Fiat Chrysler unveils aggressive five-year plan – Los Angeles Times

Posted: Wednesday, May 07, 2014

Fiat Chrysler Automobiles wants to turn Jeep into a global brand and bring Alfa Romeo back to the U.S. as part of an aggressive five-year plan unveiled Tuesday.

The company is working to meld Auburn Hills, Mich.-based Chrysler Group with Turin, Italy-based Fiat to create a more nimble global automaker that can better compete with the likes of Toyota Motor Corp., Volkswagen and General Motors Co.

“In a flat world, you can’t be secure in your home market if you aren’t able to compete in others,” said Sergio Marchionne, FCA’s chief executive.

The merged company — the product of Fiat’s gradual acquisition of Chrysler after the U.S. automaker’s emergence from bankruptcy in 2009 — wants to increase worldwide sales to about 7 million vehicles by 2018, up from 4.4 million last year. Fiat completed the acquisition this year and is creating Fiat Chrysler Automobiles as the parent company for the two businesses.

“An automaker needs to reach at least 6 million units a year to be a long-term credible competitor,” Marchionne said.

Also Tuesday, Fiat announced a first-quarter loss of 334 million euros, or $465 million, largely because of expenses associated with the Chrysler purchase. That compared with a loss of 83 million euros, or about $115 million, a year earlier.

Analysts were skeptical that the automaker could achieve all its goals.

“They have set some pretty aggressive sales and market share targets,” said Stephanie Brinley, an IHS Automotive analyst who attended the automaker’s briefing in Auburn Hills.

Fiat Chrysler wants to better segment its different brands so that they target different automotive markets.

“You need to have distinctiveness in the way you present your marketing,” Marchionne said.

Chrysler, for example, will come out with a compact sedan and be positioned as a mainstream North American label. Alfa Romeo will come back to the U.S. as a sporty European nameplate, competing with premium German brands.

Dodge will abandon the minivan market — the category it created when it introduced the Caravan in 1984 — as it creates a performance-oriented brand. Dodge also will absorb the automaker’s SRT performance lineup, including the Viper supercar.

Chrysler will carry on the minivan business.

“It will be very expensive. But overall I like the way they’re positioning their vehicles,” said David Sullivan, manager of product analysis for the consulting firm AutoPacific Inc. “I like that they’re turning the brands into more of a silo rather than have them overlap. Now it will be a lot more clear-cut on what makes a Chrysler a Chrysler and a Dodge a Dodge.”

The storied Jeep brand is the linchpin for much of the automaker’s planned growth.

Marchionne wants to more than double Jeep’s global sales to 1.9 million by 2018 from the 732,000 it sold last year. It is intended to account for about half of the automaker’s growth through 2018.

About 75% of Jeep sales are in the U.S., but now Fiat Chrysler plans to add six factories in Europe, China and Latin America as the automaker targets sales in those markets. Jeep will stick to selling only sport utility vehicles, Marchionne said.

By 2018, FCA plans to manufacture 1 million vehicles annually outside North America, said Michael Manley, Jeep’s chief executive. The strategy puts production in the markets where the automaker plans to sell the vehicles and will help it avoid heavy import fees and tariffs it would pay to export vehicles from North America.

Jeep’s growth plans include development of a full-size, luxury SUV that will make its debut in 2018. The three-row SUV will resurrect the long-dormant Grand Wagoneer name and will compete with the likes of the Audi Q7, Infiniti QX60 and Lexus GX.

Jeep will also introduce a new compact crossover in 2016, which is the brand’s 75th anniversary. The unnamed crossover will compete with vehicles such as the Toyota RAV4 and Honda CR-V and will replace the current Patriot and Compass models. It will slot between Jeep’s recent Cherokee and the Renegade subcompact crossover that will begin selling in early 2015.

“Jeep is basically the key to growing the whole company outside of the NAFTA region, especially in China and South America,” Sullivan said. “Other than Ferrari, Jeep is the most valuable brand in Chrysler’s lineup.”

FCA also is looking at its Alfa Romeo brand for growth. Although Alfa hasn’t sold cars in the U.S. since 1995, it’s well known as a sporty upscale brand in Europe. Still, sales have slumped in recent years.

The brand will return to the U.S. later this year with the Alfa Romeo 4C, a mid-engine sports car that will sell for $55,000 to $70,000 depending on trim and equipment.


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