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Sergio Marchionne Insists Chrysler and Dodge
Will Survive for the Long Run.
Fiat Auto and Chrysler CEO Sergio Marchionne is angry with auto analysts who have said recently that the Chrysler and Dodge brands have little chance of survival. Marchionne\\\'s anger came forth several times Wednesday morning as he described his five-year plan for Fiat, Alfa Romeo and Lancia in an investors\\\' conference in Turin, Italy.
Comments by such analysts as Max Warburton, of Bernstein in London amount to \\\"vitriolic assessments\\\" and are \\\"absolute hogwash,\\\" the low-key but direct Marchionne said.
Warburton\\\'s assessment seems to fit the questions I\\\'ve been getting for months. How can Chrysler survive? It has no new product.
The 2011 Jeep Grand Cherokee launches very soon, with the Chrysler 300 and Dodge Charger to follow. Problem is, these are large, relatively low-volume models with sales levels sensitive to rising gas prices. Meanwhile, Ford and GM are introducing and upgrading boatloads of compact and midsize cars for the heart of the market. While General Motors is rushing development of its 2012 Chevrolet Malibu in order to launch it earlier than first scheduled, Chrysler won\\\'t have full replacements for its mediocre Chrysler Sebring and Dodge Avenger until late in the five-year plan\\\'s cycle.
Marchionne says Chrysler is close to breaking even, and will begin to do so by the end of the year. Its market share has risen to about one point, to 9.1 percent, from a year ago. Most of that must have come from GM, which has lost share as it shed Pontiac, Saturn, Hummer and Saab. Marchionne\\\'s target for 2014 is 14 percent, way too optimistic.
Another cause for pessimism is Marchionne\\\'s two five-year plans, one for Chrysler and the other for Fiat. Not that they\\\'re too vague -- they\\\'re too detailed. Marchionne plans to \\\"merge\\\" the Chrysler brand with Lancia, the last of which looks like Buick did, less the burgeoning Chinese market, a few years ago.
The same lineup will be sold as Chryslers in NAFTA (North American Free Trade Agreement countries) and Great Britain. Lancia will be sold in Continental Europe. For the time being, at least, larger Chryslers and Lancias will be built on Chrysler platforms, which means short-term proliferation of the Mercedes-derived LX rear-drive platform, plus a front-drive Lancia mid-size minivan. Smaller Chryslers, like the re-badged Lancia Delta hatchback shown at the 2010 Detroit show, will be on front-drive Fiat platforms.
Fair enough. That also means that all those combined Chrysler-Jeep-Dodge-Ram dealers will be carrying a full line of Fiat- and Chrysler-based Chryslers, from b-cars to full-size sedans and crossovers, as well as Fiat- and Chrysler-based Dodges. Forget the product draught: It\\\'s about to get crowded in there.
The biggest clue that has led analysts to believe that Marchionne plans to do something different than what he says, is that fourth brand, Ram. While GM\\\'s bankruptcy gave it license to cut its North American lineup from eight brands to four, Chrysler\\\'s bankruptcy ended with an increase from three brands to four. Why spin off Ram from Dodge if it\\\'s going to be in the same dealerships, anyway? Nearly every U.S. dealer has completed the combination of all four brands into one sales channel. Imagine every GM dealer in the U.S. carrying Chevy, Buick, GMC and Cadillac, and you have Chrysler\\\'s new sales channel.
Marchionne\\\'s argument no doubt is that it\\\'s easier to combine Fiat brand product planning with Dodge product planning if the big trucks Fiat never will use are removed from the equation. Marchionne says that the Fiat and Dodge brands will match up, with the cars and crossovers sold as Fiats over there and as Dodges over here. Except for Challenger, Charger and Viper, of course (even if the notion of a Fiat Abarth Viper is kind of amusing).
Cynics would say that Ram was split off so the brand could be sold in U.S. Fiat-Alfa Romeo dealerships in the future. And that\\\'s why analysts are skeptical. Marchionne plans to make Jeep a truly global brand. It looks like he\\\'s putting Ram aside for our market, to save it, just like Chrysler saved Jeep when it bought and stripped American Motors.
Conversely, any red-blooded American knows you can\\\'t separate Challenger/Charger/Viper from the Dodge brand, but Ram has its own cache\\\', so that\\\'s the one model line that could be split off. In the same way, Chrysler can\\\'t sell the Fiat 500 here unless it\\\'s sold as a Fiat. Don\\\'t take that as a sign that the Fiat name will proliferate here.
This is not insignificant stuff. Brand loyalty and equity is more important than ever in the post-bankruptcy, post-Great Recession automotive market. Chrysler and Dodge could be on their way to join Pontiac, Saturn, Oldsmobile and Plymouth on the divisional scrapheap. The Fiat 500 could serve as a trial balloon to find out whether Americans are ready to accept midsize Fiats and Lancia minivans.
For now, though, I\\\'ll have to take Sergio Marchionne at his word. Other than that 14-percent market share target, he\\\'s given me no reason to doubt him. And if Dodge can sell a Fiat Punto rebadged as a Dodge, how is that worse than the Dodge Caliber? |
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