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The other shoes, ready to drop

by David Zatz on

As 2016 comes to an end, and most of Auburn Hills is spending some time with their families or friends, we wonder when the other shoes will drop — and there are a lot of them.

First, there’s the ever-present sword hanging over us — another merger or takeover. Will Fiat Chrysler Automobiles become, say, Fiat Chrysler Suzuki, or will it turn into GAC Fiat, Tata Fiat, or Global Motors?

Second, there’s the fate of Chrysler. We see, through the fog, at least one crossover (minivan-based, Windsor-made), one small car (Turkish made Neon), but at any point, someone could say, “Shouldn’t we try selling those as Fiats?” or “Hey, maybe Lancia would do better in the United States than Chrysler.”  Still, here’s our projection: the second shoe will be a good happy shoe, with a quick Chrysler Neon import, a slower Chrysler 100 (Newport?) large-compact or small-midsize based on the Neon as Compass is based on the Renegade, and two crossovers. Much will depend on the success of the Pacifica; if customers keep flocking to Caravans and ignoring Pacificas, it may be bad for Chrysler.

Pietro Gorlier and Ralph Gilles

Third, there’s the succession, which may become clearer as it gets closer. Sergio Marchionne plans to leave in 2018 — most likely at the very end of 2018. Who will replace him? Will it be the British head of Jeep and Ram, Mike Manley? The Canadian head of sales and Alfa Romeo, Reid Bigland? The Europeans’ choices, chief technical officer Harald Wester and chief operating officer Alfredo Altavilla? Or the Italian leader of Mopar, Pietro Gorlier?

Fourth, there’s the health of FCA itself. With demand for cars in the United States suddenly dropping, where does FCA find itself in sales and profits? Can it make the 2018 deadline for having net debt at zero, without selling something it’ll regret losing?

Another, related shoe — how will the Ram 1500 fare against new competition from Ford and Chevy pickups with nine and ten speed automatics and, yes, light diesels? We may find out next year. Come to think of it, will the Pacifica and Caravan stand up against a new Sienna and Odyssey? The latter uses the same nine-speed as the Pacifica. How long before Toyota makes its own hybrid minivan?

Nobody knows what will happen to fuel-economy and pollution rules-and-regs, while oil prices seem destined to stay at well below half of their recent “new normals.” Cheap gasoline doesn’t mix well with mandates for better gas mileage, but those mandates may well evaporate, with Congress on the record as opposing them. No amount of rule-making can stop Congress from simply changing the law. Do buyers really care about gas mileage? We may find out soon.

One shoe that’s been talked about quite a bit is the impact of an aggressively protectionist trade policy on automakers who rely on Mexican parts. That’s probably not a real issue, since the men in charge are keeping their businesses — which rely on cheap Mexican and Chinese labor. Still, if it came to pass, it would be bad for GM and Ford, and would hurt FCA as well — right in the profit-center Hemi and Ram pickups, not to mention hopes that Toluca’s Compass will flood American streets.

There are a lot of “other shoes” getting ready to drop in 2017.

If you are commenting on this post, I would appreciate your not writing about how Trump will save/destroy the world. Thank you.

 

David Zatz founded Allpar in 1998 (based on a site he had begun in 1993-94), after years of writing reviews for retail trades. He has been quoted by the New York Times, the Daily Telegraph, the Detroit News, and USA Today. Before making Allpar a full-time career, he was a consultant in organizational psychology. You can reach him by using our contact form (much preferred) or by calling (313) 766-2304


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