By on May 6, 2014

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Wednesday marks the 16th anniversary of the Daimler-Chrysler merger. One day prior to this milestone, Fiat Chrysler has unveiled their business plan for the next 5 years. While the industry norm is to keep future product plans, brand strategies and sales targets as a closely guarded secret, FCA took the unusual step of making it all public, with FCA CEO Sergio Marchionne headlining the event (billed as a conference for investors) at an event in Auburn Hills, Michigan. Each of FCA’s brands and subsidiaries was given the chance to present their strategy through 2018, with healthy helpings of new vehicles, future technology and corporate strategy being revealed.

ChryslerCurrently, the Chrysler brand is arguably the weakest in FCA’s portfolio, with just three offerings – the D-segment Chrysler 200, the E-segment Chrysler 300 and the Town and Country minivan. Combined, those account for just 350,000 units globally, a tiny number in the context of a 16 or 17 million unit market in the United States alone. As part of its growth plan, Chrysler will shift away from being a pseudo-premium brand to a mainstream line, aiming to compete with brands like Ford, Hyundai, Chevrolet, Toyota and Honda. The brand will add a new compact sedan, and two new crossovers, as well as hybrid capability on the larger CUV and the Town & Country minivan. Chrysler is aiming to increase sales to 800,000 units globally by 2018, equal to its best years ever in America, in the middle of the last decade – but Chrysler will be relying on stronger global sales to reach this number.

  • The Chrysler 100 sedan will debut in 2016, ostensibly as a sister car to the Dodge Dart. While details were not revealed, we can expect both the 1.4L Turbo 4-cylinder engine, as well as the 2.4L 4-cylinder paired to a 9-speed automatic. Although the latter combination was promised for the Dart long ago, it has failed to materialize. The Dart is scheduled for a 2016 refresh, and the 2.4L/9-speed could appear at that time.
  • The Chrysler 300 will receive a refresh later this year, while the 200 will get one in 2017.
  • A larger crossover, sized to compete with the Toyota Highlander and Chevrolet Traverse, launches in 2017. This will likely share a platform with the Chrysler Town & Country minivan, due to its footprint and its plug-in hybrid capability.
  • A mid-size crossover, comparable to the Hyundai Santa Fe or Ford Edge, bows in 2018. This will likely share the CUSW underpinnings of the Chrysler 200 and Jeep Cherokee.
  • The Chrysler Town & Country will be the sole minivan in FCA’s portfolio, bowing in 2016. It will be available as a plug-in hybrid to help meet regulatory requirements for ZEVs.

Dodge: In the “internal turf war” for mainstream volume offerings, Dodge is the clear loser. The upshot for enthusiasts is that Dodge will transition to being a more emotional and performance oriented brand, while still retaining its price point as a mainstream value brand. As part of Chrysler’s consolidation and push for “brand purity”, the Grand Caravan and Avenger will disappear, with the former departing in 2016. Dodge sales are expected to stay flat, with 600,000 units targeted in 2018 – Dodge sold roughly 596,000 units in 2013, and is expected to see lower volumes in the intermittent years.

  • A new B-segment Dodge will debut in 2018, offering both sedan and hatchback bodystyles, as well as undisclosed turbocharged engines. Previous rumors have suggested that a small Dodge would carry the Hornet name.
  • The Dart will soldier on until 2016, with FCA planning to market the car with aggressive leases and better content. 2016 will bring cosmetic changes as well as improvements to the driving dynamics and powertrains. A Dart SRT, with a high-performance turbocharged engine and all-wheel drive, will bow at the end of 2016.
  • A replacement for the Dodge Journey – including an SRT version – will bow in mid-2016.
  • All-new versions of the Dodge Charger and Challenger will bow in 2018 (alongside a new Chrysler 300), with SRT versions arriving at the end of 2018.
  • The Dodge Durango will continue through 2018, though it may disappear to make room for a three-row Jeep Grand Wagoneer.
  • The SRT Viper will become a Dodge again, and carry on through 2018.

FerrariFCA CEO Sergio Marchionne presented Ferrari’s outline, which was light on product plans. Ferrari will cap production at 7,000 units per year, introducing one new model every year. There are provisions to increase capacity to 10,000 units annually, and each model will be on a four year cycle, with updated variants (think 458 Speciale) launched as well. While Marchionne stressed that “Ferrari is not for sale”.

With a volume of 10,000 units, EBITDA (earnings before interest, taxes, depreciation and amortization) is estimated to be around $1 billion for Ferrari alone, thanks to its three custom car lines (which presumably generates huge margins) and the extremely lucrative revenue stream built into the brand – its merchandising and licensing business. Ferrari licenses its brand to everything from laptops to athletic apparel to model cars, and these are frequently sold as luxury goods. By comparison, Marchionne noted that conventional luxury good companies are often valued at 9x-12x EBITDA – and his presentation made explicit mention of Ferrari’s target of 15 percent gross margin, and an apparent valuation of between 3.3 and 5.4 billion euros.

FiatFiat’s presentation was the most confusing, with the brand eschewing the unidirectional approach taken by the other marques in FCA’s portfolio. A more apt-description is that Fiat is the exact opposite of “One Ford”, with the brand offering distinct product for NAFTA, Latin America, Europe and Asia.

  • Fiat will dump the Suzuki SX4-based Sedici (replaced by the Fiat 500L) and the C-segment Fiat Bravo (replaced by the Fiat 500/Panda).
  • Future product will straddle the line between functional, mainstream transportation with a “cool” bent (mostly in Europe and other developed world markets) and a novel, European brand (NAFTA). This dichotomy was presented in the form of the Fiat 124 and 124 Sport (a family car and a sports car) and the smaller Uno being sold alongside the dramatic, performance oriented Fiat Coupe of the mid-1990s.
  • In Brazil and Latin America, Fiat will shed many of its legacy nameplates, including the Palio, Siena and Linea. They will be replaced with a new A-segment car, a new Uno, a Punto/Palio replacement, a new Grand Siena, a new compact CUV and a new pickup, as well as the Strada small pickup.
  • Fiat will bring the Renegade-based 500X crossover to North America, as well as a “Speciality” product, presumed to be a Fiat/Abarth branded sports car, based off the next Mazda MX-5.

JeepJeep is one of FCA’s profit centers, and the SUV brand will undergo a major re-orientation from a NAFTA-centric maker of rough-and-ready SUVs to a global brand composed of both crossovers and traditional off-road vehicles. Jeep will transofrm from a brand of 800,000 American-made vehicles to one with manufacturing facilities in the USA, Brazil, India, China and the EU, with sales projections of 1.9 million units globally. Jeep will gain 9 new plants in 5 new countries .

  • Jeep will introduce a new replacement for the Compass and Patriot in 2016, consolidated under one nameplate.
  • The Grand Wagoneer will return in 2018 as a three-row vehicle, potentially replacing the Dodge Durango.
  • A new Wrangler and Grand Cherokee will bow in 2017.

MaseratiAlong with Alfa Romeo, Maserati will be positioned as a premium performance brand, with new product offerings. Although the Levante SUV is still on, more details were released about the Alfieri Coupe and Convertible. Maserati is aiming to increase sales from 15,000 to 75,000 units.

  • The Alfieri will offer turbocharged V6 (410, 450 and 520 horsepower), and all-wheel drive. Rear drive will be available only on the lower output V6 model.
  • The Levante will offer 350 and 425 horsepower V6 engines and a 560 horsepower V8 as well as a range of diesels.

Alfa Romeo: After nearly a decade of broken promises, we have yet another Alfa Romeo product plant that is being presented as the savoir of this once hallowed brand. Alfa Romeo’s narrative has always been grander than its financial success, but things are particularly dismal, with sales below 200,000 units and a lineup of just two small, front-drive hatchbacks and a low volume sports car.

As part of Alfa’s latest revival attempt, the brand has been transformed into what it dubs a “skunk works”, akin to what Chrysler wanted to do with SRT – create an independent workshop that is conducive to experimentation and creativity, free from bureaucracy and rigid corporate processes. Alfa’s top bosses are two Ferrari engineers, with a staff of 200 hand-picked individuals, which FCA hopes to expand to 600 by 2015.

  • Alfa is aiming to launch 8 new products by 2018, with a range of 4 and 6-cylinder gasoline and diesel engines. Alfas will be exclusively rear or all-wheel drive.
  • The first new vehicle, a mid-size sedan, will bow in 2015. From there, a full-size sedan, two CUVs and a new “speciality” car will debut by 2018.
  • The Mito and Giulietta compacts will die.
  • FCA is aiming for 400,000 units by 2018, including 150,000 units in the United States.

RamAs one of FCA’s other big profit centers, Ram is a key brand for the company, but exists largely in the NAFTA region. The half-ton trucks will see a refresh in 2015, along with a redesign in 2017, with heavy-duty trucks getting freshened in alternate years. Aluminum will likely not be a part of the new trucks, as Ram feels that the diesel half-ton truck is competitive against Ford’s aluminum RAM, and has been downplaying the durability and cost-effectiveness of the aluminum F-150. On the commercial vehicle front, a small Ram ProMaster City, based on the Fiat Doblo, bows this year.

Powertrains and Architectures:

While auto makers like Volkswagen, Toyota and Nissan are moving to radical solutions for platform consolidation, FCA’s plan showed little evidence of any move to substantially combine existing product architectures. Currently, FCA has 18 vehicle architectures, with the top 4 platforms accounting for just under half of total volume, 12 architectures representing 95 percent of volume. By 2018, this number will shrink to just 15 architectures, with the top for accounting for 70 percent of volume, and 9 architectures accounting for 95 percent of volume.

Proportionally, this is not much of a reduction, and it lags far behind Volkswagen’s strategy of just 4 modular “kits”. FCA also lacks the level of scale and volume that VW has, which would make it easier to absorb the costs and inefficiencies that come with having so many different architectures. FCA discussed its goals of bringing down costs via better purchasing practices, more shared components (like lighting, HVAC systems and interior pieces), but their plan for increasing efficiencies via shared architectures was markedly less sophisticated than much of the competition. Given the importance of achieving significant economies of scale in the future (a topic that Sergio Marchionne frequently expounds on), it was surprising to see FCA unveil a plan that is already behind the times relative to the larger OEMs that it must compete with.

On the powertrain front, FCA is downplaying the importance of fuel cell and EV powertrains, introducing EVs for regulatory compliance in the USA. Plug-in hybrids will trickle into the lineup in future, as will mild-hybrid technology like start-stop systems and Belt Starter Generators. FCA dismissed fuel cells as a non-viable alternative, and said that CNG and diesel will play a role in world markets more than in NAFTA. FCA will continue to buy emissions credits in the interim.

FinanceWhile much of the presentation material was focused on global issues, two things stood out.

  • FCA will continue to use Santander as its captive arm, and will not start a new one.
  • The overall tone regarding subprime financing was bullish, with executives dismissive suggestions of any systemic issues.

Sales and Global Markets: Separate presentations were conducted for Asia, Latin America, Europe and NAFTA regions.

  • In the NAFTA region, FCA sold 2.1 million units in 2013, and is projecting a steady increase in the U.S. SAAR, rising to 17 million units by 2018.  By that time, FCA is looking to sell another 1 million units in the NAFTA zone and increase exports by 33 percent to 380,000 units. However, no capacity increases were discussed for NAFTA, and Marchionne commented on his distaste for two-tier wages in the UAW, suggesting that profit sharing was an option in the future. Difficulties negotiating with organized labor could spell trouble for FCA’s plans.
  • In Europe, FCA has seen sales decline by over half since 2010, while capacity utilization has declined from over 100 percent to around 67 percent – a dangerously low level for a volume auto maker. Fiat’s home market of Italy was among the hardest hit, and Europe’s 13.8 million vehicle market in 2013 is at its lowest levels since 2007. FCA now has to reposition Fiat not just as an Italian mainstream brand, but one that fits the current paradigm where “cool” budget brands like Dacia and premium brands like Audi are stealing market share with their offerings that encroach on the turf of volume vehicles. Higher margin brands like Jeep, Alfa Romeo and certain Fiat products (like the 500) are their weapons of choice, as FCA aims for an increase from 1.1 million in 2013 to 1.5 million units by 2018.
  • In Latin America, FCA is well established in Brazil and Argentina, with multiple assembly plants in the two countries running at over 100 percent capacity. FCA expects the market to grow from 5.9 million units this year to 6.9 million units in 2018, with most of that growth coming from Brazil, a country where Fiat is the closest thing to a national brand. Jeep is also expected to be a strong player, with Brazilian production of the Renegade expected to start in 2015. FCA is planning to increase sales from 900,000 units this year to 1.3 million units in 2018. Fiat is expected to account for 1.1 million units, Jeep for 200,000 units and other brands making up the remainder.
  • Asia, India, Australia and other Pacific markets are also being given increasing attention by FCA, with China remaining the dominant market at 28 million units. FCA expects India to overtake Japan as its second largest market by 2018, with 5 million units annually. While FCA projects an increase from 200,000 units in 2013 to 1.1 million units by 2018, on the back of strong sales of Jeep crossovers in India and China, as well as a wide new range of Fiat product. The only question is – how will they pay for all this new product?

Conclusion:

FCA’s day-long meeting was an anomaly in the industry, providing car enthusiasts with a detailed look at future product offerings, and intense discussions of FCA’s various brands and their respective visions. No other OEM is so candid with their upcoming debuts, and FCA deserves praise for setting a positive example for other OEMs.

But dig a little deeper, and many important questions remain answered.

  • FCA CEO Sergio Marchionne is one of the biggest advocates for the necessity of economics of scale via increasing volumes, yet his plan for reducing the number of architectures looks amateur compared to the extremely aggressive plans laid out by archrival Volkswagen. While VWs global volume was 9.7 million units in 2013, it is paring down its architectures to just 4. Meanwhile, FCA, which sold 1.5 million units globally in 2013, will have 15 architectures and volumes of 5.7 million units worldwide. Compared to VW, Nissan, Toyota and even General Motors (which has a sophisticated set of architectures for its global products), FCA’s strategy seems bloated, if not obsolete, from Day 1.
  • FCA is all-in on the internal combustion engine, and is only just dipping its toe into the water of plug-in vehicles, with a plug-in hybrid. EVs are solely produced to appease regulators, and fuel cell vehicles are not in the cards. Even long-time advocates of the internal combustion engine have some kind of ZEV program (such as Hyundai, which has a fuel-cell program). This is a risky gambit, with significant upside and downside potential. Many EV programs aren’t going as well as OEMs had hoped, but FCA could be left in the dust in terms of R&D.
  •  FCA is dangerously reliant on both Jeep and RAM for their profits. A 2008-like combination of spiking gas prices and a downturn in the economy (especially housing starts, which are a key driver of pickup sales) could leave FCA exposed to both falling demand for gas-guzzling trucks and have a severe impact on the high numbers of FCA vehicles financed via subprime rates. These less credit-worthy borrowers would likely be the first to default on their payments, and a mass repossession of FCA vehicles could be another blow at an inopportune time.
  • There has been no mention of how the substantial increase in NAFTA sales will come without any additional NAFTA capacity (something Sergio Marchionne has previously sworn off). Jeeps imported from Italy and Brazil (and even China) could be an option, but booming sales of Ram trucks couldn’t be built anywhere else. Marchionne’s comments about his distaste for two-tier wages could also spell trouble for his hourly workforce when it’s time to negotiate their contracts in 2016.
  • Who is financing all of the(mostly Fiat) new product earmarked for Asia? And why all this talk of Ferrari’s value if the company is not for sale?
  • Is Alfa really going to sell 150,000 units (volumes comparable to Audi) in America? Even the most dewey-eyed Alfa diehards in the industry find that to be a bit of a stretch.

Marchionne and FCA have been known to say one thing and then completely change direction, miss deadlines and dodge questions about missing deliverables (the 9-speed Dart is the automotive world’s Jimmy Hoffa). But they’ve also presented an admirable turnaround for a once-ailing car maker, even when the rest of the world was prepared to write them off. Yes, one may argue that Marchionne and Fiat bought Chrysler’s assets for a song, and that the road has at times been rocky. But a decade ago, plans for Jeep’s global expansion, Ram’s possible conquest of GM trucks and a thriving line of Chrysler and Dodge products would have been the stuff of only the most zealous Mopar fan. It’s now a very real possibility.

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118 Comments on “Analysis: The Definitive Guide To The Fiat Chrysler 5-Year Plan...”


  • avatar
    86er

    The T&C will have to go *way* downmarket in order for the company to hold onto its enviable position at top of the heap in Canada.

    • 0 avatar
      Lou_BC

      @86er – the GC was top of the heap in Canada due to deep discounts.

      • 0 avatar
        86er

        And fleet sales, but that’s not the point. What is going to replace the excellent value proposition of the Grand Caravan? Chrysler Canada isn’t going to just give up that market.

        • 0 avatar
          danio3834

          The T&C range will extend downward to cover most of the Caravan market. While a lot of VP vans were sold, they aren’t particularly profitable and most retail buyers added options anyway.

          • 0 avatar
            86er

            I asked Tim Cain if Chrysler provided a breakdown of GC models and he said they didn’t.

            One could deduce that the AVP and CVP models were somewhat loss leaders, but I still maintain that the GC provided an excellent buy for the money.

            Colour me skeptical that Chrysler brand can keep the same sales with the T&C. I can’t put too fine a point on how the Caravan is more of an institution than just a simple nameplate in Canada. It sells more than all its other competitors combined. Cain’s breakdown noted that Chrysler Canada sold 68.5% of all the minivans sold in Canada in March 2014.

  • avatar
    heavy handle

    Things I like about this plan:

    They are committed to building drivers’ cars and drivers’ brands. Alfa, Dodge, Fiat (in Europe and North America), Maserati and Jeep will be building cars that are aimed to people who like to drive. Can’t say that about GM, Ford, Hyundai, VW, etc…

    They are giving up on Dodge as a s*box brand. It’s about time, and let’s hope they can turn perceptions around.

    Chrysler will do fine as the mass-market brand. It’s better to bring a slightly upmarket brand to the masses than to try to raise prices and margins on a cheap brand. My prediction that the Dart would get re-branded (as a Chrysler 100) will come true.

    Downsides: all of their premium brands will be hard-edged. I’m not convinced that the average premium buyer wants a Maserati or Alfa-type of ride. They need to bring back Imperial so the old farts can have something to drive.

    • 0 avatar
      highdesertcat

      Naw, the old farts now choose to drive a Jeep Grand Cherokee 4X4. Really, really old farts may gravitate to a 300 if they can no longer climb into a Grand Cherokee.

      But there is always the current RAM which seems to have a new following all its own (among men and women in America).

    • 0 avatar
      PenguinBoy

      I agree that not all premium buyers will want an Alfa, and that moving Chrysler downmarket leaves a bit of a gap, and commented to this effect earlier – but I can see how this might work out for them.

      LIke you say, Chrysler will probably do just fine as their mass-market brand. Being “semi-premium” will allow them to differentiate their product from the other mainstream brands, so they don’t have to compete head on with the market leaders in segments where they have traditionally been weak. So rather than try to compete head on with the Camry, they offer the 200 as a “luxury” car at around the same price.

      Chrysler hasn’t really been a credible premium brand for at least 40 years, so it’s not like they have a strong enough brand to position themselves as a true premium product line, and there’s nothing stopping them from offering a couple of premium products (like the 300), or even bringing back the Imperial should they see a market for them.

  • avatar

    Great analysis, DErek. From what I’m reading in the Brazilian press fiat and Jeep will co exist in Brazil with Fiat relabelling Jeep produtos and vice versa. Most larger Fiat cars will eventually become Chrysler while at first Chrysler cars will be Fiat/Alfa. Dodge lives on not only because of American sportiness, but also because in many Latin American markets, for exemple, Chrysler is a virtual unknown.

    Btw, 400 and 500hp v6s and 8s being developed. There will also be 300 plus hp diesels.

    The Chrysler-dodge connundrum continues and is far from over. Seems like their wish is for Dodge to die though has been put off into the future.

    Fiat is not that confusing. There is the Euro line and the their world line with some common products. The Old Palio, Siena must die as the new Uno was supposed to kill them. By the time the factory in Pernambuco is done, it will happen. Fiat will also be an umbrella brand, eventually putting it’s label on Chrysler cars in parts of the world where Fiat is strong.

    Sadly, Lancia is dying.

    As always, it remains an Italian company and plans can change at any moment. Don’t believe it til you see it remains the key to understanding Fiat. As the Italians say paper will tale anything and plans and rules are made to be broken.

  • avatar
    ajla

    Most of those Alfa Romeo things are never going to happen.

    • 0 avatar

      From what I hear, this time it’s for real. They are putting real talent there and feeding them resources. Could be the time is now.

      • 0 avatar
        th009

        EUR 5 billion over five years isn’t a big investment to build new platforms, new engines, refurbish plants and launch eight new models. BMW and Audi will each invest that much in a single year.

        We shall see. Almost two years before the first Alfas are due out, in the meantime sales of the MiTo and Giulietta keep dropping.

        • 0 avatar

          But, they’re developing those Vs. Not for Fiat. So this time Alfa might actually compete with the Germans. Italians have not their panache for design, nor the capacity to make very good handling and responsive cars. Guess we’ll have to see if they can stretch a buck.

          Anyways, it’s more money than Alfa’s seen in decades. And the Fiat engineers mentioned (but not named in the article) are real power holders and shakers in the group.

          Then they still have the Brazilian cash cow to squeeze. With our market possibly not growing this year, Fiat is actually gaining on their competitors. Plus, with the market not growing they can go on producing at almost full capacity here and more easily redirect the money that was supposed to have been invested here. Ask if it hasn’t already been done.

          Italians, Brazilians, there’s always a way.

        • 0 avatar
          danio3834

          Alfa will rely heavily on sharing platforms and components with Chrysler and Maserati products, but will be implemented in their own unique way. So the future Alfa models you’re seeing won’t be completely new ground up cars. A significant amount of tweaking and reskinning can be done for 5Bn.

          • 0 avatar
            th009

            I really don’t think they will build anything based on the Ghibli platform (which in itself is derived from the 300). The presentation heavily emphasized power-to-weight and lightness. Meanwhile, the Ghibli starts at over 4000 lbs. And is not designed for mass production, either.

    • 0 avatar
      ccode81

      Having pain to maintain 2 Alfas in my garage due to lack of spare parts to not so much old models, I seriously feel 8 models are above their logistics.
      If they realize this introduction, most buyers will be disappointed for the maintenance service in the mean time, walk away to Germans and never come back.
      As much as I hope Alfa to come back to it’s golden days (don’t ask when it was), I want them not to hurry.

  • avatar
    mike978

    Great analysis. One question – why is the Compass and Patriot being replaced by a new CUV, isn`t the Cherokee in that slot?

    As for FCA being open about their plans compared to other companies being tight lipped. A lot of what was said could easily have been predicted by insiders at the other auto companies. Not much was really given away.

    • 0 avatar
      CJinSD

      It does seem like a new Patrass would be squeezed awfully tightly between the Renegade and the four-cylinder Cherokee.

      • 0 avatar
        mike978

        Exactly – seems like very little space between having a B and C sized CUV. Unless they want to positions them like the Edge and Escape – similar sized, both 5 seaters. Time will tell.

        • 0 avatar
          dtremit

          The Escape and Edge are pretty prototypical C and D crossovers. The Edge is 6″ longer, 6″ wider, and 10 ft3 bigger inside.

          To put that in perspective, the Camry is about 6.5″ longer, 2″ wider, and 5 ft3 bigger inside than the Corolla.

      • 0 avatar
        Les

        That’s assuming the new CUV is a Direct replacement of the Compass/Patriot, there have been rumors of a new even smaller Jeep slotting in below the Renegade.

  • avatar

    DErek, when you say 1,5 million in 2013 what do you mean? Afterall Fiat had 700 thousand plus in Brazil alone.

    Why do you say RAM can only be built in NA? RAMs have been under study at the factory here for ages, though it seems they discarded its production here again. Anyway, Fiat Brazil now has the capacity to develop cars all on its lonesome só it could be a hub for developing market car creation or even for feeding NA.

    Interesting times.

  • avatar
    Omnifan

    Good analysis, thanks! Now my main concern. Refusing to look at alternative powertrains in the future means that FCA is going to let the rest of the industry dictate the path forward. We used to laugh at Toyota and the early Prius, but now you see application of that technology throughout the product line.

    All this means is that FCA will perform another famous Chrysler curse “crash and burn” about seven years from now.

    • 0 avatar
      danio3834

      Alternative power-trains are largely unprofitable thus far. Toyota has made theirs work through many generations of refinement and marketing, but most other automakers lose money on every single one. Over-investing in money losing projects would be foolish. FCA is being realistic by focusing limited resources on core markets instead. They’re working on PHEV and EV programs, however not as aggressively as the largest automakers with deeper pockets.

      • 0 avatar

        Exactly danio. The emphasis seems to be on Vs, 6 and 8. So NA and Alfa will get competitive engines. Might even be able to give the Germans a run for the money in Europe.

        Like you say, they have their hybrids and EVs on the backburner. But they won’t be spending tons of money on it due to the obvious limitations. Get the ICEs right first, then expand.

        • 0 avatar
          danio3834

          Looking at the FCA powertrain presentation by Bob Lee, the bulk of future engine development at FCA will be on 4 cylinder engines, with some work on force inducted V6s. V8s will largely be consolidated to higher end truck and special use.

          • 0 avatar

            Agreed, indeed it does. I mentioned the Vs mainly because Derek didn’t. The V6 and 8s will have competitive hp figures for Alfa to go against the Germans and be credible in NA, while also giving Chrysler and Dodge engines that are palatable to the market. But of course the focus is on 4 cylinder engines and even 2 and 3 cylinders for Brazil, Europe and elsewhere. I’ve seen the 2 cylinder. Fitted with turbo and compressor it gets 130-ish or more (depending on calibration) out of 0.9 L.

            I think they’re covering all the bases well as their engines, and Chrysler’s 4, too, need some overhaul.

  • avatar
    Big Al from Oz

    I saw one view that Derek has and he put a negative spin on it, that is FCA flip flops about I following a pre-selected path.

    I think this is good by FCA. This allows for flexibility, maybe something other auto manufactures should be capable of achieving.

    The other comment on how FCA is very reliant on Ram and Jeep, has negative intones as well.

    We have to remember the Fiat and Chrysler only a short while ago were valued as garbage and now there seems to be light at the end of the tunnel.

    I think Sergio has done a sterling job with FCA.

    Like Derek I do believe that Sergio will move away from the poorly managed UAW socialist camp. Hopefully the NA manufacturing remains in NAFTA and even goes to Mexico.

    There should be a message to the UAW on FCA and what not to expect.

    • 0 avatar
      highdesertcat

      I think the UAW was marginalized at FCA a long time ago by Sergio. I can see it now, the UAW striking FCA, an automaker of which they own a piece.

      Like cutting off your nose to spite your face.

      • 0 avatar
        Big Al from Oz

        @highdesertcat,
        I agree with you regarding the UAW. The UAW can’t succeed as it’s institutionalised culture will be the end of them.

        The UAW just aren’t progressive, more like regressive policy is their problem. The past is based on political thuggery, which means the UAW officals are always watching their back to maintain power and not looking after the ‘little guy’.

        This doesn’t bode well for the guy on the floor who the are supposed to be ‘supporting’.

        Australia now has a policy regarding business and unions. Our government will not bail out any companies in the future due to p!ss poor agreements between business and unions.

        The unions don’t like this, as now when making a decision if it is to greedy and ill considered they will lose jobs of the guys who pay taxes into the union coffers (union dues are a tax).

        People would be far better off protecting their income by investing into an insurance policy than go with the UAW.

        Good riddance to the UAW, it will soon just be a figment of our imagination. They with the Big 3 can written down in history as the most inept managers in the US during the 20th century.

        • 0 avatar
          mikey

          Great work Derek, and highly informative.

          Of course a couple of lines mentioning the UAW, and the haters come out of the
          woodwork.

          @ HDC Unlike “BOFO” your a guy that deals with facts. Just so you know. The UAW does not own any part of the former Chrysler. The VEBA fund was set up to cover retiree benefits. During the crisis of 07 to ??, the VEBA accepted share’s of Chrysler, in lieu of cash. The UAW has zero input into the administration of the VEBA fund.

          • 0 avatar
            highdesertcat

            mikey, what you say is true. No doubt about that. But there is the concept of “vested interest”.

            No doubt there are more than two ways of looking at the situation and the view changes from each perspective.

            My view is that the UAW is in a precarious position just how much they can actually push Sergio to do their bidding, the way the UAW used to push their employers, including the Chrysler of old, into complying with their (UAW) demands.

            In the case of FCA, I do not believe that the UAW has any input and is of any relevance to FCA decisions. And that is also why I believe that Sergio can run rough shod over the UAW and make plans that will result in downsizing US operations while at the same time increasing operations outside of the US.

            BAFO may have a point-of-view that is different from yours and mine but that does not mean his POV in not relevant. It’s amazing how differently my family members in Portugal, Brazil and Germany view the US and its auto industry.

          • 0 avatar
            mikey

            HDC In my part of the world,the private sector unions are either dead ,or on life support. . The only unions that are flourishing would be the government workers.The former CAW ,and now UNIFOR has yet to take on one of the former big three. With our Canadian auto industry hanging by a thread , you will not see any labour unrest on this side of the border. Not a chance.

            I’m not sure if the UAW is in the same position. From what I see and read, the UAW is fighting for it’s very existence . My guess, is that the UAW will be more than willing to play ball with Sergio. If for no other reason, than to show the rank and file in the transplants, that the UAW is not out to kill jobs

          • 0 avatar
            highdesertcat

            mikey, again, sage wisdom on your part, from your side of the border.

            It is often said that the past is prologue and in the case of the UAW their past is a pretty good indicator of what we can expect from them in the future.

            Ford and the NEW GM are certainly going to be targets of the UAW in the immediate future to increase their UAW pay, benefits and annual bonuses, as is the unionization of the transplant auto factories in all right-to-work states in America.

            I see Sergio as heading the UAW off at the pass because this reorganization and realignment is skewed toward FCA future growth, without any consideration to the employees.

            I know that is a harsh way to do business, but then again, business is all about the bottom line.

            Just like I hope be live long enough to see the US Social Security System go broke, I also hope to live long enough to see FCA move its operations to countries and locales that will substantially increase its bottom line profits.

            We’ve already seen what unions have done to the US auto industry. There’s no need to ever go through that again.

            If the UAW wants to play at FCA, they’ll have to do it on Sergio’s terms, with Sergio’s toys.

    • 0 avatar
      danio3834

      The flip-flopping about product plans and just about everything else is common at all automakers. The only reason it seems that FCA does it more is because Marchionne doesn’t mind talking about it in public. You just don’t see this kind of transparency elsewhere. If anything, it gets people talking and generates interest which is proving to be good for the bottom line.

      • 0 avatar

        Yep and its carefully tailored for the public, giving them big numbers that will impress and telling the press what they want to hear, all the while hiding what they want, tier trump cars, their real numbers et al. It’s more a PR exercise than anything else or even due to its culture, to anything set in stone.

      • 0 avatar
        PenguinBoy

        Agreed, the transparency from the current FCA management is refreshing.

        I personally don’t see the flip-flopping as a bad thing – it seems FCA is prepared to try something out, and if it doesn’t work out for them, make some course corrections and try again.

        This plan is aggressive, but given the success of the Chrysler turn around I wouldn’t say it’s impossible. While there’s little chance of FCA giving Toyota, GM, or Volkswagon a run for their money any time soon, it wouldn’t surprise me if they start to close in on Ford and Hyundai over the next few years.

        • 0 avatar

          Don’t forget Renault-Nissan. Though the Franco-Japanese Alliance is closer to the big 3 than those immediately below. I agree, if they gain in America, hold steady in Latin America, rebound ever slightly in Europe, find some success in China and India, they could soon close in on Ford and Hyundai-Kia. Lots of ifs, but it does seem they are trying to get there and have an idea as how to do so.

  • avatar
    VoGo

    Great job, Derek. They don’t pay you enough for this quality of analysis.

  • avatar
    readallover

    They need to spend more R & D on the sub-par 4 bangers and a little less on the V-8`s.

  • avatar
    th009

    “Alfa Romeo’s (…) sales below 200,000 units”. About 70,000 units in 2013, and down about 15% from that so far this year. I would guess about 50K in 2015 (the last year without new product): from there, Marchionne projects 100% growth each year to reach 400K in 2018.

    And, yes, it took Audi decades to get to 150K units.

    • 0 avatar

      I think more an exercise in wishful thinking than anything else. But it’s what the public wants to hear. Also, this time around there are new markets like Brazil, Russia, India. If Alfa doesn’t get to 150k in a shorter time than Audi did, in a more globalized and open market than ever before, it will mean they’re being unsuccessful.

      • 0 avatar
        th009

        It seems my prior response is getting caught in a spam filter maybe …

        Anyway, I agree that Alfa Romeo can grow more quickly than Audi’s historical growth. But from basically zero to 150K (in the US market) in just three years is nowhere near realistic.

        • 0 avatar
          heavy handle

          The Fiat US plan seemed even more unrealistic at the time: “Fix it again Tony,” plus a sub-mini that supposedly no American wanted.

          That worked out OK, because the product was good.

  • avatar
    npaladin2000

    Wrong move with Chrysler, it’s got zero equity outside the USA. Should let that be the marshmallow brand, let Dodge be the “mainstream” and stick with Alfa for “enthusiast” stuff.

    And I bet anyone that the next Alfa to be released after the 4C is FWD. ;)

    • 0 avatar

      Don’t know about that. Dodge is better known in South America than Chrysler, but I don’t know about the rest of the world. Car companies are not run by stupid people. They must have their reasons.

      • 0 avatar
        npaladin2000

        People in Europe have heard of Dodge, but Chrysler has so little recognition that they sell Chryslers as Lancias instead.

        And who says car companies aren’t run by stupid people? SUCCESSFUL car companies generally aren’t run by stupid people, but the ones that are doing badly can be. In fact, the two are generally connected. ;)

        • 0 avatar

          Doesn’t seem to me the current bunch is stupid. They are weathering the storm in Europe, how gracefully depends on your point of view, they are growing their market share in Brazil at the expense of others (in a declining market), they got Chrysler for “free” and with their management the American company is on the rebound (aided of course by an expanding market, though they are outgrowing the market so it’d seem they’re doing something right).

          The ship is by no means righted or out of treacherous waters, but they appear to know what to do.

          No, would hardly call these guys stupid.

      • 0 avatar
        an innocent man

        >Car companies are not run by stupid people.

        Citation needed.

    • 0 avatar
      danio3834

      FCA hasn’t announced any significant ambitions of pushing Chrysler branded vehicles outside NAFTA zone as of yet. Growth in those regions is being chased with better established brands like Fiat, Jeep and Alfa. These brands already have a presence and products that are more in-line with the demands of other markets so it makes sense to develop them there.

      • 0 avatar
        th009

        Why are half my TTAC posts disappearing? Sigh.

        Anyway, while Jeep has huge brand value, I’m not really convinced that Alfa Romeo is well known outside the hardcore enthusiast community. You know, by those 90% of BMW buyers who don’t know whether their cars are RWD or FWD.

  • avatar
    Arthur Dailey

    Why eliminate the Caravan? It still sells well in Canada.

    The Town & Country will have to be de-contented to meet the price point required to sell and that may devalue the Chrysler brand.

    Can someone please explain the logic behind this decision?

    Have to agree with the previous poster. shouldn’t Dodge be the ‘value’ brand and Alfa the ‘sport/tuner/performance’ brand?

    • 0 avatar

      Disagree. Canada is a small market that understands that Dodge=Chrysler. So a simpler Caravan sing a Chrysler brand wouldn’t be that much of a tough sell. As has been pointed out in this thread, Chrysler hardly commands a premium nowadays. And it is taking Dodge’s place. I for one believe the plan is still to phase out Dodge. Chrysler will eventually take its place.

    • 0 avatar
      heavy handle

      Dodge will still sell the Journey, which is a Caravan with non-sliding doors.
      We will have to see if Chrysler sells a “Canadian Edition” Grand Caravan (starts at $19,995 with A/C). Maybe that one will become a Ram Crew Van.

  • avatar
    billfrombuckhead

    The most exciting car company on the planet just became even more exciting! FCA is the home for real car enthusiasts.

  • avatar
    Zekele Ibo

    So, is Lancia dead then? Unless I missed it somewhere, they can’t even be bothered to mention Lancia in their plans. I love the old Delta Integrale (and the old Fulvia), but if the brand is just destined to sell rebadged Chryslers in certain Euro markets, it deserves to be killed off.

    • 0 avatar

      Sadly, unfortunately seems so. I heard that that was due to American pressure. If Dodge has to die, so must Lancia. That’s a story I’ve heard.

      Though it seems that Lancia will go on inside of Italy and maybe a few selected Euro markets.

  • avatar
    Lou_BC

    @Arthur Dailey – Alfa Romeo has zero name appeal in the NAFTA zone markets, i.e. primarily Canada and the USA.
    Dodge has the Viper, Challenger, Charger etc. Until us baby-boomers go off to retirement homes and get driven around in shuttle buses, performance badges of our youth have market appeal. The “Buy American” types will look the other way if a FCA product has a “Murican” name on it but not an evil foreign name.

    • 0 avatar
      danio3834

      With the right products, I could see them making in-roads. It won’t be easy, but if they can bring credible competitors to the established German and Japanese cars in the luxury/performance segment, they will be able to carve out a niche. There are a good amount of buyers in that segment that are looking for something different, if Alfa builds enough emotion into their cars, they’ll find buyers.

  • avatar
    northshorerealtr

    Like the approach, I think….but I’m a little put off by the plans for Chrysler as a mainstream brand. If in North America, Dodge is performance and Chrysler is mainstream…..after you get the “best” Chrysler, is there a “move up” brand? Don’t think Maserati is a real option–too exotic, highly limited distribution channel, and a wide pricing leap upward. Or have I fallen into Sloan’s strategy?
    Daimler didn’t–and wouldn’t– allow Chrysler to be upscale, for fear of infringing on Mercedes’ territory; vehicles of that era were de-contented/downgraded–and were hated by press and many of the public.
    Guess I’m already missing the approach of Chrysler as an aspirational brand, or a cut above–like Buick.

    • 0 avatar

      Alfa Romeo, it seems like, will be waiting to greet you with open arms.

    • 0 avatar
      dtremit

      I think they are throwing out Alfred P Sloan’s ladder — and I think that could be the best part of this plan if they get it right.

      Focus the brand on the buyer’s identity, and let them move up *within* the brand.

      Think about two people buying first cars. One buys a bright red Dart; the other buys a silver 200.

      It’s the 200 buyer who will probably end up in the T&C when they have kids. The Dart buyer is more likely to end up in a Journey or Durango.

      The strategy works at the high end; I don’t see why it can’t work for the mainstream. (Arguably, it’s already working for Ford, to Lincoln’s peril.)

  • avatar
    PrincipalDan

    “A replacement for the Dodge Journey – including an SRT version – will bow in mid-2016.”

    A raised eyebrow… “Excuse me Sir, could I interest you in a 300+ hp AWD psuedo-wagon?”

  • avatar
    Magnusmaster

    Fortunately it seems Fiat’s idiotic “500 & Panda” lineup is first-world only. Though it makes sense considering Fiat’s history. Oddly enough no signs of a C-segment car for Brazil. It seems they’ll keep two different lineups with very little overlap for first-world and third-world markets.
    I’ll believe everything Marchionne says about Alfa when I see it.

    • 0 avatar
      Viquitor

      I was scratching my head over this one, too. I’ve red somewhere – maybe in 4Rodas – that they were planning on producing the Fiat Viaggio in the Pernambuco plant and calling it the Tempra. But that plan was scrapped in favor of a new brazilian Alfa Romeo, to be based on the same platform and sold for Corolla money.

      Maybe Chrysler or Alfa Romeo will play C-segment in Brazil. Or maybe even Jeep.

      • 0 avatar
        Magnusmaster

        It doubt Alfa would ever build something in Brazil. Maybe a Chrysler. Could work out. But they need a substitute for the Linea ASAP. They can keep the Bravo on life support but the Linea has been DOA from the start and that abortion of a facelift isn’t going to sell.

        • 0 avatar

          Magnusmaster, it’s up in the air. Lot’s of things going on backstage. Viaggio is still being developed in Betim. But the whole Punto/Linea line plus Bravo are in a kind of suspended state. What does seem sure is that the whole old Palio family will be axed by 2016 (with the possibility of a basic, work Strada continuing). New Uno and its platform will sprout derivatives as will the hybrid platform under the Grand Siena. Also the new City, smaller than Uno, should be making the rounds by late 2015. In the presentation info on Brazil was sparse. They’re holding those cards close to their chest.

        • 0 avatar
          Viquitor

          Well, they have. Until 1986. Audi is coming back, Mercedes and BMW are coming as well. Without brazilian production Alfa Romeo will have a hard time fighting those guys. And if there’s one place where they surely can succeed, that is Brazil. Alfa Romeo is still hugely appreciated here.

          • 0 avatar
            th009

            According to Marchionne’s current talk (and the investor presentation), Alfa Romeo will be built in Italy only. That doesn’t bode well for local production in Brazil (or China for that matter) — and will significantly limit the potential in those countries.

          • 0 avatar

            th009, like Viquitor said, Alfa has a history here. they even built trucks!

            Something will be done in the mid-term though. Basically, after a guy is up to a Grand Siena here, and he wants a car, he’s out of luck as the Bravo is a hatch and the Linea has a hard time competing. There is the Freemont, but not everyone wants that.

            It make take a while, but eventually we will have larger FCA cars built here. If Fiat, Alfa, Chrysler or even Dodge, no one knows.

  • avatar

    Good thing has a new toilet (Alfa-Romeo) to flush all the ‘hard-earned’ Ram/Jeep cash down.

    • 0 avatar

      And part (a good part) of the reason Ram and Jeep are earning so much cash is?

      Fiat management. Lots and lots of work. Sacrifices from other, just as profitable Fiat branches the world over. If Fiat wants to burn all of Jeep/Ram money let them. They’ve earned it.

      • 0 avatar
        Lorenzo

        It’s Peter De Lorenzo’s contention that all the Ram/Jeep models that are selling were developed under Cerberus and Fiat stepped in just in time. I think he’s right – Fiat has NEVER developed so many models over such a short time as they’ve owned Chrysler.

        As for Lancia to be reduced to one Italy-only model, the puny 3 model Alfa line up and the very few Fiat models that get updated, that’s Marchionne’s standard operating procedure. He’ll keep a model going as long as it sells, and when it doesn’t, he kills it with no replacement, having starved product development of the money needed to bring out a new model.

        For a finance guy, that’s good cash flow, but for a car guy, that’s a slow death of a thousand cuts. Marchionne is not a car guy, or he’d have financed replacements for the Brera, Spider and 159.

        • 0 avatar

          Development has not been completely stopped, it has been slowed that’s for sure. As to Marchionne being a car guy, most people I know who speak of him say he is. He keeps his eyes on the money, which is very necessary at this point in time, but he also carefully follows the engineering side.

      • 0 avatar

        Fiat hasn’t earned anything; the folks at bankruptcy-era Chrysler did yeoman’s work to keep the company afloat. Fiat just came in and acquired all that hard work and intellectual property for FREE.

        People say what they will about GUBMENT MOTORS, at last it was OUR government that owned it…

        Fiat is a sinking ship and has been for the past decade (if not longer). No one respects them even in their home market.

      • 0 avatar
        OldandSlow

        Marcelo – The new Cherokee is the only Jeep model that is pure FIAT from the platform up. It may do well versus the old Liberty – but here in the US, its sales are dwarfed by the CR-V, Escape, and RAV4.

        Profits: The Ram truck platform sells in such large numbers that any tooling costs are quickly paid off and with options a 4 door, short bed, 1/2 ton sells for nearly $40K – without tax, title or dealer fees.

        The Jeep Grand Cherokee and Wrangler also sell at price levels that will quickly recoup tooling costs. Where I live the Grand Cherokee alone outsells the combined volume of the Ford Expedition and Explorer.

        Sans the Chrysler built ZF 8HP transmission, most of the development for the above money makers where in fact done during the Mercedes and Cerberus eras.

        • 0 avatar

          The “gross” development was done under Mercedes yes, but Fiat has been quietly at work in things you don’t see but feel. When they bought Chrysler they were amazed at how backward were some processes and how dated some of the technology was. Paintshops have all been overhauled, management systems, exhaust systems, many countless little pieces that had rather hamfisted approach were improved on.

          Plus the internal redesigns and external touches that have made the cars more palatable to a wider swath of the public.

          Those who think Fiat has only been sitting at the entry of Chrysler’s treasury taking a cut of any money that comes in is woefully uninformed. Fact is Fiat has been putting more money into Chrysler than any other business unit they have.

          The Cherokee is the first visible result. Seems like it’s doing well. More will soon come.

          • 0 avatar
            dtremit

            “Those who think Fiat has only been sitting at the entry of Chrysler’s treasury taking a cut of any money that comes in is woefully uninformed. Fact is Fiat has been putting more money into Chrysler than any other business unit they have.”

            These two situations aren’t mutually exclusive. Even leaving profit out of the picture entirely, NAFTA is 53% of FCA’s global sales volume, and 60% of global revenue.

            If 80% of FCA NAFTA profits are being reinvested in NAFTA, they are both putting more money into Chrysler than any other business they have, AND taking a cut of all the Chrysler money that comes in.

          • 0 avatar
            bobman

            Hey dtremit
            Chrysler money? Since the bankruptcy in 2009, any money in or out of the company has been controlled by Fiat. (VEBA too?) Daimler took care of any Chrysler money before they ‘sold’ it to the ‘scavs’. Chrysler’s current success is what Sergio and Co. have brought to the table.

            The balance between NAFTA and the rest of the global FCA market will level out as the five year plan is executed.

          • 0 avatar
            dtremit

            Chrysler money, meaning the revenue from products sold by the Chrysler(/Jeep/Dodge) arm of FCA.

            I’m not making any judgment about who created what value, just talking numbers.

        • 0 avatar
          Viquitor

          The Cherokee is not a game changer, but instead a sign that Jeep is back into the game. And that is one nice step into the right path. Nobody could expect FCA to beat CRV/RAV4 right from the start.

  • avatar
    Viquitor

    Derek, as for architectures, Fiat Brazil currently pretends to have four of them: 178 and their derivatives, which are Palio Mk.3, Siena, Strada, Palio Adventure, Palio Weekend and Linea; 326/327, which are Palio Mk.5, Grand Siena, Uno and the Fiorino; the Punto/Linea, whatever that’s called; and the Bravo’s. There’s supposed to be a 5th architecture to underpin the Doblò.

    However, the reality is largely different. Because the brazilian Punto rides on a modified 178 platform – the Palio Weekend’s, to be precise – whereas the italian car shares a much more modern platform with the Opel Corsa. It is much like the brazilian Tempra being actually a argentine 131 derivative instead of a proper Tipo Tre like its italian sibling.

    In the end, everything they do down here apart from the Bravo comes from either the 178 or the newer 326/327 – itself an update on the 178 that embraces much of the modifications made to the 178 in order to properly dress the Punto’s bodywork.

    See where this is going? Fiat has been actually very clever with their platform strategy, and they’ve been doing that for years. Decades, even. It’s not every automaker that gets away with making similar-yet-so-different cars on different places, while using much cheaper tech and milking much greater profits.

    They don’t have that many platforms in Italy as well. It is only a matter of time before the entire FCA lineup is following suit.

    • 0 avatar
      GTAm

      This is correct. I have read about this too. They’ve been doing it for decades. It’s just that Fiat has never made a big deal about it like VW has done recently. Of course they need some time to digest Chrysler and do the same there too. And it’s already begun with the Dart, Cherokee and new 200.

    • 0 avatar

      You’re largely correct Viquitor though I could dispute a point or two. It has been called flexible manufacturing and many other companies would love to know how to do it. When done right, it can stretch a buck a long, long way.

    • 0 avatar
      Magnusmaster

      I still can’t believe they didn’t bring the Mini or SCSS down here (though it seems they’ll FINALLY bring SCSS). I mean, the Palio platform isn’t that bad but it goes back to the Uno from the 80s FFS! (yes I know it was updated along the way, but still…).

      • 0 avatar
        Viquitor

        I suspect the 178 is largely based on the Mk.2 euro Uno, the one we didn’t get here. But I don’t know for sure. Maybe Marcelo knows something about that.

        • 0 avatar

          Those who aren’t in the loop can hardly know, Viquitor. What I can surmise though is that the old 178 will finally be laid to rest in 2016 when the whole old Palio family will be laid to rest (with possible exception of a basic Strada). The Uno will grow a family while the new Palio family will move on to whatever the Punto is using down here (the back of the Grand Siena is virtually identical to the Punto). Everything else will be a derivative of those two, with the needed adaptations and extensions done here (like they have been for a while).

  • avatar
    djn

    Its sad that many in the US have tunnel vision about Alfa Romeo. Alfa still has a strong brand following in Germany, UK and both coasts in the US. Even today, 20 years after Alfa left these shores, there are vibrant Alfa Owners clubs up and down the west coast as well as the East Coast. The Japanese have been snapping up Alfa’s from the 60’s and 70’s at a break neck pace.

    Sure FCA which has resurrected the very broken Fiat brand in the USA will do well with a brand in much better shape, Alfa Romeo.

    • 0 avatar
      danio3834

      Since it’s been so long since Alfa sold a new car in the US, they will have the benefit of a fresh start with most of the buying public. Aside from enthusiasts, the average person knows very little about Alfa Romeo, it’s previous products or history. As far as the average buyer here is concerned, they’re a new brand. So first impressions are key.

      • 0 avatar
        OldandSlow

        djn – In between both coasts are the fly over states – lots of Interstate travel with not many twisties en route. An Alfa built for Europe is a waste on I-10, I-40 or I-75.

        • 0 avatar
          Lorenzo

          An Alfa built for Europe – with a manual transmission – won’t sell in flyover country OR either coast. FCA won’t make the same mistake they made with Dart: we’re a shiftless people and they now know it.

    • 0 avatar
      th009

      There are some fervent Alfa Romeo enthusiasts, for sure. But like the people clamouring for AWD manual diesel wagons (in brown), they are far too small a group to build a business case on. If Alfa is to be successful in the US, most of the buyers will need to be new to the brand.

  • avatar
    burgersandbeer

    Where does Alfa fit in the market in terms of price? Are they taking aim at BMW and Audi, or more in line with Buick and Acura?

    I like the idea of RWD/AWD only. I also have hope for manual transmissions. I realize those don’t sell to mainstream buyers, but so long as Alfa views itself as a “skunk works,” I think it’s reasonable to hope for. A midsize, RWD sedan with an MT is right up my alley; however, I fear it will be more expensive than I would like.

    I’m surprised at plans for a full-sized sedan. I thought those were an endangered species, courtesy of CUVs?

    • 0 avatar
      PenguinBoy

      I’m no marketing guy, but looking at their lineup of brands I would suggest that the right place for Alfa would be right in line with Buick and Acura – especially now that Chrysler is no longer positioned as an entry premium brand. Aiming for BMW and Audi might be a bit of over reach for Alfa at this point, and it hasn’t worked out well for brands like Volvo and Saab. On the other hand, it seems like it would be relatively easy to position Alfa as a step up from Acura at an Acura price. The top end of Alfa might overlap with the 3 Series and A4 a bit, but after that FCA has Maserati, which is now stepping down into 5 Series / A6 territory.

      The full size sedan is definitely a niche vehicle at this point (and the mid size sedan might be as well in a few years), but the LX cars have their following so FCA must figure it’s worthwhile to keep developing the platform at this point. Having a good large car platform with the development costs largely paid for by the volume models makes it easier to develop competitive ultra low volume premium models – see the recent Ghibli for an example of this.

      • 0 avatar

        PenguinBoy, that sounds like a plan! Great analysis.

      • 0 avatar
        Viquitor

        I’m trying quite hard inside my head to figure out what will happen to the 300.

        If Alfa is now knowhow skunkworks and it is to be rwd/awd only, and if is to have a full-size sedan, then…

        1) When they say “full-size”, are they talking american full-size like the 300, or euro full-size? Won’t the euro full-size, 7-series fighter be the Quattroporte? And isn’t the Ghibli supposed to go against the 5-series? An american full-size, lower in tech and price point while big as a 7-series does not fit nor the Alfa residual image, neither what they’re telling us about Alfa being sporty and premium. So in the end the so-called flagship Alfa is likely to play Buick to Maserati.

        Then there’s a future for a cheaper 300. But as in a bigger 200, a sort of Chrysler Avalon. And that might mean fwd. The SRT8 is clearly dead, anyway.

        And that also means Dodge using the future Alfa gear on the next muscle cars. I predict a much lighter Challenger, then.

        2) If Alfa is to be a full-on luxury brand, charging BMW money for their models and pushing Maserati into quasi-Bentley territory, then the 300 could itself play Buick to Alfa Romeo, and be a proper range topper to this new Chrysler, that would go a bit downmarket without losing entirely its brand cachet.

        This could mean a bright future for the 300.

        My money is on #2. They will not throw 7 billion dollars on a Buick. Alfa Romeo IS the original ultimate driving machine. BMW is what it is only because they ripped Alfa off so much in the 70s and early 80s.

        • 0 avatar
          OldandSlow

          I can agree with you on one thing at least. Alfa Romeo was the original ultimate driving machine until BMW came into the field with their late 2002 sports sedans and then the 3 series.

          Taking Alfa from ~100K units a year to 400K units in less than 5 years dependent on 8 presently non-existent new RWD models will be a Herculean effort.

          Time will tell and hopefully like you said, the next Chrysler 300 reaps the benefit of an Alfa chassis.

  • avatar
    drksd4848

    ” Car companies are not run by stupid people.”

    Some of the dumbest people in human history have managed to become in charge of car companies.

    • 0 avatar
      geeber

      They aren’t “dumb” as in, “suffer from a seriously low IQ.” The problem is that they failed to accurately judge trends in the market or within the industry for a variety of reasons.

      A good example is former GM Chairman and Chief Executive Officer Rick Wagoner. The man certainly wasn’t stupid. Unfortunately, he was so caught up in the GM corporate culture of arrogance and insularity that he couldn’t imagine that the path GM was pursuing might not work.

      • 0 avatar

        Now that geeber is a good analysis and spot on. Quiet a challenge actually for CEOs to understand. Hopefully the Fiat honchos are not that shortsighted. Nothing would suggest they are not in tune.

      • 0 avatar
        dtremit

        Indeed, I think there have probably been more CEOs that are too smart for their own good. Jacques Nasser comes to mind; he was so busy reconceptualizing the global automotive ecosystem that he forgot about building cars.

  • avatar
    rpol35

    This is an excellent analysis!

    It still seems to me, however, that FCA has too much circus for the tent – too many models and too much overlap. I don’t see how the Chrysler/Dodge relationship will work, especially with Dodge as a specialty or performance marque and Chrysler all but forgotten. I also question Alfa’s development or significance going forward. I can read and understand what’s being said but seeing will be believing.

    I hope things work for FCA but there seems to be holes, as other posters have mentioned, regarding power-train, alternative technologies and platform variability. Most of all, FCA has set a published direction before, actually several times before, and then changed course anyway. I have a feeling that will continue to be the case.

    • 0 avatar

      The changing of course is par for the course. It’s the Italian style. It’s good because you can respond rapidly to changing market realities. It’s bad because you can suffer from insufficient follow through. I suspect you’re right and there will be more changes. Nothing Fiat says is ever set in stone.

      Chrysler-Dodge is like I said above a contention point. Dodge has been kept around because it sells. They don’t want to lose those sales now. Eventually though, the trend is for Dodge to peter out.

      • 0 avatar
        PenguinBoy

        If Dodge focuses on RWD / Performance at an affordable price, they can generate volume to help amortize the cost of developing new RWD platforms that will also underpin Alfas. This will give Alfa access to RWD platforms it couldn’t afford to develop on its own. Maserati is already doing this with the Ghibli loosely based on the LX cars, and the soon to be release SUV based on the JGC.

        I also highly doubt many will cross shop an Alfa and a Dodge – so there is little chance of cannibalization. As long as Dodge generates sufficient volume, I can’t see them going anywhere.

  • avatar
    Pch101

    Aside from the Chrysler brand being acknowledged for what it is (a mainstream marque, not a quasi-luxury badge), this doesn’t seem that different from before.

    Fiat is still supposed to be FCA’s answer to MINI in the US and Canada, and the mainstream family brand everywhere else. That has been true for some time.

    Alfa is supposed to emerge as an Italian BMW. Also true for sometime.

    Maserati is supposed to be some sort of morphing of Aston Martin and Land Rover. Also true for sometime.

    Dodge is supposed to be a performance brand of sorts, a bit of an Americanized cross between Pontiac and Scion. Also true for sometime.

    Jeep is supposed to become North America’s contribution to the international market. This hasn’t changed much.

    Perhaps the volume expectations have been adjusted, but from the 30,000 foot level, this looks like a continuation of the old plan.

    • 0 avatar

      A different detail here and there, a new car added, a projected one deleted. It seems they have a general sense of direction, but are willing to adjust according to circumstance.

      The really difficult part is implementing it all. That’s what they’re doing now.

    • 0 avatar
      geeber

      I’m just not so sure that the company has the money and leadership to make Alfa into a genuine BMW/Audi/Benz competitor. That’s a pretty tough task by any standard.

      • 0 avatar
        Viquitor

        I sure hope they can pull it off, Alfa Romeo speaks to my heart like no other brand.

        What they really need is get the first one right. This 3-series fighter might be the single most important car in Alfa Romeo history.

        They should call it the Alfetta.

      • 0 avatar
        Pch101

        “I’m just not so sure that the company has the money and leadership to make Alfa into a genuine BMW/Audi/Benz competitor.”

        Cash is indeed the biggest challenge. Aside from building profit in North America, the company’s best chance for paying for this is listing the stock in New York. (The value of the business should increase (creating an effective profit on the VEBA share purchase), which could then be levered.) But FCA will still be dwarfed by its competitors, even in that scenario.

        Still, with Audi, Cadillac Lexus and Infiniti all aspiring to be BMW, it’s a pretty crowded field. Whatever FCA produces to compete against the 3 will be a mission critical car.

  • avatar
    billfrombuckhead

    I think the new Dodge will start off like Chrysler answer to Pontiac but morph into Mopar’s answer to Subaru with Journey Crossroads and a new Dart hatchback Crossroads leading the way.

  • avatar
    phargophil

    Developing new base architectures costs big money. I think that the reason consolidation of platforms isn’t stressed is simply that Sergio still will put Fiat first, and right now Fiat needs more of the FCA revenue just to survive.

  • avatar
    th009

    Investors not impressed, shares down 12% today.

    An analyst with Nomura Holdings told Automotive News:

    “The problem is PowerPoint presentations are a lot easier than real life. These brands need a huge amount of work to get where they need to be. The world changes very slowly and you have brands at the bottom of the pile in many regions. It’s not going to happen overnight.”

  • avatar
    ridoca

    A somewhat spotty analysis, with some apparent lack of understanding of parts of the presentation (especially AR, FIAT, Chrysler).

    I won’t delve into it too much because it seems this page is somewhat old by now, but I just wanted point your attention to the fact that ALL car companies change plans on a dime (VAG being possibly the most evident, if much less vocal). Claiming this to be an exclusively Italian trait (as per MR Vasconcelos posts) is, at best, ridiculous. It’s simply a sign that you are willing and able to modify your plans on a certain product if the situation changes.

    Additionally, there seems to be a grave lack of understanding of the differences between Platforms (as in ASE/Chrysler’s description of critical production line dimensions) and the rest of the industry (a combo of dimensions and architecture).

    If you talk about basic architecture, you will see that VAG currently has 18 of them on which they base their models, pretty much the same as FCA. The main difference is, of course, that VAG doesn’t have anything close to a Wrangler (which needs its own platform AND architecture) or any real Pickup trucks like FCA’s RAM (same as above).
    Lastly, the only full size minivan VAG offered was…manufactured by FCA.

    Regarding, the slump in prices, I seem to remember that the same thing happened last time around…look what has happened in the last five years ;)


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