Chrysler & Fiat

May 25th, 2010 § 4

The collaboration between Chrysler and the Italians dates back many decades. From proposals made by Ghia in the ‘50s, to Chryslers made by Maserati, and Chrysler owning Lamborghini in the late ‘80s and early ‘90s.

Today, Chrysler is in the hands of Fiat and its future is, after the Marchionne’s five year plan was released at the end of April, still unknown.

Looking at details of the plan and reading about it in various publications one element came to my attention. Seen as an internal business plan, it makes sense. It’s all about, as Automotive News writes, an “effort to weave together the companies’ product development, purchasing and other operations for maximum efficiencies of scale”. There is perhaps nothing mentioned about the external perceptions of the two organizations. What do they stand for? How do they differentiate from each other and from the competition? How will customers perceive the two companies and their products? What each brand, Fiat, Alfa Romeo, Lancia, Chrysler, Dodge, Ram and Jeep, stands for?
Looking at the products, as described in the plan, one’s head start spinning: Fiats made in Serbia (remember Yugo?) will be sold in US with Chrysler and Dodge badges, Dodge Journey will be sold next year in Europe as a Fiat, many Chrysler models will be sold in the continental Europe wearing a Lancia badge but not across the Channel where they’ll keep the Chrysler badge. Two future Alfa Romeo SUVs will be built in the States on the same line (using the same platform and parts) as two of the future Jeeps.
If the same vehicle has a badge in US and a different badge in Europe, then what is the meaning of the brands? This case looks more like badges playing musical chairs.

Currently, both corporations suffer from the same disease. Chrysler’s products don’t excel in any area and more than that, its interiors are considered the worst in the industry. Fiat, being now absent from the US market for 27 years, is remembered for unreliable, rusty vehicles. In Europe, Fiat is not doing bad, the quality improved, but is not doing well either. In other words both companies need right now excellent products to reflect and sustain their brands and to build trust. They need products which will differentiate themselves in a very crowded and competitive market. They need products which have, what some people call, symbolic attributes. Think of Apple products. They are not better than the competitors’, they don’t have more features but they grabbed a good share of the market. They are based on innovation and feelings.

Chrysler and Fiat have one of these products each. Chrysler has Jeep (the true off-road ones) and Fiat has the 500, which will enter the US market by the end of this year. The 500 is an excellent car, a niche product which, hopefully, will change the perceptions American consumers have about the Italian brand. It sold already 500,000 units in 21 months from its launch.

Will Chrysler and Fiat be able to add such vehicles to their lineup? They will have to.
In today’s market middle-of-the-road products are a recipe for failure and even very good products will not make it if they don’t have those symbolic attributes. People don’t buy products anymore, they buy experiences.

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