Most automakers have shed brands, but Fiat and Chrysler are showering American consumers with nearly as many choices as Procter & Gamble, even as Jeep and Ram trucks remain the engines of its North American profits.
As the automaker’s leaders outline their next five-year plan today in Auburn Hills, they may spark as many questions as they answer. Will consumers, who are already migrating to pickups, midsize and small crossover utility vehicles, embrace cars from Alfa Romeo, a brand that evacuated the U.S. before the dotcom bubble inflated?
How many new models will the flagship Chrysler brand get by the end of the decade? Can Dodge grow by appealing primarily to boy racers?
And that’s without mentioning the plans for Maserati and Ferrari.
“I would like to really know how they are going to manage a stable of six or seven key brands with none of them as a full-line brand, or carrying a full offering,” said Stephanie Brinley, automotive analyst for IHS Automotive. “It makes for a very chaotic and noncohesive range for consumers.”
CEO Sergio Marchionne’s team has earned credibility. Five years after bankruptcy, they have paid off loans, gained U.S. market share and generated profits robust enough to subsidize Fiat’s struggling operations in Europe.
But Chrysler is thriving on a lopsided, but profitable mix of pickups, SUVs and vans. Known by industry insiders as light trucks, those combined segments accounted for 78% of Chrysler’s sales in April. The promise that Fiat’s small car expertise would cure the glaring weakness in Chrysler’s lineup is largely unrealized.
The new Chrysler 200 sedan could change that. The completely re-engineered midsize car is expected to beat the combined sales of the model it replaces and the discontinued Dodge Avenger.
Meanwhile, the Chrysler brand has just three models — the 200, the 300 and the Town & Country minivan — and analysts question whether the company still needs its Dodge brand, which celebrates its centennial this year.
Today, Marchionne will finally say whether Dodge or Chrysler gets the next generation minivan, and provide more details about the crossover-type model the other brand will offer.
There will be an update of Alfa Romeo’s U.S. return, and more ambitious goals for Jeep in China.
“They have done exactly the opposite of what Ford and General Motors have done,” said Michelle Krebs, an independent auto analyst. “Is that the right direction to go? You have to define them carefully; you have to feed them with product. You have to support them with marketing dollars.”
In its turnaround, Ford, for example, sold Volvo, Aston Martin, Jaguar, Land Rover, a stake in Mazda and ended Mercury to get down to CEO Alan Mulally’s “One Ford,” global strategy.
General Motors — once proudly known for offering “a car for every purse and purpose” — has shrunk from eight to four brands, but still offers a comprehensive portfolio of vehicles.
More focus needed
Among global automakers, only Volkswagen has as more brands than Fiat Chrysler, ranging from ultra-luxury Porsche, Bugatti, Lamborghini and Bentley, to Audi, Volkswagen, Spanish-based SEAT and Skoda in eastern Europe.
“There are a number of consumer goods makers that have multiple brands under one roof,” said Reid Bigland, who doubles as CEO of Ram trucks and Chrysler’s head of U.S. sales.
Bigland argues that some competitors that start with subcompact cars and extend all the way to heavy duty pickups can become bloated and hard to define.
“We believe at Fiat Chrysler that a single brand cannot be all things to all people,” Bigland said. “It’s pretty clear that Ferrari is Ferrari — and Ferrari is not going to get into the minivan business.”
Fiat and Chrysler prefer to offer brands with a clear personality and identity.
Dodge, for example, is a performance brand that stands on its muscle car roots. Jeep is an SUV brand with off-road capability. Ram offers pickups and commercial vehicles. Maserati and Alfa Romeo offer Italian sports car and luxury performance.
“When you look at Fiat Chrysler, you need to look at its sum, and all of our brands contribute to our sales success and our profitability,” Bigland said.
Fiat Chrysler’s strategy has advantages and disadvantages, said Andrew Martschenko, senior director of strategy for Interbrand, an advertising and marketing consultant.
“It most certainly gives you more flexibility if you have more brands,” Martschenko said. “The challenge is can you support those brands with enough products?”
Budget constraints
Mike Manley, CEO of Jeep and head of Fiat Chrysler’s international operations, said the product development budget can support each brand.
“Jeep has been lucky enough to be given the resources to really get the things that it needs to continue its growth story for many years,” Manley said.
But budget constraints have delayed Alfa Romeo’s re-introduction to the U.S. as well as the new minivan.
And even though Chrysler has delivered on most objectives of the 2009 five-year plan, it remains an also-ran in passenger car segments. The Dodge Dart, introduced in 2012 with an Alfa Romeo platform, was the company’s first new compact car in years.
Larger, heavier and pricier than the old Dodge Neon, its weight leaves it feeling underpowered. Dart sales didn’t meet expectations in 2013 and declined 28% through the first four months of this year.
In search of nameplates
Now, Chrysler is introducing an all-new 200 midsize sedan with high hopes. but with just three nameplates the Chrysler brand sells fewer vehicles in the U.S. than Hyundai, Kia, Subaru and Volkswagen.
“If you combine the 200 and Avenger volume today, you would say ‘OK, we have a little over 6% share of the midsize car segment,’ ” Chrysler brand CEO Al Gardner said. “Our goal is to do that and then some. If not, why build it?”
Meanwhile, Dodge might lose its Caravan minivan, already lost the halo effect of the Viper super car when it was reallocated to the new SRT performance brand last year, and is losing the Avenger now.
Even with fewer models, Tim Kuniskis, Dodge CEO, said the brand has a stronger identity now than just a few years ago, largely based on the muscle car image of the Charger and Challenger.
Asked what additional cars he would like to have in the Dodge lineup, Kuniskis responded, “May 6” — an indication that there will be surprises coming today.
