Marchionne’s Latest Five Year Plan Rightfully Addresses the Core Problems at FiatChrysler (Part 2)
Further to my first piece which focused on FCA’s plans in Europe, the second problem that FCA’s new plan seeks to tackle is the group’s fundamental under-representation in key emerging markets, especially China. Although compact cars account for 1 in 4 passenger vehicle sales in China, competition is intense and FIAT arguably sits uncomfortably between domestic brands and numerous foreign players that are significantly more established in China. With neither the brand reputation nor an especially compelling product, it is little surprise that the locally-assembled Viaggio sedan did not meet sales expectations.
However, with the Chinese market set to grow to 30 million units by 2020, boosted especially by middle-income earners, and the boom in SUV sales in China, the resurgent Jeep brand surely provides a perfect platform for FCA in China and other key emerging markets such as India. Aside from credible products, Jeep does of course also have the brand heritage in China that FIAT lacks – bear in mind that the first Beijing Jeep rolled off the lines in China in 1985 but ultimately disappeared with the demise of DaimlerChrysler. A full return to China, i.e. not just as a niche import brand but as a fully-fledged local manufacturer is therefore long overdue for Jeep. Furthermore, the newly revealed Renegade compact SUV will also be produced in Italy and should successfully tap into the burgeoning demand for small SUVs across Europe.
On a final note, although Marchionne is sensibly differentiating the Chrysler and Dodge brands, with the latter focusing on performance models, plans for Chrysler do seem rather vague. However, with US light vehicle sales expected to climb back to pre-crisis levels in excess of 16 million units already in 2014 and to set a new record from 2017, Marchionne is rightfully prioritising FCA’s problems in Europe and emerging markets. The US may just have to wait five years to receive greater attention.