Good old Automotive News reported some juicy gossip regarding Fiat Chrysler Automotive.
The gist of it is that FCA’s CEO Sergio Marchionne thinks making smaller cars in Italy is a waste of time and money. He is concerned that smaller cars are going to be commoditised and that the real margins lie in making larger cars. Resulting from this set of assumptions, stalwarts of the Fiat range will be axed and anything small and plausibly profitable shifted to outside Europe. The Punto – once a European top-ten car – and the MiTo (never a European top ten car) will be discontinued.
With the production lines thus freed up it will be possible to shift production over to bigger and more lucrative vehicles such as new SUVs under the Maserati, Alfa Romeo and Jeep brands. At this point in the story I am thinking of the time the US car industry abandoned smaller cars and gave the Japanese producers a lovely foothold into the N American market.
The analogy doesn’t fully hold because FCA will still make smaller cars, only they don’t seem to want to make them in Italy. The analogy is partially useful because smaller cars will not get the same attention as they once did in FCA brood of brands. And that makes me think that apart from making money, one reason to have a full range is stop customers going elsewhere as they seldom come back. They keep the weeds down, so to speak.
A ghostly 607 and phantom Scorpio roll silently down my mind’s lane of memories…. they kept the weeds down too.
ANE sees the plan as being a move away from easily affordable to less affordable cars – a margins game not a volume game. In among the plans is talk about an FCA move to hybrid electric cars, something FCA has not been all that good on so far. In 2016 Chrysler only had a hybrid minivan. In future more and more Jeeps will be hybridised. Fiat cars are not as yet widely electrified (putting it midly) – you’d think maybe that’d be easy enough and a better place to start (look over to Renault and BMW for more electric cars).
“Marchionne, 65, who is set to retire as CEO next year, doesn’t see a future in making affordable cars in high-wage European countries, said people familiar with the automaker’s strategy”, writes ANE. What is interesting is that PSA, Renault and VAG among others do see future in making affordable cars in western Europe. What does FCA know that others don’t?
It’s about outlook. Marchionne is the most N. American of the European car industry leaders – his thinking is very much more like Ford and GM’s chiefs than the chiefs HQ’d in Yurrup. I expect some N American readers will write to tell me that that is not so odd since their HQ is de facto in Auburn Hills, MI and de jure in London. And SM is almost half-Canadian anyway.
Fans of the MiTo will be saddened to know that Alfa is ending production of this car, just a short decade since its launch. Reminder from WhatCar???: “Those who prefer petrol have three choices: a 105bhp, 0.9-litre TwinAir two-cylinder, or three variants of the same 1.4 – one producing 78bhp, another 140bhp and another, reserved for the sporty Quadrifoglio Verde, that develops 170bhp. Diesel lovers have two choices: an 85bhp 1.3-litre, or a 120bhp 1.6.”
Lest we forget in this torrent of FCA scepticism, I like this car for having three doors and a weird look. I am sorry it did not pan out and also sure the MiTo will be a very well-liked car in 2032.
Fiat – the “F” in FCA – will be soon reduced to making Polish Pandas and 500s and none of them will be diesels. Is that sad? Not really though if you proposed in 2002 that Fiat would consist of two models people would have considered you a skeptic or a lunatic. A prediction of similar craziness today would be to say that in 2035 Peugeot cars will consist of the 108 and 208 models. Or that Ford will only sell Kas and Fiestas by then.
I am often struck by the proposition that owning Chrysler and Jeep gave Fiat access to premium brands. I don’t see either Chrysler or Jeep as premium – not even in the way Alfa Romeo, Cadillac and Lincoln are premiumish – and certainly not in the way Audi or Jaguar are premium. Lancia… did someone mention them?
Discuss this part of ANE’s article which shows up my industry nous for what it is: “ FCA’s strategy in North America has so far paid off. The company, which almost halved net industrial debt in the first quarter, reported wider profit margins than Ford during the period and now has its sights on General Motors. Marchionne is aiming to better GM margins in North America before he steps down next year.”
I suppose if you compare FCA to other American car makers they can look relatively good but that’s because the N. American car makers are not really very healthy deep down – lurching always from crisis to triumph in that capitalist lurchy way.
I went over to car sales base (Bart Demandt never rests!) to see what the stats looked like before wrapping up. I see another reminder that Ford is giving up on the saloon car market. So, yes. Lurching.
Automobile summed up FCA’s position in the US as number four, down 8 percent. Honda USA are next in line with only two brands to manage and growing ever so slightly. So – yes, FCA can look good and also not so good depending on how you look at things.
That returns to the start: more surprising developments from a car firm that seems to be scripted by Kevin Lynch.