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The loss of 200 and Dart....

Discussion in 'Mopar News' started by CDJSalesPro, Dec 2, 2017.

  1. Judas Shuttlesworth

    Judas Shuttlesworth Active Member

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    You can't have it both ways.
     
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  2. DAGAR

    DAGAR Active Member

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    I don't understand your comment. I explained that the circumstance for Dart/200 and Fiat in the US are very different. That's two different scenarios that lead to two different solutions, not "both ways". Most of this discussion is lost in a "fairness debate" - hey they got rid of the vehicles I like and kept ones I don't - NOT FAIR! Well, that's life. If we look at it from a completely pragmatic perspective the decisions to date as painful as they may feel make sense.
     
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  3. aldo90731

    Level III Supporter

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    What are 26,000 Fiats going to do to CAFE numbers, really?

    Besides pissing off 26,000 additional innocent customers, that is...
     
  4. DarkSky

    DarkSky Moderator
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    In less than a week this thread has generated 20 pages of arguing over the same points that have been argued over for months now. At this point all that we can do is wait and see what FCA has planned.
     
  5. aldo90731

    Level III Supporter

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    I don’t deny Marchionne had his reasons for deciding as he did. The point I keep trying to make is that there are other perfectly valid reasons for keeping them.

    My personal feeling is, had he been aware of those other perfectly valid reasons, I doubt he would have pulled the plug on those two cars. Or at the very least, he would have drawn a more business-savvy timeline and transition plan.

    True, I don’t know for a fact whether he was aware of all the implications; I am simply going from being familiar with that other market information myself, from a tendency I see in Marchionne to ignore it, and a pattern I see in other —arguably more successful— automakers for not ignoring it. Ultimately, no automaker can remain successful over the long run, regardless of its short-term financial goals, if it keeps ignoring the laws of the market.

    But we keep going around in circles...
     
  6. KrisW

    KrisW Active Member

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    There is. 500 is not an expensive car to make, even at low numbers in Saltillo, and MRSP is high for this model. Using the same price advertising rules as the US market (i.e., excluding sales taxes), the mechanically identical FIAT Panda sells for $9,000 in Europe as a 5-door; the basic 500 starts at $13,000 but almost no cars are sold without extras on the order. Panda is a profitable model at its price, and there is not $4,000 of additional content in the base 500 model. Even if you allow that the Tychy, Poland plant is much more efficient per vehicle (as it makes 400,000+ cars a year), there's still a lot of scope for discounting on 500 without losing money.

    The only NAFTA capacity consumed by the FIAT brand is the line at Saltillo that was provisioned for 50,000 units per year, but which has probably been reduced down to 30,000 by now anyway. (For what it's worth, I believe 500 production will end at Saltillo as soon as that plant gets modernised, and 500 product for NAFTA will come from Poland thereafter). Everything else is overflow from profitable European-market plants.
     
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  7. MJAB

    MJAB Well-Known Member

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    Upgrade works on the plant that is manufacturing the Fiat Tipo / Egea / Dodge Neon were completed about mid 2017. Si now they have increased capacity, if I am not wrong, now the bottleneck is the paintshop.

    Will Tofas be source of some additional models for U.S.A.?

    note: Tofas is a joint venture between FCA and Koc Group.
    FCA costs are shared with Koc Group.
    From Tofas arrive also the Ram Promaster City, contract from 2014 to 2021, minimum 175k units.
     
  8. valiant67

    valiant67 Rich Corinthian Leather
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    But it does matter. Just because the cars exist doesn’t mean there is zero certification costs to sell them in the US. Not to mention the corporate overhead for them, advertising, parts, warranty, etc. They are at best zero margin, likely quite a financial drain. Keep them where they sell well and save money.
     
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  9. somber

    somber 370,000 miles
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    Agreed. I don't think that's why Fiat USA is kept around - if it were, then I'm sure there was a MUCH stronger case for keeping Dart/200, because they had to be having 10 times the positive impact to CAFE numbers that Fiat has.

    My hope is that Fiat is being kept around because they're secretly developing a new Dino that they're going to spring on us and it's going to be awesome. Well, I don't really have any reason to expect that...but I can daydream.

    I think it was a bad decision to delay a Dodge version of Giulia. The last estimate I heard from RRB was that it was looking like not until 2022 or 2023. That's a long time for the CDJR dealerships to go without a smaller sedan to sell.
     
  10. aldo90731

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    I hear you. And I don’t dispute KPMG’s findings. But KPMG is not an automaker.

    In its simplest terms, the job of an automaker is to uncover consumers’ unmet needs and develop a vehicle that gives it to them.

    Over the years I heard auto clients tell me things like “the 2-door coupe is dead”, “the minivan is dead”, “RWD is dead”, “the V8 engine is dead”, etc. And every time, KPMG, or some other prestigious consultancy, had a million-dollar study telling them they were right. Until some astute automaker would figure out what consumers really wanted, and seemingly come out of nowhere and give consumers precisely what they wanted.

    The 2-door coupe was dead until Ford came up with the 2005 Mustang. That car was such a hit that it singlehandedly turned around those segment’s fortunes, forcing Dodge and Chevrolet to respond. Now even Toyota is looking to bring back the Supra, after having given up on coupes for decades.

    The minivan has been given for dead since I can remember. I have to give credit to both Chrysler and Honda for sticking to it and trying real hard to figure out how to revive the category. It looks promising, but it is not out of the woods yet. Meanwhile, Toyota appears content letting Honda and Chrysler figure it out, and keeping its toes in the segment with Sienna.

    The RWD non-luxury sedan was dead until Chrysler launched the 2005 300. That car launch singlehandedly TRIPLED purchase intentions for the entire Chrysler brand over a six month period. This accomplishment is simply unheard of in this business. Chrysler scored such a homerun, that both GM and Ford were forced to explore bringing back their own RWD sedans, and others like Acura and Nissan to pay attention. The wholeness of 300’s original design speaks for itself today by still selling in decent numbers despite the cold shoulder it continues to get from FCA.

    The V8 engine has been written off too many times to count. More recently, positioning the 5.7 V8 as a HEMI was another marketing coup, and mating it to the Chrysler 300 —and later Dodge Charger and Challenger— was simply a stroke of brilliance.

    In my opinion, the old Chrysler Corporation had a knack for pulling these unexpected tricks more regularly. But regardless, even if Marchionne didn’t want to spend his organization’s resources tied up uncovering sedan consumers’ unmet needs and wants, it should have stayed in the game until Toyota, Honda or GM did. Because that’s precisely what Toyota and Honda are doing right now, and is only a matter of time until someone does.

    The problem for FCA is, once someone else figures out what sedan owners really want, they will reward that automaker just like they reward Chrysler with Pacifica and, still, with 300. But at that point, FCA will be late to the party by many years. Because even if it scrambles at the last minute to bring a foreign-made Fiat with a Chrysler grille, in the interim years it already lost HUNDREDS OF THOUSANDS of sedan owners who went to the competition, and don’t give a hoot anymore about Chrysler...or Dodge...or Fiat.
     
    #390 aldo90731, Dec 7, 2017
    Last edited: Dec 7, 2017
  11. Judas Shuttlesworth

    Judas Shuttlesworth Active Member

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    Pragmatically, FCA should be building low margin cars that actually sell with that capacity as opposed to ones that don't.

    It's not about "fairness", it's about common sense.

    Common sense says you don't throw away billions in investment. If you have to move the line, then move it.

    At the very least Tipos and Neons should be rolling out of Toluca instead of the 500.
     
    #391 Judas Shuttlesworth, Dec 7, 2017
    Last edited: Dec 7, 2017
  12. Charger383

    Charger383 Member

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    Not just that -- but the Dart had international potential that was squandered. The Viaggio (Chinese Dodge Dart) sold better in China than the majority of the Fiat USA lineup...... And yet again, the Fiat models get a pass (and don't deserve it).

    Fiat Viaggio China auto sales figures (at http://carsalesbase.com/china-car-sales-data/fiat/fiat-viaggio/ )

    The Dart/Viaggio was a more viable product than a 500L and even probably the Spyder (even though that is one of the products I actually like).

    What does the Fiat USA lineup do well at.
    1) They sell way below sales forecasts.
    2) Dealers need subsidized rents because they are losing so much money
    3) The entire lineup are low-margin, low MSRP vehicles
    4) They are nearly always dead last in all Quality and Reliability Ratings
    5) Lose a ton of money on each car because of low residuals and the highest lease rate in the industry (hovering around 78% of all Fiats in the USA)

    So what's the point? If profitability is their main focus -- then Fiat USA should have been retired 3 year ago.
     
    #392 Charger383, Dec 7, 2017
    Last edited: Dec 7, 2017
  13. Judas Shuttlesworth

    Judas Shuttlesworth Active Member

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    So the fact that Fiats don't sell is the justification to keep building them?
     
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  14. Charger383

    Charger383 Member

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    Not just that -- but the Dart had international potential that was squandered. The Viaggio (Chinese Dodge Dart) sold better in China than the majority of the Fiat USA lineup...... And yet again, the Fiat models get a pass (and don't deserve it).

    Fiat Viaggio China auto sales figures (at http://carsalesbase.com/china-car-sales-data/fiat/fiat-viaggio/ )

    The Dart/Viaggio was a more viable product than a 500L and even probably the Spyder (even though that is one of the products I actually like).

    What does the Fiat USA lineup do well at.
    1) They sell way below sales forecasts.
    2) Dealers need subsidized rents because they are losing so much money
    3) The entire lineup are low-margin, low MSRP vehicles
    4) They are nearly always dead last in all Quality and Reliability Ratings

    So what's the point? If profitability is their main focus --
    Agreed, the Tipo/Neon should be available for sale in the USA -- just to keep Dart / Avenger buyers from leaving to buy cars from competitors. A Jeep doesn't serve everyone's needs and never will. Crossovers are at the point where they are now getting major incentives -- because supply is now beginning to exceed demand.

    There is a $5,000 incentive on Jeep Renegade 4x2 Limited right now -- That's crazy high. I don't remember the Dart ever going that high.
     
  15. Judas Shuttlesworth

    Judas Shuttlesworth Active Member

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    I wish I could upvote this at least once for each 500L sold in the US.:D
     
  16. Charger383

    Charger383 Member

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    That is very true. The 9 speed in the redesigned car turned out to be a disaster -- they should have kept the vastly more reliable 6 speed from the previous generation. I suspect that decision came from marketing and not the engineers.
     
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  17. MJAB

    MJAB Well-Known Member

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    Most of the examples You made is about creating a distinctive value that the customer would want to pay for.
    But that does not apply to a generic sedan, that I could name "appliance", whose main reason of purchase, for vast majority of customers of that kind of vehicles, is to have a transportation tool with low cost of maintenance and trouble free.

    FCA is too small to compete in "appliances" in a market that is shrinking.
    Had/has to invent something else.
     
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  18. DAGAR

    DAGAR Active Member

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    Perhaps, Valiant, but there is a need to sell the Fiat 500e in CA to be allowed to sell other cars there. Perhaps Pacifica Hybrid is replacing that need and I also believe there is a cost to stopping that vastly exceeds the cost to continuing at a small loss. This will be mostly from financial penalties in dealer agreements. There's a big difference between discontinuing models and brands. Especially when many of the dealers have standalone facilities that sell only that brand.
     
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  19. MJAB

    MJAB Well-Known Member

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    Dodge Dart and international markets.

    - Dodge Dart is a sedan too big for most international markets.
    - In some international markets "sedans" are rare cars in manufacturers lineup.
    - CUSW is too expensive for markets in which sedans have already a big market, even if shrinking also there.
     
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  20. aldo90731

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    It is also a matter of business diversification and lowering financial risk. Selling fewer units at a higher margin, as opposed to more units at a lower margin, maximizes profits but only in an upturn; it maximizes losses in a downturn, by making the automaker more dependent on each unit sold. For instance, if FCA can choose to make $100,000 in profits by selling 10 Hellcats or 100 Challenger SXT, the latter gives FCA more flexibility if economic or competitive conditions change. In an economic upturn, for each additional Hellcat FCA adds $10,000 in profits. However, in a downturn, for each Hellcat not sold, FCA doesn’t get $10,000; for each Challenger SXT not sold FCA doesn’t get $1,000 in profits. In other words, Challenger SXT gives FCA more cushion.

    Many automakers, not just FCA, learned the wrong lesson from watching German luxury automakers sail through economic recessions relatively unscathed.

    They think High Margins vehicles = Sales resilience. But this is not true. There’s a fundamental difference between Mercedes or BMW and FCA’s clientele: individual solvency.

    In economic booms, the average FCA customer will stretch himself/herself financially to buy a high margin SRT or Overland; the downside is, in economic downturn, s/he won’t buy anything until household financials improve. Affluent buyers don’t have that constraint.

    This is a key part of the reason both GM and Chrysler —and almost Ford— went under during the last recession: over-reliance on high-margin trucks and SUVs left them exposed when those buyers shifted to cars. The prevailing explanation is that selling too many gas hogs was the problem. That was only half the problem; the other half was: domestics didn’t offer much that wasn’t a high margins truck or SUV that was worth buying, so those buyers flocked to Toyota, Honda and Subaru.

    And this CEO wants to repeat this all over again.
     
    #400 aldo90731, Dec 7, 2017
    Last edited: Dec 7, 2017
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