Wednesday, January 27, 2016

Is Sergio Marchionne killing Chrysler?

I like Fiat.
I really like Chrysler. (Poor old Chrysler. You have to feel bad.)
After a string of dead beat owners, they now have this guy...

His recent comment sound like bad news to me.

First, he's been trying to force some stupid alliance with GM. Over and over.
Even after they said "no way" repeatedly .

Then, just a few days ago, he blamed the designers (The designers!!!) for the Chrysler 200 inability to get a "recommended" rating from Consumer Reports.
By saying :"The Sonata has a similar problem (rear seat entry), we copied the entry point of the rear seat, dummies"
Therefore insulting both Chrysler and Hyundai designers.
So I guess he, the big boss, had nothing to say about it while it was being designed, tested, re-tested.  Checked, re-checked.... He just wasn't around...

Now he is also "realigning" the North American production capacity.
Which means more (only?) pick ups and SUVs, and killing the Dodge Dart and Chrysler 200.

The Dart has been poorly received since it came out.
But not the 200.
He also keeps saying crazy stuff, like he's going to find a "partner" to produce these 2 models. (The ones he is canceling??) Where? Who?
Does that mean we will be getting Darts and 200s from China soon?
(The assembly line where the 200 is built will soon being converted to built pick up trucks.)

So basically, he is giving up on cars all together. Since we hear nothing about a new Chrysler 300.
And he is killing the 200 and won't be replacing it.
Soon Chrysler will only have one model: The new pacifica Minivan.
And Dodge will basically have nothing.

Amazing how pretty much everyone else has now figured out how to generate money from successful compact and mid sized sedans .The market is far from dead.
(Camry, Accord, Fusion, Sonata, Optima, Civic, Corolla, Focus, Elantra etc...)

It looks like he is trying to kill both Chrysler and Dodge and put everything into Jeep and Ram trucks.
Which is really sad...

As for the "always late' Alfa Romeo return to the US?
After all these promises of an all new full line up, now we get more bad news.
Although the Giulia will go in production in a couple of months (I guess it was too late to kill it), it won't be joined by the larger sedan they were talking about any time soon.
Instead, we'll get even more SUVs. One in 2017. And more later.

So basically, Chrysler's future is trucks, trucks, trucks. And probably NO Chrysler.

Sorry about the rant.
Marchionne might actually be a nice guy to have a beer with. But his short term vision for this great old company is a disaster.

Claiming that low fuel prices are "permanent" is idiotic.
He also uses the word "permanent" to describe the "shift towards SUVs and pick-ups".
If there is one thing car companies need to learn from the past, is that trends do not last forever.
Putting ALL your eggs in the same basket is a huge mistake.

Someone with such short sighted thinking should never run a car company.
Or anything else.

One more time, Chrysler is on the verge of death.... Because of one guy.


ryan.gebhart said...

Sadly, I agree with all this. When you go to any automaker's website, be it MB or Ford or Honda, you see multiple offerings in multiple categories. Then you go to Chrysler's website--here are two cars and a minivan. Dodge--two and a half muscle cars. And this is today. What's Chrysler's website going to be in 2017? Here is a minivan and here is the same minivan with an electrical outlet. What's Dodge's website going to be? Tumbleweed and a link to Ram Trucks.

MrBud said...

This carpetbagging Sergio first gets the Chrysler dealers to make showrooms for the hundreds of thousands of Fiats that people will supposedly be rushing to buy, then they are delayed with only the micro sized 500 model available for several years, and a then a bunch of lackluster models after that, which no one wants. Then he diverts all of the income from Jeep and RAM to prop up Fiat and to create some Alfa models. He also says Alpha Romeo will be selling hundreds of thousands, and the poor dealers have to go along with this crap. The Alpha's which were promised two years ago and still aren't here, all the while he is postponing updates to the Wrangler and Grand Cherokee. The only thing new on the horizon is the minivan, and he's going upmarket with that, so the sales might slide even further. This guy was handed Chrysler/Jeep/Ram, and he's sucking the life out of it to keep some comatose Italian brands alive. it's really painful to watch.

MrBud said...

I didn't want to mention another site without permission. The guy who writes posts what a disaster this Sergio is and how he keeps collecting the money as he runs Chrysler into the ground in order to save Fiat (which should be allowed to die on its own since no one wants their cars, not even in Italy).

Les said...


He isn't cancelling the Dart and 200, he wants to partner-up for their replacements.

That's the exact same thing that Mercedes, Renault and Infinity-Nissan are doing. The latest rumor is that Toyota and Suzuki will do the same.

He's just stating out-loud what other auto execs are doing behind closed doors.

Anonymous said...

The sad truth is that FCA has already run into the ground, amazingly at a time of record auto sales. The just posted lower earnings despite having a popular truck and SUV heavy lineup. They obviously are short on cash. Previously they postponed the next Cherokee to get Alfa going, yet now the next Alfa's are being delayed, Maserati's are being delayed, and next generation cars are being cancelled.

He is crazy to think that gas will stay low forever. When the next price rise occurs, FCA will be totally unprepared.

Like you said, every real automaker has products in every category, and can get sales no matter what the market does.

FCA clearly very desperately needs a partner for cars. Perhaps Mazda, now that they have developed the Fiat 124 Spyder together?

I've never understood why successive owners have all tried to downgrade Chrysler into a mainstream brand, instead of using Dodge for that. It seems so obvious to have Dodge as a mainstream brand and Chrysler as a more upscale brand. Still does, since Alfa and Maserati are so far above the American brands.

The bottom line is that FCA has too many brands and not enough money. They really need to sell Alfa and Maserati to some Chinese company, and refocus on the 3 main brands - Dodge, Chrysler and Fiat.

Anonymous said...

He came in guns ablazing and because the Dart and 200 didn't take over the world, he gives up??? Ralph Gilles disagrees, so he sketched a Pacifica Hellcat instead.

- FusioptimaSX

Anonymous said...

Very sad indeed Vince...It truly is a classic being squandered.

Tard said...

Vince, I hate to ask ... but why do you have a pic of Sergio in a bathrobe?

Not sure if I really wanna know ... Hahaha.

Anyway, I agree. I also think Sergio is an idiot for this comment. Even if he didn't mean it to sound like it did, he has 98% demotivated his entire car-design departments, thereby making this a self-fulfilling prophecy. Very stupid statement for a CEO.

Carl Sandstedt said...

Talk about three straight owners that have screwed this once proud brand into the ground. Sad indeed.

Philthy82 said...

This is one of the best articles you've written Vince, well said.

MrBud said...

Tard, that's a scene from the deathly hallows, where voldemort's head has been replaced by sergio's.

Anonymous said...

I cannot believe that they are still building junk. Can you imagine selling Grand Cherokees that need a new engine within 4 years?

Anonymous said...

It seems like he using the same strategy that Isuzu and Mitsubishi implemented in North America of just producing trucks and SUV's. It worked for a while and then sales just slowed to a trickle. I don't see this working any better for Chrysler.

Anonymous said...

This bitch is ugly as sin and certainly is a tyrant and a pushy human being. not a nice man. Makes Ghosn look decent, which is tough. bad people.

Dead Zone said...

Absolutely - these market assessments and product decisions all seem to be very short-sighted.

But, I do think Chrysler and Dodge are handicapped in the market - as brands, they just don't have the respect in buyers' minds. Not even on the same level with upstarts like Kia and Hyundai. I think Buick is in the same position.

Unless they can produce truly outstanding cars, with, say, amazing interiors, market-leading efficiency, AND standout styling, the return on investment will never come. So hard choices seem to be necessary. And thus the sad but seemingly inevitable march towards killing the brands.

Anonymous said...

If Sergio thinks gas prices are not going to eventually increase again, then he is a fool.

Saying that the 200 is selling poorly due to a design flaw and demoralizing your designers by solely blaming them is not good business sense. From what I understand, rear seat access is not the only issue hampering the 200's sales performance. The unrefined base engine, not ready for prime time 9 speed transmission, and the reliability reputation of FCA are also factors that are possibly keeping the 200 from being a major contender in the mainstream midsize sedan segment. I think the exterior design of the current 200 is quite beautiful; it seems a shame that FCA can't find a way to address some of its issues and tweak its marketing to improve its chance at success in the market.

Considering FCA's limited financial resources, the wild popularity of crossovers, and the higher profit margins that crossovers generate, I do think it's wise that Sergio is increasing production of utility vehicles while searching for partners to either co-develop or provide possible next gen "car" products.

I see one of three possible scenarios playing out:
1) FCA works with another car manufacturer to develop unique "tophats" (exterior/interior designs) on shared platforms, utilizing shared engine/transmission combos, and assembled in shared manufacturing facilities to provide future "car" products. The FCA products would look completely different from the other manufacturer's products, even though they would be essentially the same underneath.
2) FCA establishes an agreement with another car manufacturer to distribute products in the U.S. market that are not currently available here. European brands (Peugeot/Citroen, Renault, or Skoda/Seat) would probably be the preferable partners, but there are some issues with this strategy. One issue would be whether the cars would be able to meet U.S. safety, emissions, and fuel efficiency standards. Additionally, Renault cars competing with Nissans and Skoda/Seat cars competing with Volkswagens in the U.S. market might not be viewed as desirable situations by Renault/Nissan or VW. FCA could also partner with a Chinese company to provide car products in the U.S. market, but I'm not sure how well this would play out from an image or reliability perspective.
3) This would probably be the worse case scenario: Slightly alter another car manufacturer's products that are already available in the U.S. market to sell here. I know the 2nd scenario is also rebadging, but at least it wouldn't appear to be so blatant in the eyes of consumers.

I can see FCA salvaging the Chrysler brand with this strategy since Chrysler seems to be FCA's mainstream brand in the U.S. and the partnerships would more than likely provide mainstream FWD cars for FCA (I view the MX-5/124 deal between Mazda and Fiat as an exception, not the rule).

To me, the future of the Dodge brand seems more sketchy since it seems to have been positioned as a sports car brand.

Anonymous said...

I don't understand Sergio's comment comparing the 200 & Sonata. Sonata not only has a MUCH bigger back seat than the 200 -- it's also bigger than the back seat of Malibu, Fusion, Legacy, Passat, Accord, Camry, Mazda 6, and any Buick in a similar price range. The Sonata is roughly the same size as an Avalon. I looked at and drove all of these cars recently (2015 &/or 2016 models) and in my opinion, the 200 was 1st or 2nd in every category from safety to mileage to quality of dash materials of seat comfort to quietness and ride smoothness. I bought a Sonata ONLY because 1) Much bigger interior, 2) Less expensive, comparatively equipped. But the 200 was a VERY close 2nd, and in my opinion, MUCH MUCH nicer than the habitual class leaders of Camry, Malibu, Fusion and Accord! If I were only 6' tall I would have gotten the Chrysler!

Anonymous said...

Sergio should never have released those comments, it just looks terrible from a PR perspective, although no one needs to be convinced of that. He needs to take my advise (duh) and structure the American side of his company this way by simplifying the lineup and purpose of each brand.

Dealerships - Need to be revamped with a higher emphasis on service. I'd be ok if they were even branded FCA Dealerships (with a sign with each subbrand) as opposed to the current Chrysler Dodge Jeep Ram Dealership

Cars (brands need to realign)
Fiat & Alpha Romeo- bring them to the US, let them be part of the lineup, but no standalone dealerships. Give some European flare to the image, but don't necessarily reinvent the wheel for American models

Ram- kill the brand, move the trucks back to dodge

Dodge - Trucks with powerful Cummings Engines and Super Cars
Ram 1500-3500
Durango - Grand Cherokee Based
Dakota - Colorado Competition or something a little more quirky like the former Ridgeline

Large SUV - Grand Wagoneer based? Much softer model
Compact Crossover SUV

Jeep - Off-Road Performance
Grand Wagoneer - Range Rover Competition
Grand Cherokee
Cherokee - I'd prefer a boxy mid size
Liberty/Patriot/Compass Crossover - One model, current cherokee design would fit well

There you have it! Do this for me Serg and you have a customer for life.