Chrysler to quit UK market, what’s next for FCA?

Chrysler-auto-sales-statistics-EuropeIt really didn’t come as a surprise when Fiat-Chrysler Automobiles announced that it would withdraw the Chrysler brand from the UK market this week. Right-hand drive American MPVs, large sedans and rebadged Italian hatchbacks just didn’t vibe with the British car buying public. With the Jeep brand currently red-hot all over Europe thanks to the successful launches of the new midsized SUV Cherokee and even more so of the small crossover Renegade, the company has decided to dedicate its resources in the UK to its SUV brand.

Chrysler-Jeep-UK_Sales_ChartChrysler’s UK sales have dwindled to less than 2.000 units last year, but haven’t been above 3.400 in the last 6 years, which is approximately the number of Fiat 500 minicars the company sells every month in the UK market. Production and sales of the Delta compact had already been suspended last year, and the slow-selling RHD 300C large sedan (88 units in 2014, just 2 in January 2015) and Voyager MPV (2014: 565 units, January 2015: 5) will be discontinued as we speak, while the Ypsilon minicar (1.411 units in the UK last year) will be sold on customer’s request until the end of 2017.

Rumors of the withdrawal of the Lancia brand from all markets outside of Italy have been surfacing for a while now, but this is the first step the company has officially taken to execute this strategy.  Sergio Marchionne has saved the Fiat Group and miraculously turned it around and brilliantly acquired Chrysler (and the crown jewels Jeep) in the process, but he has also shown that he is in the business of making money and has got no compassion for nostalgia.

Sergio-Marchionne-Chrysler-FiatWas Marchionne right to let Lancia bleed to death without investment in new products for years? Or should he have kept throwing money at it, money that he didn’t have, knowing that it would be water to the sea? He envisioned that the brand was too small and too weak to stand a chance in the hard-fought European luxury market, where there’s only room for the German Big-3 and a single Swedish challenger. All others can only fight for the crumbs and can only be profitable if they have a sizeable market outside of Europe to support them. It’s an all-or-nothing market, and for FCA’s other wannabe-premium brand Alfa Romeo to be able to join the party requires not only the investment of billions of Euros into new products and marketing, but also an enormous load of patience as this won’t happen overnight, especially since the brand has first been neglected for years.

Typically, Marchionne has demonstrated many times his striking lack of patience when success takes longer than expected with the firing of executives who didn’t deliver satisfactory results quickly enough. I can already warn him that for Alfa Romeo to become a first-tier premium brand in Europe Alfa-Romeo-4c-auto-sales-statistics-Europe(and in the US for that matter) will take much more time and money than he can imagine. It’s taken Audi 20 years in Europe and in the US it’s still not quite there yet. If the plan eventually succeeds, it’ll all have been worth it and the company can make a healthy profit on its investments.

I hope he has the patience with Alfa Romeo, but I’m afraid one day I’ll find a press release in by Inbox with the headline: “Alfa Romeo withdraws from European and US markets as FCA focuses on Jeep brand”.

  1. I agree that Marchionne seems very impatient, but his decision to all but kill off the Lancia brand unfortunately makes sense – the brand’s positioning has been very “middle-of-the-road” and “non-sporting” recently, two things that don’t sell these days. I feel, in Europe at least, to be a successful brand you have to have an air of “premium” (VW, Audi/BMW/Merc) or “sporting” (Mazda, Seat). The other brands that are treading water (Ford, Opel, Renault, Citroen, Peugeot) have a large in-built loyal audience, even though occasionally they try to do something outside of their MO (Nissan’s crossovers, Citroen’s daring designs).

    The big question is not whether Lancia can sell, but whether it can attract new customers to FCA that would not otherwise buy a Fiat or Alfa. And I’m afraid the answer is “no”, or at least not enough to justify the investment. If I was Marchionne I would actually consider killing Lancia off entirely…

  2. A great article. It was a mistake to brand Lancias as Chryslers in the UK. Then again, Lancia branding has failed in the rest of Europe (apart from Italy).
    The Ypsillon in my opinion, is a really terrible design and not worthy of Lancia. This ungainly blancmange with Chrysler branding is even worse.
    So yes, Chrysler follows Dodge, Chevrolet, Daihatsu and unofficially Proton in leaving the UK, Irish and general EU market.

  3. @AndyT: don’t forget to mention half of the Renault line-up….
    Early 2012, Renault pulled the plug on LHD-versions of the Espace, Kangoo, Laguna, Modus and Wind in one clean swoop, literally halving its offering in the UK. I hadn’t thought the brand would recover this quickly, as it must’ve been quite a disgrace for a mainstream manufacturer to admit half of your line-up has failed to connect with customers.

    And then there’s also Perodua, with a whopping 29 sales last year…..

  4. Ah yes, very true Bart. Amusingly, only this week as I was cycling, I noticed this exotic, never seen before car drive past me and I realised it was a brand new Renault Espace (with French plates). At one time the Espace was a big selling car in the UK and now it is like something from a different world!
    I had forgotten about Perodua, then again if I was to ask my friends, no one would have heard of the strange brand!
    All very interesting ;o)

  5. I think it’s safe to call Lancia dead. Fiat misunderstood its role and saw it as an Italian Rover. They needed to use Lancia as a parallel brand to Alfa not as a complete alternative. Then they could have run the two brand together. Also, they didn’t realise that Lancia could have been modern looking but focused on comfort then it would complement Alfa’s character of heritage design and overt sportiness. Neither would have been old guy’s cars.

  6. Richard, I don’t think Lancia ever had a chance after it came under ownership of Fiat and they launched a series of bland mass-market cars in the 1980s and 90s. Cars like the Dedra, Kappa, Delta and even an MPV…..
    It’s too bad they’ve let it suffer this long, because the brand is now tarnished and most people have already forgotten about the great cars from the past. Even if they had that infamous Italian “reliability”, they had style, flair and character. That would’ve been a great legacy on which they perhaps might’ve been able to resurrect the brand after a while.

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.