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Chrysler-Fiat Alliance

by David Zatz. Revised June 6, 2010. Also see "Fiat cars and trucks" and "The Five Year Plan"

The Grand Chrysler-Fiat Plan

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Starting with the Grand Cherokee and finishing with the Jeep Wrangler (2012 model year), the Pentastar V6 will quickly replace all other V6 powerplants. The World Engine will be enhanced with MultiAir and direct injection, helping flatten the torque curve and increase efficiency. The four speed automatic will be dropped, the six speed made standard in most cases; a seven speed is rumored for the LX, and an eight speed is planned for SRT and Cummins diesels.

New interiors and refreshed exteriors are being added to Avenger, Sebring, and minivans within one year. (See the Grand Plan)

All Chrysler cars below the LX in size will move to Fiat platforms [dimensions], but most will have at least some Chrysler engineering and design - only the smallest are being imported "as is" from Fiat.

Dan Minick has spent a great deal of thought and effort on bringing together what the product line will look like. Remember that this covers platforms; two cars on the same platform can look and feel completely different (as an example, the solid-rear-axle Dodge Challenger Drag Pack vs the V6 Chrysler 300 - and those cars are closer together than they ideally would be. Other examples are Audi TT and Volkswagen Golf, or any Scion and Toyota Yaris.)

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Dan noted that:

  • Fiat/Suzuki models for Europe are built in Hungary (the SX4 for the US is sourced elsewhere); a linkup between Volkswagen and Suzuki may cause that joint venture to fizzle out. The Fiat Sedici is a niche model that might be replaced with the B and C segment "Fiat-based Jeeps."
  • The Brava (Multipla) might be phased out in favor of a Journey-based vehicle. The Doblo could also fill that segment. Multipla might continue but there do not seem to be future long-term plans for it.
  • The Fiat/GM premium platform (e.g. Croma) was dropped by GM, where it had been meant for Saab. The next Alfa Romeo Giulia, replacing the 159, may move to the D-segment version of the C-EVO or to the LX platform.
  • Some of these Fiat B and C platforms will eventually wither away as models are replaced; SCSS is currently favored in B, while C-EVO is the future for C and D, and LX/LC/LY for D and E rear-drive models.
  • Liberty is moving to the extended version of C-EVO. Nitro might continue, with its tooling operational in a lower-cost country for sale outside North America.

PT Cruiser production will be ended at the end of 2010. The Charger and Challenger will continue but 200C will not join them. Chrysler is to regain its old sense of style, performance, comfort, and reliability; Ram to focus more on truck buyers' needs; Dodge to re-image and youthify; and Jeep to return to its roots and bring more Wrangler-based models.

The new Chrysler Group

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Chrysler Group LLC is now 55% owned by a pension fund, 20% by Fiat, 25% by the U.S. Treasury and Canadian government. The pension fund, which has no voting rights, plans to sell their equity as soon as it is economically feasible.

Fiat will get, at long last, a full-sized Alfa Romeo design and one third of Chrysler Group, as well as serious access to one of the world's largest auto markets. Chrysler also benefits, getting the small cars which, thanks to nine years under Daimler, they could no longer create on their own, and access to worldwide markets. Together, the two companies will be in a much stronger position because their technologies, markets, and products are almost completely different, but both are mass-production manufacturers.

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Fiat's Case/New Holland and Latin American production show that Fiat is very much unlike Daimler in its handling of subsidiaries; they seem to prefer mutual profitability to ego and domination. Fiat officials have repeatedly visited Chrysler plants, getting off the guided tour and talking to regular line employees; and they have reportedly been very impressed with what they've seen.

The current plan is to essentially merge Lancia and Chrysler in Europe; both are headed by the same person, and Lancia will start using Chrysler vehicles as a basis for their own larger offerings. Chrysler will be able to sell more vehicles around the world, especially Jeeps; the Chrysler and Dodge vehicles will sometimes be sold as such with Lancias added under their names, and sometimes will be sold as Lancias.
(Dodge will be restricted to Challenger, Charger, and Viper in Europe; Chrysler will be used in the UK and Ireland, and Lancia will be used in continental Europe.)

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Projected Alfa Romeo version of 2011 Jeep Grand Cherokee (courtesy JackRatchett)

Sergio Marchionne is CEO of both Chrysler and Fiat. He has shaken up the management structure, giving the brands independent leadership. His approach is to give executives multiple jobs, e.g. in charge of both a brand and overall sales, or a brand and overall product planning, or two brands (one in Europe and one in North America). Numerous executives have left suddenly under his restructurings, and some Fiat people have been brought in at high levels.

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In the U.S., the Fiat brand will be used only on the Fiat 500 series small cars - which will be sold at Chrysler (not Dodge) dealerships. Chrysler will have little, if any, engineering responsibility for the A/B (small) cars.

The new C/D (compact and midsized) cars are an open question. The Avenger/Sebring will be reworked to extend their life to at least 2012. The Avenger/Sebring's perceived weak points - engines and styling - can be remedied with the Pentastar V6, Fiat's four-cylinders, and a reskinning.

A nine-member Board of Directors includes three directors appointed by Fiat, four directors appointed by the U.S., one director appointed by Canada, and one director appointed by the Retiree Medical Benefits Trust (VEBA). The Board named C. Robert Kidder as Chairman.

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The Fiat 500 may be the first new arrival. Roberto Giolito, designer of the popular 500, said (June 30, 2009) that Chrysler will build four versions of the mini-car beginning in 2011. The lineup will include the standard 500 hatchback, a convertible, a station wagon and a sporty "tuner" hatch based on the Abarth version of the 500. According to Fiat, an all-wheel-drive CUV is a possibility. All the versions will be sold as Fiats. Production may be at a plant in the U.S. or at Chrysler's Toluca, Mexico assembly facility.

Fiat will use the LX platform for an upcoming, long-planned Alfa Romeo, and will have its own version of the Grand Cherokee. In the US, Fiat will sell most vehicles under the Alfa brand, with just the 500 showing up as a Fiat. Lancia may return, as well as (or instead of) Alfa Romeo; but Alfa is expected only to reach 70,000 annual sales, with Chrysler brands having the lion's share.

Chrysler will use a Fiat commercial van, based on a Fiat design and made in North America, to replace the Mercedes-Freightliner Sprinter.

The Alfa Romeo version of the Dodge Charger and Chrysler 200C

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Dan Minick wrote in early 2009:

The successor to the big Alfa 166 (executive sized 4-door), is the 2012 Alfa 169. It was suppossed to have been launched in 2009. For several years, Alfa has been poking around looking for a suitable platform' on which to base it. They want a return to rear wheel drive. The Maserati Q platform has been deemed too expensive. Talks were held with Daimler several years ago, and a plan was underway to base it off of an E-class platform, but in 2007 agreements broke off with Daimler due to difference of opinions and plans. So, the search for a suitable platform was under way again.
The Fiat-Chrysler deal: why Fiat?

by David Zatz

Outside of Jeep, Chrysler did not, after years of Daimler domination, have a serious presence outside North America, and with no domestic minicars. Chrysler's international momentum of the 1990s, including a thriving business in China, was dropped by Daimler.

Under both DCX and Cerberus, Chrysler said it needed a collaborator to make a small car, and was working to badge-engineer with Nissan, Chery, and possibly others. Constant engineering reductions also left Chrysler without a strong mid-sized entry - where Chrysler used to dominate with the Valiant, Duster, and Dart, and put up a strong fight with the Reliant, Neon, and Cirrus/Stratus.

Fiat is one of the few companies that did not compete against Chrysler in any meaningful way. The two have barely any geographical overlap and even less product overlap.

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Today's Fiats are not the poorly assembled cars of the 1970s. They are technologically advanced, well-made, and solid.

The new cars will be made in the U.S. and Mexico at Chrysler plants. Fiat engines will be made in Dundee, as far as we know. The array of technologies gained by this is impressive to say the least, and includes diesels. There will be no need to link up with Chinese companies that will soon become competitors.

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Chrysler will get small and mid-sized cars, small engines, lightweight transmissions, new fuel saving technologies, new distribution channels with established names, and an equity owner that has an interest in Chrysler's success, with no emotional need to destroy the company, and a history of successfully managing American companies.

There are concerns. This will make Chrysler seem foreign-owned again. Fiat will get up to 35% of Chrysler regardless, but they can buy the VEBA's shares as they are put onto the market and end up with over 50% ownership (though if they are smart, they will not go over 49%, which would make Chrysler foreign-owned and take it off the stock index funds that would normally hold Chrysler stock after a public offering). Both parties in Congress seem to want to destroy the company, since President Obama rejected Congress' demand to put Chrysler into liquidation - and both parties appear to believe industry is unnecessary to America's economic future.

Management changes (June 2009)

Each brand (and Mopar Parts / Service) will get a president and CEO, with full profit and loss responsibility, to avoid "free rides." Marchionne said, "Control over commercial and industrial investments is related to the brand. Therefore we have developed a matrix-based organization where team work and a disciplined management process are at the core of its success. Understanding the management decision-making process and individual roles are key."

June and October 2009:

Peter Fong was promoted from Director of the Mid-Atlantic Business Center to be President and CEO, Chrysler Brand, and leader of Chrysler Group sales (replacing Steve Landry, who will stay on for the transition). He was replaced after a few months in both roles by Fiat man and current Lancia CEO Olivier Francois. In Europe, the Chrysler and Lancia brands are reportedly to be combined.

Michael Manley, formerly in charge of international sales and global product planning, took over Jeep and Chrysler Group product planning, coordinating product planning for all three brands. Joseph Veltri, product planning lead and head of truck/SUV product planning since July, was put in charge of product planning across the group. Veltri joined Chrysler in 1988 as an analyst, leaving KPMG to take the post; he was later put in charge of Dodge Truck marketing and product planning.

Michael Accavitti, formerly Dodge marketing director, was in charge of Dodge and C.G.-wide marketing, advertising, and brand development. He lasted only a few months before being replaced by Ralph Gilles, who will also lead design.

Pietro Gorlier, of Fiat and Case New Holland, has been placed in charge of Mopar parts and service, and customer service as a whole.

Fred Diaz, a 20-year Chrysler veteran from the sales, service, marketing, and customer relations side, was put in charge of the new Ram brand.

Engineering and manufacturing

Scott Kunselman, formerly truck product team leader, leads product and advance engineering, replacing Frank Klegon, who will retire. Ralph Gilles continues to lead the design. Frank Ewasyshyn continues to lead manufacturing, Doug Betts continues to lead quality, and Scott Garberding continues to lead procurement.

Michael Keegan, former volume planning and sales operations head, leads supply chain management, including volume planning and logistics, "driving dramatic improvements in service levels, working capital efficiency and complexity reduction; optimizing demand and supply to benefit balancing the needs and requirements of the individual brands..."

Mark Chernoby leads C/D Segment (C and D refers to compact and midsized vehicles, not Chrysler and Dodge) Product Engineering - covering Caliber, Patriot, Compass, Avenger/Sebring, and any future vehicles in the class.

Sales, service, and support functions

  • Chrysler de Mexico and Chrysler Canada are still led by Joe ChamaSrour and Reid Bigland, respectively.
  • Peter Grady leads dealerships and fleet sales; he moves up from heading Franchise Planning and Administration.
  • Richard Palmer leads Finance as CFO; a former Fiat man, Palmer replaced Ron Kolka, who is staying with the bankrupt Chrysler LLC.
  • Jan Bertsch continues to be Treasurer and CIO.
  • Holly Leese continues to lead Legal.
  • Gualberto Ranieri, another Fiat man who worked with Case New Holland, leads Communications, taking over from Nancy Rae, who continues to lead Human Resources.
  • Laurie Macaddino leads Audit; she was the Vice President, Finance Operations.
  • John T. Bozzella continues to lead External Affairs.
  • Barb Pilarski leads Business Development; she was recently Executive Director, Mergers & Acquisitions, NAFTA and South America. VansReviewsFreemontForum

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