The only way I think Chrysler can survive and why it won’t happen

Chrysler 200With production of the Chrysler 200 midsized sedan set to end next December, the illustrious brand will be down to just two models: the now almost elderly 300 large sedan, which shares its platform with the Dodge Charger and Challenger, and the brand new minivan Pacifica. That means the two namesake brands of Fiat Chrysler Automobiles are also its weakest volume brands in the North American market. And considering Chrysler cars are sold almost exclusively in the US and Canada, the brand doesn’t seem all that relevant anymore. That’s unfortunate for a brand which used to be one of America’s most innovative brands with a number of important technological breakthroughs to its name and which of course is credited with the creation of the minivan. However, for the past decades Chrysler has let its image crumble by selling mediocre cars and ongoing financial uncertainty under multiple owners as it has gone through a number of (near-)bankruptcies.

Chrysler_100-based-on-Fiat_TipoWhile Jeep has made an impressive revival in the past few years, Chrysler doesn’t seem destined to make a similar transformation if you look at the brand’s product planning for the near future. The 200 will be axed at the end of 2016 as years of mediocrity has reduced its prospective customer pool to daily rental fleets and buyers with employee discount, even though the last generation was probably the most competitive midsized sedan Chrysler has had in decades. Plans for a semi-premium compact sedan in the spirit of the Buick Verano and based on the Dodge Dart have understandably been scrapped now that the Dart is dead and the Verano will be killed as well. The future of the 300 is still uncertain, as a decision to replace the current model hasn’t been made yet, which means it won’t arrive before 2020, if at all.

If you’ve followed FCA this year, you’ll know that the company is all but abandoning cars and is betting big on more profitable SUVs, pick-up trucks and crossovers in the North American market, so it shouldn’t come as a surprise there are two three-row crossovers in the product pipeline for the Chrysler brand as well. That’s not a bad strategy as long as gas prices remain low and these models add value to existing offerings in the market and are marketed right. Those requirements are exactly where Chrysler has faltered with crossovers in the past. Do you remember the Chrysler Aspen? No? Not surprising as the Aspen was a rebadged Dodge DurangoChrysler_Aspen-US-car-sales-statistics with added chrome and a higher price tag. It was built from 2006 to 2009 and less than 65,000 units were sold in the US in those four years, less than the Durango sold in 2006 alone. Then there’s the first generation Pacifica, produced from 2003 to 2007 and which wasn’t an outright failure in sales volume with about 475,000 units sold. However, it suffered from a reputation of substandard quality and was positioned wrongly in the market so it never hit the projected 100,000 annual sales. So much for a brief history lesson of Chrysler’s previous attempts at crossovers, now let’s take a look at the projected future:

A midsized crossover is planned for 2019, which will share the front-wheel drive platform and many components with the Jeep Cherokee. In itself this is exactly the kind of model the market is waiting for, but remember that FCA already has such a crossover in its range: the Dodge Journey, which would move to Alfa Romeo’s rear-wheel drive Giorgio platform in 2018. The added value of a front-wheel drive Chrysler next to this Journey is not exactly clear to me, considering a Chrysler would usually be positioned higher in the market than a Dodge, while this one will use a cheaper platform.

Chrysler_Pacifica-US-car-sales-statisticsIn addition, Chrysler is planning for a 2018 launch of a full-sized all-wheel drive crossover on the platform of the new Pacifica in 2018 but without the sliding doors and innovative Stow ‘n Go seats. That means it’ll be a less practical version of the Pacifica, following the trend that minivans are unhip and crossovers are hot. This looks like a deja vu from a decade ago, when the Pacifica from back then also didn’t have a clear positioning: it was marketed as an alternative to a minivan but was too expensive and impractical for those buyers, while SUV buyers considered it not tough and capable enough. Chrysler risks making the same mistake again: those who want a practical car and don’t car about image are better off with the Pacifica, while those who prefer the looks of a crossover or need the capability of an SUV are likely to rather drive a Jeep than a Chrysler.

My point is that I don’t see the added value of these two models within the existing FCA line-up. They’ll always be the less successful sibling of another model, which hurts the brand more than it helps. So, what’s the alternative for Chrysler: quietly kill the brand off and only continue the Pacifica as a Dodge (please don’t rename it Caravan)? That shouldn’t be necessary if FCA would only invest in the brand and its image, most importantly to be clear about what Chrysler stands for, as that’s what makes a strong brand. Look at Jeep, one of the most recognizable automotive brands anywhere in the world and one of the most successful US global export brands, next to McDonalds and Coca-Cola. No wonder FCA is investing heavily into expanding Jeep’s model range and tapping into new markets by spreading production to key growth markets like Brazil, China and India. I’m not saying the same is possible for Chrysler in the short or medium term, but if it’s going to remain a North America-only brand (possibly adding Europe back in), then why not revive its former technology-leading image?

Chrysler_Pacifica_HybridPresently, FCA is hopelessly behind its competitors in the field of electrification and future mobility concepts, as Marchionne’s short-sighted vision sees no short-term profit in those developments while he only sees the big profit margins of SUVs, pickups and crossovers as long as oil prices remain low. But he should spread his chances and let Jeep, Ram and Dodge reign in those markets while turning Chrysler into the innovative brand of the group, bringing down the Corporate Average Fuel Efficiency figure as a secundary benefit. They’re off to decent start with the upcoming Pacifica PHEV and a possible tie-up with Google would help too. I think this is an opportunity to differentiate themselves from existing offerings: combine the popular bodystyle of the present with the powertrain of the future: electrified crossovers. At the moment, there are only a few Plug-in SUVs in the luxury segment, but I think GM really missed an opportunity to really make a move against Tesla when the Bolt was launched as an MPV instead of a crossover. Similarly, I don’t understand why Kia only plans to make hybrid and plug-in hybrid versions of the Niro crossover, based on the same platform as the Hyundai Ioniq, which has full EV capability. So if FCA wants its namesake brand to have a prosperous future, I’d suggest Marchionne to look beyond the internal combustion engine and let Chrysler be an innovator again.

However, here’s the problem: Fiat Chrysler Automobiles currently already is the automaker with the worst cash position of all, and is commited to investing all of its available credit to restore Alfa Romeo and Maserati as successful premium brands and to expand their North American capacity for the production of pick-up trucks and SUVs at the expense of its car lineup. Tell me: if it was your money, what would you invest it in?

  1. In the 1950s, my Grandfather George Lindblom, was the world’s largest Chrysler dealer. I was literally brought up breathing Chrysler. It pains me to see the demise of the brand. I will cherish my wonderful Chrysler 300 Sport for these last years of my life. The death of Chrysler has taken longer than I originally thought. Teaming a weak Chrysler with Death-Spiral Fiat seemed the Coup de Grace. I guess putting two weak companies together is a long shot. At least it bought some time to try and fix Chrysler’s problems.

    I had such high hopes for the 200. The looks were a bit bland but very pleasing to the eye. However, after renting one for a weekend, I decided that it didn’t seem competitive in the mid-size market. Aside from being too small, it seemed well thought out. My question was why didn’t Fiat-Chrysler fix the 200 and Dart instead of killing them off. The fact that they’re going to the great auto graveyard in the sky tells me that “fixing” the Dart and 200 would have taken major (expensive) work.

    I guess the only way to maintain Chrysler brand is to hope for a White Knight such as Honda or Toyota comes along. Unfortunately they are probably only interested in Jeep and Ram.

    1. I think Chrysler lacks sprit de corps. Executives do their job within expectations but they do not motivate subordinates. They can not put in everybody´s bloodstream love and committment for Chrysler.

      Instead a worker at Daimler, Lexus or BMW have blood filled with brand and pride and their families feel proud too.

  2. Marchionne is clearly operating FCA in survival mode, but he’s trying to position it as forward thinking. Replacing sedans with SUV’s is reacting to a secret that everyone else already knew. Just because sedans are a slowly shrinking segment, doesn’t mean you should practically abandon it. This makes even less for Chysler specifically, considering the same dealership lots are going to be filled with a bunch of Jeep and Dodge SUV’s.

    Part of the problem, I believe, is he looks at the brand as “FCA” and not the individual brands. Seperating Ram from Dodge was a desperate attampt to make FCA look more diversified. When, in reality, Jeep and Dodge were the only brands that held actual value. Fiat’s continued loss of market share in Europe should be very troubling for him. And Chrysler serves no purpose, beyond a minivan(not exactly a growing segment)

    The whole auto industry has concluded that alliances and collaborations are necessary for the industry. Marchionne seems to get credit for this but other auto makers are doing this to save on R&D, not just for rebadging cars. Rebadging cars has never been a sustainable business plan, GM went bankrupt this way. Yet, Marchionne, who keeps touting alliances seems to be the one learning the least from them. He keeps looking for more partners, but is left wondering why no car maker wants anything to do with him

  3. The new Chrysler Pacifica already caught up in sales to the outgoing Town&Country.
    And Marchionne already said that they WILL replace the 200 and Dart for new models. They won’t exit the car market but they need to be more rigorous in how they handle those launches. And after he said this, both Ford and GM already stated that they would end production of cars in North America as well. But the auto journalists didn’t give nearly the same attention to that as they when Marchionne revealed that.

    FCA is investing on Alfa Romeo, Maserati and Jeep, but Dodge will benefit from the investments on Alfa since they’ll have access to the Giorgio platform.
    Chrysler will carry the FWD platforms of the group. I think Chrysler will survive if Marchionne gets the brand in the chinese market. Chrysler could be a great Buick competitor over there and that would ensure the survival of the brand.

    As long as Jeep prints money, the Alfa Romeo launch is successful (early sales indicators show a jump in sales after the Giulia launch) and the Levante increases Maserati’s profits (it’s selling very well) they’ll get muscle and time to plan what to do with Chrysler.

    As for electrification, FCA doesn’t have the capital to be a leader on that segment. they just have to wait for the battery manufacturers to ramp up production and adopt electrics when they replace their current platforms.
    There’s no point for them in investing heavily in a market that won’t bring immediate profits. It’s better to let other manufacturers do the heavy lifting and then do agreements with suppliers like LG Chem or Panasonic for the batteries.

  4. China; where is Chrysler in China? Also where is Dodge, where is Fiat, where is RAM, where is Alfa Romeo? The biggest market in the world and they’ve got two performers Jeep and Maserati; the rest are either anonymous or not-present.

    India? Jeep and Fiat – the rest are nowhere.

    To save FCA Marchionne needs find a partner who will fix this problem for him. FCA doesn’t have the capital.

    1. SUVs aren’t a bad idea big ones for the US are fine; they’ll need to do a better job than last time with the Aspen at making them a bit more special; proper competition for Buick. But they’ll need small and medium SUVs for China. They’ll need a few, they need them soon. One based on the Renegade and one on the new Compass; both slightly lengthened and with improved interiorswould go a long way.

    2. A new 200, American’s still buy mid-sized sedans; not in the numbers they have in the past; but they’re still among the best selling vehicles in the US; Camry, Accord, Fusion, Altima, Malibu, Optima, Sonata. The old 200 looked good, but it needed to do more than that after the disaster that was the Sebring.

    3. Imperial. Fiat, Dodge, RAM, Jeep, Chrysler, Alfa Romeo,_______, Maserati. I know it seems counter-intuitive to add another brand (they still have Lancia in Italy as well), but luxury is big business these days – Imperial can sell the Lincoln Continental/Cadillac Escalade rivals that Alfa Romeo and Maserati can’t, and they can sell them to China. It works like Borgward – a fresh brand but with a dash of history.

    4. New engines. FCA has some very good engines small and large capacity engines – and a lot of duds in the middle. Their best engines, also tend to be confined to a single brand, Maserati will have to keep its exclusivity when it comes to power plants – but Fiat needs to start sharing it’s small capacity engines with the other brands (though they need the platforms to put them in – see No.1).

  5. Chrysler cars should all have 23 inch rims, 2 18 inch subwoofers in the trunk (ya’ know for all dat thumpin’ in da’ trunk) , 20,000 watt sound systems, smoked glass and lambo doors as standard equipment. Chrysler must keep up its ghetto image or it’ll never survive.

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