Does Fiat Chrysler have a future?
In the early 1990s, General Motors was cost-conscious, watching their pennies, operating normally and bureaucratically in the knowledge that they were the world’s dominant automakers. Chrysler was on the verge of failure, but invested heavily in a series of completely new cars and trucks, developed by “platform teams” whose members came together from formerly inviolate functional groups.
After a few years, Chrysler had record profits and GM was in a slump; Chrysler’s run only ended because of the merger with Daimler-Benz, AG. After bankruptcy, Mary Barra made GM focus on their internals and it’s been working.
Sergio Marchionne looked at product and trends, and spent far more than he should have with constant market corrections. Worse, he also did not care much about quality, and every Fiat Chrysler (FCA) brand ended up at or near the bottom of the quality charts.
Critics mocked the late leader for his constant drumbeat that FCA had to merge with other automakers. Had size helped GM or Toyota? Both companies fell when they reached an impossible-to-govern size. Sergio Marchionne’s time spent on corporate hookups distracted him from the quality problems at home.
There are also problems with FCA’s niche product strategy. Some was inherited. Jeep and Dodge have rules they have to follow. Dodge has to have muscle or heavily discount to sell automobiles. The Italian brands came to the United States and failed. In Europe, they also try to hit niches to separate Alfa Romeo from Maserati. Fiat ended up with one or two popular cars and a lot of unprofitable sales outside of their small world.
The few mainstream Dodge and Chrysler cars were killed because market trends showed that sedans were dying. That strategy worked but made the niche product strategy more severe. There’s not a lot of sharing between vehicles at Fiat Chrysler because of the need to be true to the niche. European cars have one set of engines and American cars have another. Platforms are stretched and widened and changed to meet the need of each new car. Work is done and redone and redone again. Products are halted or restarted because they don’t fit the niche well enough.
Niches can be good for a small company because there’s often only enough room for one player. The brief success of Hummer and the postwar success of Jeep are good examples of that. The profits aren’t big but companies can survive by hiding where nobody else wants to go, and quality is less important because there’s nowhere else to go if you want that kind of car. However, when someone else does compete with you, you probably lose. Chrysler minivans used to make massive profits and have high resale values, before Toyota, Ford, Chevy, and Honda cloned them.
Fiat Chrysler has not yet thought about giving more power and guidance to lower level employees, bringing groups of people from different functions together, creating skunkworks, and working on quality at every level. Until they do, they will always have a hard time competing. They won’t be able to keep up their profits forever with their niche strategy, and mergers with other troubled companies somehow don’t seem like a good solution. Maybe that’s why Fiat Chrysler seems to always have their eye not on companies like Mitsubishi, but on General Motors.
Clark Westfield grew up fixing up and driving past-their-prime American cars, including various GM and Mopar V8s. He has ghostwritten auto news for the last few years, lives in Farmingdale, New York, and can be reached at +1.516-531-4021.