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Fred Diaz left Chrysler for a job heading up Nissan North America around two weeks after this interview. The position is arguably higher than his job at Chrysler, and likely requires less travel and shorter work-weeks.
What kind of differences can we expect in the Iveco Daily when you redo it for North America?
We haven’t announced whether or not we’re bringing the Iveco Daily to the US yet.
I would’ve sworn that you would’ve announced it.
No, we haven’t announced it.
Well, I guess I can’t ask about that.
No, I wish I could. I wish I had some information that I could talk to you about, but I can’t.
[Communications man]: We said Doblo is coming. We haven’t named it yet.
Oh, I was assuming that was ProMaster City…
Have we announced the name?
What’s ProMaster City then?
Where did you get that name from?
I don’t remember.
Male: There’s a copyright or trademark filing in New York eight months ago.
That’s probably where I got it from. I can’t recall.
That could end up being the name of the Doblo when we bring it, but we haven’t announced yet.
Sorry about that.
No, no, that’s okay.
Feel like I’m a man with a time machine all of a sudden.
It just means that you guys are on top of things.
[With regard to Daily], we are examining the business case for it. When you look at the size of the Class 1 market, that’s where the Doblo would place [and where Ram Cargo Van is], 37,000 [per year]. Class 2, that’s where the ProMaster’s playing, is 175,000, and then 3 and 4 combine to 50,000 units. So obviously we want to play in this market first.
Sergio has mentioned that we’re bringing the Doblo, and we’re examining the business case to see if the Iveco Daily makes sense to bring to the Class 3 and 4 market.
I can see that there would be a limited market…
Yeah, you’ve got to make sure you do it and you do it right and you have what’s going to make those that are already in the market buying want to gravitate to us.
I was looking at your plan for the next four years (from 2012), and I noticed the new Ram there for 2016, and in the Fiat plan for Europe, there’s an imported Fiat truck from the United States. Would it be crazy for me to think that we’re looking at a compact, mid-sized truck — the metric-ton that was talked about in ’09?
I’ll tell you what we’re looking at. We are heavily, heavily, heavily exploring the possibility of bringing a mid-sized truck to the market. It’s a very small market here in the United States, so you have to decide whether or not you’re going to play in that small market and be able to dominate that small market enough to build a business case that makes it worth going there, or you’ve got to decide that you’re going to bring a vehicle that’s so new, so unconventional, so styled right, good MPG and just the right amount of capability, that you’re actually going to grow that market.
You’ve seen Ford get out of that market; Chevy’s gotten out of that market; we’ve gotten out of that market. So it’s basically Toyota and Nissan that have that market all to themselves right now. For them, it’s probably a lucrative business case, because it’s just two players.
So we’re looking at many, many different things. We have a plethora of things that we can look at because of our partnership with Fiat, and we’re even looking at okay, if we want to build a truck like this, there’s also a need for a truck that’s similar in size but actually is metric ton capable from a payload standpoint. When you talk about the big dogs, you look at the continent of Asia, you talk about Europe, you talk about South America, a metric-ton truck that’s a mid-sized truck size is what they’re looking for. You’ve got to have a small vehicle, and that small truck has got to be able to just be a monster.
So we’re looking at the possibility of what do we do? If we want to bring back a truck like this to the US and we want to play in that mid-sized segment, what do we want? Do we want a truck that only plays in North America? Or do we want a truck that plays in North America as well as other continents around the world? Is it one truck? Is it two trucks? How do we brand the trucks? What brand would give us the best resonance out there in the marketplace worldwide?
There’s several different scenarios, options, packages that we’re looking at. It’s perhaps one of the most aggressive product planning things that we’re researching and looking at right now from a truck standpoint, but still no decisions have been made as to whether or not we’re even going to bring a mid-sized truck back to the US market or the worldwide market. That’s being a straight up honest with you as I can possibly be. That’s where we’re at. And we talk about it almost every week.
Not to shift gears or anything, but I understand that you’re in charge of operations in Mexico at this point. Can you tell me all the wonderful things you’ve been doing since you got there?
Well, I’ll tell you, one of the things that I’m most proud of is for the first time in history, last year in 2012, and we’re still there right now in 2013, we eclipsed Ford, as we were the fifth largest manufacturer in 2011 and last year in 2012 we eclipsed them, and we’re now the fourth largest manufacturer in Mexico in sales.
We’re pretty proud of that and certainly not resting on our laurels. We’re still pushing hard. Ideally, who wakes up in the morning and says, “I want to be number 4”? No one. Everyone wants to be number 1. And number 3, number 2, number 1 is a long ways off but nothing stands in the way of us at least trying to do that. First and foremost, we’re going to try to maintain that number 4 position and not go backwards.
Things are going pretty well. As far as living there and feeling, just on a personal note, do I feel uncomfortable? Do I feel worried? Do I feel scared? Never. I feel very good when I’m down there. A lot of it has to do with my cultural upbringing, being raised in a Latino/Hispanic environment in South Texas. So it fits; it works for me culturally and I fit in. I also don’t stick out like a sore thumb over there.
That’s one of our biggest achievements and accomplishments that I’m very proud of. We’ve got a good, young, aggressive and what I’m looking for whenever I build organizations is I’m looking for people who are humble and hungry. Those are the two qualities and everything stems from that.
I’ve got a great team of direct reports that I know are very capable of running the operations and making decisions even when I’m in the United States like I am today. I just got back from Mexico on Friday. I was there for two weeks. I spend about half my time there. It’s great. It’s great to learn different aspects, to learn a different country, different politics and a different culture as well, as not only do we run Chrysler, Jeep, Dodge, Ram and Fiat, we also have Mitsubishi. We distribute Mitsubishi vehicles there. It works pretty well for us.
Out of all those sales, once you subtract out the Hyundais and Mitsubishis, how is Chrysler doing?
Chrysler’s doing well. Chrysler’s doing well. Chrysler’s obviously the lion’s share of our sales, and Mitsubishi’s a small fraction of our sales at this point.
When I look at the sales figures, the Hyundai i10 usually comes up. I know it’s not sold as a Hyundai there.
It’s a Dodge.
It’s a Dodge, right. But if we exclude the Dodge-branded Hyundai vehicles, how are sales?
Right now our Hyundai sales account for 15% of our sales under the Dodge brand. We do well with their products. The only thing is, in some of the cases like the i10 and the Attitude, worldwide demand is difficult for them to meet, so we’re not getting as much of a product as we would like to get. We continue to work with them to try to fix that situation. If we can get more of those products, we’d be selling even more, but we’re doing well.
Jeep does well. Jeep does extremely well. Minivan does really well. Compass, Patriot, our number one selling vehicle down there is Journey.
Trucks are starting to see an improvement. We used to sell quite a bit of trucks down there, and then unfortunately with the key activity relative to the crime and the drug cartels, unfortunately people were getting their trucks stolen. Trucks were getting stolen from dealership lots. Customers didn’t want to buy them and dealers didn’t want to stock them, and so the truck market just collapsed. And not just for us. For Ford, GM, Chrysler, it just collapsed. We’re still selling a few at retail, but the majority of our truck sales are going to a few customers, municipalities, government suites. But we’re starting to see a resurgence now because it appears things from a crime standpoint are starting to improve.
Can you tell me something about the aftermarket builder and RV interest in the ProMaster?
Nothing that I can speak of. I do have some information on that but it’s nothing that I can share at this point because there’s still some things that are moving right now. We have an opportunity to partner with somebody. If it proves to be a good business for the two of us, we certainly will look at that. We’ve got some interesting things in the works, but I can’t speculate or talk about it, unfortunately.
But we’re excited about the fact that 4.5 million [Ducatos have been] sold and we’re on the third version of the new Ducato and do you remember the name of that RV company? There’s an RV company in Europe that is the biggest RV company in the world. I think something like 90% of the vehicles that they upfit and turn into RVs are the Ducato. It’s a great vehicle for that type of outfitting.
So it’s a great vehicle, and the things that we homologated to bring it to the United States, I think we’re going to do really well with that vehicle. I think the front-wheel drive application, we’re the only ones that have it, is going to be fantastic because it gives you a lower step-in height, which people that use that for work, that’s huge when you’re stepping up and in all day, every day, all week, all month, all year, their knees will appreciate it.
The front-wheel drive also gets rid of that transmission hump in front so it gives you a little more cargo capacity, and it also gives you better steering capability in snow, ice, and gravel roads when you have front-wheel drive applications.
That along with the best-in-class cargo space, best-in-class fuel economy, best-in-class torque and horsepower, best-in-class turning radius, our walls are the most vertical of any of the vans out there, which is why we have best-in-class storage capacity. Both our doors on the side as well as the door on the back allow you to put a pallet in with a forklift. So nine total best-in-class features that I think are really going to surprise the market.
We have given our ProMaster truck to several package delivery companies. They asked us not to say who they are, but think of the best you know of in the country today, and you’ll figure out. The feedback that we got from them when they were testing our vehicle for us to give us feedback was absolutely phenomenal. Best-in-class mileage. We’re not ready to announce our mileage, but they were very pleased with the mid-to-high 20s they were getting in their vehicles. We haven’t rated it with governments, so we’ll see where that comes in. So we’re pretty excited about that.
We also talked briefly about class 8 trucks. Mr. Diaz called going into Class 8 (tractor-trailer/“big rig”) trucks a shared dream, and said that they were still getting a case together, because it’s a completely different group of customers than the company has now; but they can tap Fiat and Iveco’s expertise in commercial vehicles eventually to make it happen, if the circumstances are right.
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