler may still be trying to figure out whether American consumers are willing to go that small. On the other hand, it seems we'll buy a lot of anything with a seven-slot grille as long as it's "authentic" Jeep.
Fiat Chrysler leaps into the EV and autonomy fray from nowhere.
Marchionne & Co. appeared to be resisting the lure of the nascent electric vehicle market, until now. And why not? There's still no great business case for it, other than it's where the industry is heading because of impending regulation globally, technological leaps with attendant cost reductions, and the promise of some attention paid to recharging infrastructure. Before Marchionne became Ferrari's CEO, that automaker, at its 60th anniversary party back in 2007 indicated it would look to engine downsizing and electrification for future road cars. Formula 1 electrification requirement of the past several years helps. Now, Ferrari will supply all future Maseratis' powerplants, and that marque has a new battery electric and plug-in hybrid electric vehicle subbrand called Maserati Blue. The marque is going after both Porsche, in terms of performance, and Tesla, in terms of clean power, says Fiat Chrysler chief technical officer Harald Wester.
Alfa Romeo has a chance to make it.
Restoring this marque to its former glory by transforming itself from a small fleet of tarted-up front-wheel-drive Fiats not sold in North America has been the automaker's burden under the current Five-Year Plan. It has not gone well. When VW tried to buy Alfa from Fiat Chrysler early in the decade, it gave Marchionne the impetus to rebuild the marque into a kind of bargain BMW, but then he decided Alfa could compete directly with the Ultimate Driving Machine, even on price. I think Alfa can still make a good premium marque profit under the bargain-BMW scenario, though the electrified 8C and GTV in the new Plan ought to sell for a good price, and pull the rest of the brand up. I hope there's a group within Alfa Romeo working on getting its reliability up to snuff.
Ram wants to be number-two.
I'm no truck guy, but considering the design of the 2019 Ram 1500, plus the impending addition of a new Ram/Fiat midsize pickup for global markets, I'd say this marque has a pretty good shot. Mike Manley, who is also Ram's chief, says he doesn't care which of his two competitors—Chevrolet or Ford—Ram overtakes. He does care about the fact that Ford Raptors have an average transaction price $28,000 over standard F-150s, which is why the TRX is on the way.
The Waymo deal is what Fiat Chrysler needs.
Just as with EV power, Fiat Chrysler hasn't been at the forefront of autonomous technology, until now. Partnering with the company that has been working on it as long as GM, Daimler, and Toyota [formerly Google] is the best way to catch up. Fiat Chrysler also has partnered with BMW and Aptiv on autonomy and connectivity.
Marchionne vs. Mulally.
No, automaker CEO comparisons are not fair. But it is fair to say that Marchionne will leave Fiat Chrysler better positioned to survive the disruptive, tumultuous automotive decade to come than Mulally did. While Alan Mulally sought to update Ford's fleet early in his tenure at the Blue Oval, the company has since reverted into its old habit of letting good product age too much. Marchionne has let cars like the Chrysler 300, Dodge Challenger, and Charger age too much, as well, but his Jeep lineup under Mike Manley (one of the lead candidates to replace him as CEO) is well ahead of the Ford SUV lineup. And Marchionne has new, electrified and Level 3 and 4 autonomous cars on the way that represent the future of the automobile in one other important way: they're high profit-margin luxury cars.