Not very well informed, and seems to be deliberately trying to be contrarian.

When compaining about Alfa Romeo being outsold by Dodge Dart, he ignores the fact that the 88,000 Darts sold would have brought in less money into FCA than those 20,000 Alfa Romeos. (Alfa Romeo's US sales are heavily weighted towards the high end, the share of Giulias that are QVs dwarfs the share of BMW 3s that are M3s). Actually the 10,000 Maseratis probably also out-earned Dart. There's a very big misunderstanding about volume versus revenue.

Yes, Americans would rather buy a Dodge than an Alfa Romeo... because Dodges are cheaper. What Americans definitely wouldn't do is pay Alfa Romeo prices for a Dodge-branded Giulia. The idea that FCA should have rebadged Giulia as a Dodge model shows an enormous misunderstanding of how brands work. Dodge has a strong brand, but it's based on value for money as well as performance - it won't support $35,000 for a compact midsizer like Giulia. (See Volkswagen's failure to move its uber-luxury Phaeton for a clear example of how you can't overstretch a brand - and the VW brand is much more upmarket than Dodge).

The fuel efficiency is misleading too - product mix is the issue there: FCA does have a problem of low mpg, but it sells more large vehicles than Mazda, Toyota, Hyundai etc. The proper comparison is with other truck-heavy makers like GM and Ford... when Ford's decision to drop Focus percolates through to the CAFE ratings, you may see that FCA is outperforming them. Meanwhile, #1 on economy Mazda has a problem: because it's heavily weighted towards cars, which are ruthlessly discounted to sell, and doesn't sell so many SUVs and pickups, it isn't making very much money.

Also, and I expected someone who covers automotive to know this, today's CUV mileage is equivalent to sedan mileage: UVs aren't body-on-frame like they were in 2007. While FCA can't and won't start making compact sedans if gas goes up, it will start making more compact and sub-compact CUVs. Its real answer to increasing gas prices is hybrid drivetrains, though.

That's the next criticism, actually: our author doesn't know about, or is ignoring FCA's published electrification plans, and the RAM hybrid and the hybrid drivetrain for Wrangler. Who else is electrifying cars of this type? FCA is hardly going to start making BEV compact sedans, because it doesn't make compact sedans, period. Someone who's claiming a position of knowledge about FCA should know about these plans, even if it's just to dismiss them out of hand.

Personally, I'm skeptical about the real demand for BEVs in the USA until driving range exceeds 500 miles on a charge, especially as US buyers' preference is shifting towards big vehicles again. But the European market definitely has a place for an electric city car with around 200-250 miles range. And of all manufacturers, only FCA has a nameplate in this segment that could command the necessary price premium (it has two, in fact: Lancia Ypsilon and FIAT 500, but Y is sold only in Italy).

Yes, there are problems in FCA - most critically: a product pipeline that was delayed two years in the name of reducing debt has left dealers with very little new product to generate "buzz", and the very real problem of what to do when a charismatic leader suddenly disappears. But this author misses those problems and picks a few straw-men instead. Lazy.

 

CUVs today do not have equal fuel economy to sedans. That is exactly why FCA lags the rest in fuel economy.

A Grand Cherokee and Chrysler 300 are the same class, but not the same fuel efficiency using the same powertrain.

While CUVs have closed the gap, there is still a difference in fuel economy.

Marchionne knew that FCA could not survive without a partner. FCA is a collection of niche brands that are all vulnerable. It does not have a broad base of business that assures its survival. Any faltering in Jeep or Ram and the company will be in financial trouble quickly.

 

I'm sure Apple would not agree with that statement.

 

FCA is so capital-allocation efficient that bare-survival is probably not at issue EVEN if there is a usa market serious downturn. (Jobs, plant closures, pay and benefit cuts, pension underfunding etc are another matter.)

What Marchionne was concerned about was the absurdly low return on all investors' capital OVER the business cycle: industry wide and not just at FCA+Ferrari+CNH, whether in germany, japan or korea. The returns of fca+cnh+ferrari have beaten allcomers hand-down over the last 8+ years, so.

Accordingly he has prepared the firm, PRECISELY by being multiple-niche-brand with a very very heavy accent on the global and globalizable brands (Jeep, Maserati, Alfa, Ram+Fiat Pro, Fiat latam, and also in a sense Magneti marelli.) The idea, it seems, was to ensure a continuation of fca's amazingly improved financial health at exactly the time pretty much all other large auto companies are seeing net profitability crushed, with little potential letup in financial pressures foreseeable......and THE first 'recession' (or worse) since 2008 is still nowhere in sight. I feel he succeeded, and the new five year plan/etc makes it very plausible that FCA will be among the 'hunters', as it were, rather than (yet again!)....prey. Imho expect one or even three large 'strategic deals' involving fca/exor within a year, ok within two, by which time a recession or much-worse will assuredly be truly upon the industry globally. Ford loses money everywhere in the world, except in a couple of nafta segments, GM almost ditto.....psa remains geographically over concentrated and subscale, JLR is subscale with collapsing once-global-industry-best margins, Honda has lost money most years of the last 5+, Hyundai-Kia's financials are spiralling fast downwards over the last 5+ quarters, etcetera etcetera.

 

Yesterday Auto News listed what it sees as Marchionne's Hits and Misses: Marchionne's greatest hits ... and misses

With regards to the article at the start of the thread: IMO, Marchionne's biggest blind spot was his belief that Americans and Canadians were willing to buy Italian cars in any significant numbers. That hasn't been the case in 40+ years. Despite spending many years and billions of dollars, FCA has been unable to change that.

Another was his belief that maximizing profits today invariably would result in a sustainable strategy for tomorrow. His predecessors in Detroit proved this to be bunk several times before.

 

He believed no such thing, since his decision making did not evidence any such, quite the opposite, since he always sought (all too successfully in the end: to play a good Long Game.) He stated repeatedly the only 'sustainable strategy for tomorrow' is sheer scale-economies aka 'consolidation' in one or several forms, and/or extreme prudence in capital allocation, as well as using every trick in the financial 'engineering' book available (such as palming off fca debt to ferrari during the spinoff, etc.) His predeseecors at chrysler Corp circa 1990/91, namely bob lutz and steve miller knew that too, which is the very reason they sought to sell off a then-but-temporarily hugely profitable and cash-rich Chrylser Corp to.....FIAT Group (declined in the end by Gianni Agnelli.) You seem to have GM, Ford, the UAW (?) and a post-Lutz+Miller Chrysler Corp in mind, which is very right, and still is am afraid, BUT they were/are in no sense predecessors of the Marchionne architect-ed FCA+Ferrari+CNH.

 

FCA is so capital-allocation efficient that bare-survival is probably not at issue EVEN if there is a usa market serious downturn. (Jobs, plant closures, pay and benefit cuts, pension underfunding etc are another matter.)

What Marchionne was concerned about was the absurdly low return on all investors' capital OVER the business cycle: industry wide and not just at FCA+Ferrari+CNH, whether in germany, japan or korea. The returns of fca+cnh+ferrari have beaten allcomers hand-down over the last 8+ years, so.

Accordingly he has prepared the firm, PRECISELY by being multiple-niche-brand with a very very heavy accent on the global and globalizable brands (Jeep, Maserati, Alfa, Ram+Fiat Pro, Fiat latam, and also in a sense Magneti marelli.) The idea, it seems, was to ensure a continuation of fca's amazingly improved financial health at exactly the time pretty much all other large auto companies are seeing net profitability crushed, with little potential letup in financial pressures foreseeable......and THE first 'recession' (or worse) since 2008 is still nowhere in sight. I feel he succeeded, and the new five year plan/etc makes it very plausible that FCA will be among the 'hunters', as it were, rather than (yet again!)....prey. Imho expect one or even three large 'strategic deals' involving fca/exor within a year, ok within two, by which time a recession or much-worse will assuredly be truly upon the industry globally. Ford loses money everywhere in the world, except in a couple of nafta segments, GM almost ditto.....psa remains geographically over concentrated and subscale, JLR is subscale with collapsing once-global-industry-best margins, Honda has lost money most years of the last 5+, Hyundai-Kia's financials are spiralling fast downwards over the last 5+ quarters, etcetera etcetera.

The problem is, even among the good sales results, there are sure signs that many models are long in the tooth and losing sales. Why are Grand Cherokee and Durango down in a hot SUV market segment where sales overall are up? Cherokee sales are up nicely this year, but look how the sales tapered off (and the incentives grew greatly) on the old model.
The capital saved for the past few years has created flatter or declining sales in many older models, a greater need for incentives to move those older vehicles (see 2018 Cherokee, 300, Journey, etc.), and greater expected costs to "catch up" in future years.
Also, without being political, had the US election turned out differently we likely wouldn't be celebrating a lineup of large, less efficient vehicles.
Let's look at the niches where FCA chose to play. Consider how many of those niches were decimated in 2008 due to recession and high fuel cost. The very plan that has lead to 'success" also leaves a great vulnerability should conditions change.

 

I completely agree. I don't think this is a SM criticism or rather an FCA management criticism but FCA has proven for a long time to be INCREDIBLY slow to make even the most minor cosmetic updates and refreshes to their vehicles. Many other automakers will make small updates to things like the grill or the easily changed pieces like the plastic molded front and rear clips. However FCA just leaves everything exactly where it is and how it looks until the next major model overhaul - some of which never seem to come. There's absolutely no way to tell a 2011 Grand Caravan from a 2019 Grand Caravan. Or a 2011 Journey from a 2019. When you have customers with those older vehicles returning for something new I'm sure it has to be a difficult sell to get them into the EXACT SAME vehicle they just drove onto the lot. This is why Grand Cherokee and Durango are flatlined or in decline (and especially given the price point of those vehicles I sure as heck wouldn't want to dump that kind of money on a vehicle that already looks like it's 7 years old).

 

It's not about units, though, it's about profit per unit. In 2007-2008, Chrysler was churning out expensive SUVs, but not making much money overall - when the bottom dropped out of big SUVs, none of Chrysler's other offerings were profitable enough to save the company. Cerberus did not care about long-term prospects; they wanted good "numbers" to make the company an attractive purchase in a couple of years: the investment they did make, in L-cars and Pentastar were as much about plugging holes in GM and Ford's future product portfolios as Chrysler's current one.

Fuel cost is something of a bogeyman: it's not the threat it was in 2008. Firstly, the United States now sources nearly all its petroleum needs from North America, and unless the USA declares war on Canada (which even with the current office holder is only an outside chance), there won't be queues at gas stations any time soon.

The second reason is that the industry is moving steadily towards electric traction - look at the 2020 and 2021 model year predictions from every manufacturer and you'll see batteries and hybrids everywhere. People who worry about fuel-price instability will buy hybrid versions of the pure-gasoline cars they love, rather than shift to a smaller car. Hybrid also makes fuel cost a smaller part of running costs: move from your gas CUV to a Hybrid, you might save $1000 a year on gas; move to a Hybrid sedan instead, you'd save $1,200 a year on gas, but lose the utility and prestige of the CUV.

Another was his belief that maximizing profits today invariably would result in a sustainable strategy for tomorrow. His predecessors in Detroit proved this to be bunk several times before.

The only way I can make that comment fit the history of the American Automotive business, is that his predecessors showed that you can survive for a long time on momentum and lobbying, with no regard for profits. GM's recent history should be enough to show that it is this that's bunk.

FCA is financially in better shape than it's been since the 1990s (for the part that was originally Chrysler), and it got there by concentrating on making money by making cars, rather than just "making cars". Meanwhile, General Motors is becoming a regional player in the global auto business right before our eyes because it has refused to make its product more profitable for fear of the precious monthly sales number dropping.

As Maserati and Alfa Romeo are growing year over year in the US market it's hard to say that they've "failed". Both have comfortably exceeded their best ever performances pre-FCA. When digging a grave, at least wait for the potential corpse to start looking sick first.

Speaking of illness, we had a small but very, very vocal cheerleading team for Genesis on here last year, claiming that Hyundai would do everything right that Alfa did wrong... where are they now?

 

Relatively nice tribute..up to paragraph nine.

In a nutshell, the author raises a glass for Marchionne (thank you), but then sings an oh-so-familiar song about the - certain peril - that is FCA(once Chrysler LLC, once Chrysler, once FIAT, and on and on). Any chance to get a "dig" in, I guess.

FIAT was never going to replace CDJR. To a certain extent, this was fully understood by SM(he may have dreamed, a little). But (ultimately), he knew that while 500 had succeeded nearly everywhere else in the world, NAFTA wasn't going to be a huge market. But that wasn't the point(or the real opportunity).

By fostering growth at "Chrysler" in "America" (which included taking the Jeep brand GLOBAL), SM could expand FIAT (w/the help and expansion of Maserati and Alfa). It is serendipity at its very definition - as none of it could have happened - independently.

FIAT doesn't need to succeed in "America" nor does Chrysler have to succeed anywhere else. It's the success as a whole, that's the thing!

Sergio Marchionne had that vision.

 

Someone put in their corporate mind that cosmetic changes aren't really needed, other then stripes, special edition models etc. Some of this has worked, but their mass market models, seems like for the most part get one minor refresh cosmetically then that's it. That works if your products aren't 12 to 13 years old. If your going to keep them that long, more investment is needed.

 

And that's where some of us enthusiasts here get frustrated. Yes we get the whole margins argument when it comes to why some products got axed prematurely, however it doesn't explain the complete absence of investment in some ongoing products. 2011 was when nearly the entire product line got massive investment and refurbishment. Finally, the DCX era of neglect and cost cutting was over! And now they've allowed many of those upgraded vehicles to rot on the vine. Like ok, so the new products are delayed and not ready for several years because the global brands are priority, but would it cost that much to upgrade those "placeholder" lines in the meantime? Take Journey for example. It's had zero sheet metal changes since it was launched. What if they took some of the updated Durango styling cues on the front clip and changed the tailgate to add the Dodge racetrack lighting? Then it would at least look consistent with its Dodge stablemates and appear fresh. I mean all of its trim levels still come with halogen reflector headlamps for crying out loud.

 

Maybe those refreshes in 2011 were done with bailout money?

 

It's not just the lack pf visible refreshes. It's failing to keep technology current in the older models. No 360º camera on the Grand Cherokee or 300 for example. I was truly surprised when lane departure was added for 2017 in the Durango.

 

I truly believe that in their original five year plan most of these models we're to be replaced, but that plan didn't pan out. Six billion for Alfa plus all the plant shuffles dried up their plan. No one will ever convince me that the money for Alfa will ever come close to paying dividends like an updated product line in North America would've. It's making money now, imagine what could've been.

 

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I think you're right. And if not 100% right on all specifics, then it's too close to quibble.

The North American market never seemed to be his strong suit.

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Well... remember, some of the “money for Alfa” was work on a common architecture, some was rebuilding factories, and some was going to be spent in Italy regardless. Six billion is not as much money as you think in the auto industry and it's amazing they were able to do what they did on that money. While Alfa may not pan out, putting six million into trying to make Chrysler a global upscale brand would have been riskier and harder to manage, and he saw that in the world ahead, the only way to succeed — given competition from East Europe, China, Korea, etc — is to design and build more desirable, premium cars so that you're not going after low-price buyers alone.

Another point is that Alfa was purchased with the inherent promise that it would be revived when possible, just like Lancia. They tried to build up Lancia and it didn't work, so they are trying Alfa. They changed their approach when they discovered with the Quattroporte and Ghibli that you have to pretend your mainstream and upper cars are totally different.

SM saved the remains of Chrysler, refused to do a merger that would not be good for Chrysler and Fiat alike, did not try to do “a sale—any sale,” and brought thousands of jobs back to the US and Canada from Daimler's and Cerberus' outsourcing binge. Keep that in mind when you're looking at the Alfa Romeo expense. He put Fiat onto a serious diet, more severe than Chrysler or Dodge, when he took over. Chrysler lost one car, the 200. (The PT was already moribund.) Chrysler has often sold just one or two cars with different trims and nameplates, too, historically. It proliferated in the 1980s but that weakened the brand.

He had some extremely tough choices. Alfa is in some ways a test-bed for Dodge now, according to some of the insiders here — they pioneer (expensive) and Dodge adopts the ideas that work and implements them their own way. That means technology moves faster for Dodge. In the past, they could try new things on Imperial...

Moving Chrysler up wasn't working. Cerberus tried it, FCA kinda tried it, to some degree Chrysler Corp tried it with the LHS and 300M. The Concorde sold like gangbusters but LHS and 300M really didn't, not without heavy discounting. In the later days DCX and then Cerberus tried “Chrysler starts where Dodge leaves off.” It didn't work too well. They could either revive Imperial, at that point, or revive Alfa, which had never really left. I don't have any great love for the Alfa brand, but I suspect it made more sense. Whether it works or not, is hard to tell.

Lexus worked very very well because Mercedes and Cadillac and Lincoln had all dropped the ball, and if you wanted a good, very quiet, very comfortable, economical, and above all reliable car, Lexus was the only way to go. Infiniti tried doing the sporty thing like Alfa is, and they failed. Acura, too, tried the sporty route, and they also failed. Maserati, you may have noticed, opted for the traditional American interpretation of luxury, which is the grand tourer, — good handling, big engine, lots of space and comfort — and while they didn't set the world afire, they made gobs of money and doubled their sales pretty easily.

Perhaps the new Alfa/Maserati media reach-out will change their fortunes? Or perhaps they will wow us with an electric car later.

 

I get what you're saying. Everyone keeps pointing to the 200 and the money invested. The 200 wasn't very well thought out. First off it should've been RWD like the prototype. It should've been bigger to accommodate more room in the backseat area. Ok it's gone now, and other then the Pacifica dealers have nothing other then the now ancient and soon to be dropped 300. If there really is a Chrysler brand CUV coming it can't get here soon enough. The Dodge situation is almost as bad, but they have a bit more time with it. But not much.

 

Maybe they figure they have to get a Chrysler CUV 100% right...no mistakes like with the 200.

 

Well, that's what they should do.

 

My opinion on why the 200 failed: other than the V6 AWD model (which was uncommon) it didn’t do anything that the competition wasn’t already doing. Styling was attractive, but not bold enough to stand out. Comfort was compromised by by the design, but was OK up front once you were in the car. The 4 cylinder and 9 speed didn’t always play well together. So all that was left was to compete on price, which they did with heavy discounts.

 

Money invested correctly in North American products is about as close to a sure thing as FCA has. In order for Alfa to make back it's money it has to sell very well in China and NA, that's not going so well at the moment.

 

The sad part was in order for a new 200 to be successful, it had to be lights years better then the old one. It wasn't. Now people point to the money that was allocated and say oh we gave the Chrysler brand this brand new car, spent however much, and it flopped. That's like asking a one armed wallpaper hanger to hang wallpaper.

 

Again it didn't flop the category flopped, and it was a Significantly better car then the old 200. And it doesn't matter how much one pretends it didn't happen FCA spent a ton of money and resources to make it a great car and give them a car. In the end it didn't matter how much better or even how much better it was, They could have dead copied the Accord and improved every aspect and the same decision would have been made because the category failed. In fact it would have failed more because the issue was cost, how to make a great vehicle with a lower cost structure to match failing margins in the category. The only flop was that it wasn't a CUV, that they did it in first place. While here you still see people making wrong argument that somehow it was a product problem, it was, that it was to darn short and has a trunk.

It was a two handed person hanging wall paper.... the problem is in not 1980 and who the hell wants wallpaper? The market doesn't want wallpaper, they want a barnwood accent wall instead. It could be gold leaf wallpaper people still don't want it. The only flop is hanging it in the first place.

I apologize to T_690 for not taking my own advice....

 

Do people remember when minivans were the hot segment and every brand had one in their lineup? As the market started to contract, the weakest nameplates started dropping away. They couldn't capture enough margin to compete with the juggernauts from Dodge and Chrysler. Soon sales stabilized as did which brands would offer a minivan. The same market process is happening with mid size sedans.

If someone desires to get back into a commodity segment, they need to introduce a vehicle that blows people away. Dodge did it with the BR Ram. Chrysler did it with the 300C. Ford did it with the 2005 Mustang. It's tough to catch lightning in a bottle.

 

Chrysler had two misses in this segment. I remember a year or so before the new Sebring debuted, all the in the know folks said wait till you see it, it's beautiful. Well, it fell flat on it's ugly hard plastic face. The rebrand into the 200 helped, but it was a bandaid. So Chrysler's reputation in this segment was tainted by the car the new 200 replaced. It may have been bad timing, but there was no love felt at the corporate level when the reviews panned the lack of rear entry ease and the overall size. Then the market began to shift, so it was an easy target. If everyone was so smart at the corporate level then the 200 would've been a CUV. Now poor Chrysler the brand is paying dearly for that one. And if I sound agitated I am. This brand is the only original thing left of the original Chrysler corporation. Plymouth, and DeSoto are gone. This is all that remains of what Walter Chrysler started.

 

I think it failed for multiple reasons, but everyone has their own personal fact as to why.


This is getting really old.

 

Yeah, personal facts are what made this country Great! That and Apple fritters and I dare anyone to prove me wrong!

 

Marchionne said the 200 was a poor design. Most people agree, except those who want to blame something else.

Yes, it happened at a time when sedan sales were shrinking and customers expected safety, efficiency and reliability....three things that FCA under Marchionne did not care about.

Maybe FCA changed in the last few years, maybe not. One quality report means nothing. It is all about the long-term.

Had FCA focused on quality, efficiency and safety in the years before the new 200, then designed a decent vehicle that wasn't undersized for its class (isn't that why people buy CUVS?) I would believe they understood the market.

Instead, they tried to chase everyone else with an inadequate product that was not efficient, not offering standard safety and not offering reliability (quality and customer service).

Sorry, but the market rightly rejected the 200 because FCA rejected what the market wanted.

 

Sorry, but the market rightly rejected the 200 because FCA rejected what the market wanted.

And the market wanted a CUV.

 

I really, really , really enjoyed driving my 2015 200 Limited for 26,000 miles. I took a really, really dim view when the boss trashed it, kicked it to the curb and sentenced it to lower resale. My next purchase very likely will not be FCA. The learned aldo gets people like me.

 

I really, really , really enjoyed driving my 2015 200 Limited for 26,000 miles. I took a really, really dim view when the boss trashed it, kicked it to the curb and sentenced it to lower resale. My next purchase very likely will not be FCA. The learned aldo gets people like me.

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I need four vehicles. Right now. Each have to come in their own time, however - Off-Roader will have to be a late model 4Runner or Tacoma PUp. 85% Up 15% Down for 4 Runner; 15% Up 85% Down for Tacoma. Truck Bed would be for Lowes/Home Despot . Too sick and injured to be a serious off-roader.

Need a nice Minivan ( or maybe a nice Sedan for civilized outings ).

In April I bought my Commuter Car, so that's one down already. But need a second Commuter, too.

No longer feel strongly for any particular brand.

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There will never be a better time to buy a sedan.... so if that is what you want go buy one... but as the inventory and capacity shrink the price will rise..... so if that is what one wants DO IT NOW.

 

Hey, if there really is a Chrysler CUV coming, if it has more room then the Cherokee, the turbo engine, looks attractive and well built it will be ok. I'm just not convinced it's coming. Not official until it's official.