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The Aldo plan

by David Zatz on

Aldo, an Allpar member who works in customer research, laid out his plans for FCA US going forward. Allpar does not necessarily endorse the plan, but it may be worth some thought to examine it. 

  1. Make quality the most overriding priority — in the product,  the customer experience, and manufacturing; and a focus in marketing
  2. Pair Chrysler and Jeep in certain showrooms, possibly including Alfa Romeo — the upscale brands
  3. Pair Dodge and Ram in showrooms — the “blue collar” or muscle brands. Each would pair one popular, profitable brand with one less popular and profitable

  4. Focus Chrysler on premium and performance cars, and Jeep on off-road capable SUVs.
    • All Mopars have the credibility to deliver performance. Chrysler would revert to its historical perch of somewhat lower volume, somewhat premium pricing
    • The customer experience at Chrysler-Jeep-Alfa dealers (and corporate support) would need to rival that offered by other premium brands.

  5. Let Dodge retake the volume role it played in the past
    • Make Dodge present in every segment, including crossovers, while Ram would keep pickups and commercial trucks
    • An overarching umbrella would will help FCA keep customers at a much greater rate, and increase marketing efficiencies
  6. Keep the Fiat focus on fuel-efficient, smaller cars
    • Remove Fiat from a customer-facing role in North America. Field those cars as Dodges here.
    • Leverage the Fiat name where it is well established, like Europe and the Atlantic coast of South America

This would a long-term project, not just because it takes time to rebuild quality, but also because it would need careful planning of a strategy that helps existing customers migrate to the right place.

Chrysler’s current role, as per FCA, is much tougher to accomplish than performance. Chrysler has never had to fulfill a high-volume role, notwithstanding isolated hot sellers in Chrysler’s past (PT Cruiser). FCA needs to convince a lot more people that Chrysler is a volume brand if it is fulfill that role.

When you do time -series analysis, there’s this thing my boss used to call the “U-curve” phenomenon: it is much easier to remind consumers about something, than it is to convince them of something different. In other words: it is much easier to regain a pre-existing market position, than it is to carve a new one.

There are plenty of examples of this on the market:

  1. It was much easier to get Dodge back into the fullsize pickup game with the 1994 Ram than it’s been for either Toyota or Nissan to break into it — but neither Toyota nor Nissan have the same problem in compact pickups, where they have an established credibility.
  2. It was much easier to remind consumers of Chrysler as a credible maker of large, powerful, comfortable sedans with the 2005 300C than it’s been for Hyundai or Kia with the launches of Equus, Genesis, or K900.
  3. It was easier to remind consumers of Dodge and Chevrolet as makers of muscle cars with the relaunches of Challenger and Camaro. Challenger was largely absent from the market for four decades. The styling and HEMI performance struck a chord right away.
  4. It is easier for Honda to remind shoppers of its sporty past with the recent launch of Type-R, than it is would to convince shoppers that Hyundai can build world-class sporty cars
  5. Toyota is looking to tap on similar “dormant” perceptions with upcoming Supra

Dodge has traditionally been a bread-and-butter brand for Chrysler. Bringing Dodge to a pre-established role is easier, faster, and cheaper than trying to convincing millions that Chrysler is now the bread-and-butter brand.

The devil is still in the details. the 1994 Ram, 2005 Chrysler 300, 2006 Dodge Charger, 2009 Dodge Challenger, and 2017 Chrysler Pacifica are all examples of home-run launches that achieved their restorative goals; the 2013 Dodge Dart and 2015 Chrysler 200 are not.

Dodge is going to have a hard time convincing anyone that it can build front wheel drive four-cylinder sedans as well as Honda or Toyota, after the Caliber and Dart. But that needs to be part of a long-term strategy, backed by a commitment to quality, and aided by careful customer retention plans.

A brand needs to build volume on the back of reliability, safety, and efficiency. Those are the pillars that drive consumer demand. Toyota and Honda built a profitable business on these pillars. Nissan has been trying to grow sales with Innovation that excites,  and has to resort to incentives. Mazda seems content with niche positioning, relatively low sales, and premium prices.

Roughly 10% of the buying population has some sort of a “performance” mindset. When you carve that up across however many manufacturers, there isn’t enough left to survive on.

You cannot have a marketing campaign that shows brats doing burnouts and establish a reputation for quality, safety, and efficiency. The two messages pull in opposite directions. This is why performance brands are, by definition, niche. When a niche brand like BMW wants to grow volume, it has to water down the product to appeal to the large masses of buyers.

Performance positioning comes accompanied by smaller volume and premium pricing. American manufacturers spent decades selling performance at blue collar prices, but that ended with two oil crises. Now Ford, GM, and FCA understand that they need to charge $70,000+ for a Hellcat, Z28, or GT500 — premium pricing that is the antithesis of volume.

Once a brand has credibility building quality, safe, and efficient automobiles, it can then do whatever it wants.

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