AUBURN HILLS (WWJ) – The merger with Fiat is going to turn Chrysler into a very different company.
“Today is much more than a new chapter,” said CEO Sergio Marchionne. “We’re beginning to write a completely new book.”
As analysts from around the world gathered in Auburn Hills to learn details of the new Fiat Chrysler Alliance, a new sign—with the letters FCA—was unveiled in front of what has been the Chrysler headquarters building.
The changes include a more global Jeep brand, a more muscular dodge brand—more Fiat’s and even Alfa Romeos, and big changes at the core Chrysler brand.
Chrysler brand CEO Al Gardner says the goal is to increase sales from 350 thousand a year now, to 800 thousand a year by 2018.
“Effectively returning the Chrysler brand to the volumes and share it has achieved in the past, while keeping it focused on what it does best.”
During the Daimler Chrysler years, the Chrysler brand began moving upscale, with more upscale vehicles like the Chrysler 300. It had narrowed its focus to the point where it only has 3 vehicles today.
The goal now is to have a Chrysler brand vehicle in every major segment—except trucks and performance cars—and turn the brand into something more mainstream, that can go head to head with Ford, Toyota, Chevy, Honda and others.
“Chrysler brand is not luxury,” said Gardner. “It’s not premium, even though you should expect to get premium content, equipment and craftsmanship in every Chrysler product. Chrysler is the mainstream American brand.”
We’ll soon see a “Chrysler 100” small car, as well as a new crossover.
Chrysler’s Town and Country will become the company’s only minivan. It will come with a plug-in hybrid variant. The Dodge Grand Caravan will go away.
Dodge shifts to a performance oriented brand, with a little bit of Charger in every vehicle, says brand CEO Tim Kunisis.
“Charger buyers, for example are 17 years younger than the national average.”
The Durango SUV will stay, as Kuniskis says it has the personality of a Charger. Dodge will also become the only brand that gets vehicles with the performance oriented SRT badge.
The poor selling Dodge Dart will remain. It will get a marketing makeover at first, with an all new version coming out in a few years that look more like a Charger.
Fiat will get more products in North America, including a “specialty” vehicle and the 500X, which will be more of a crossover.
Alfa Romeo also plans to bring vehicles to the U.S., starting with the 4C sports car. Few details were given on other vehicles that could be added.
The Maserati brand, meanwhile, will become a larger luxury brand, moving to six models by 2018, to better compete with BMW and Mercedes.
Jeep, which has been primarily a North American brand in the past, will move to a global role. The aim is to have Jeep’s build in six different countries, with 1.9 million sales globally.
Add all of the goals together, and Chrysler aims to increase its North American sales 42 percent–one million more vehicles a year–by 2018.
“You can see the shift in strategy with Dodge trading in for Chrysler, Chrysler becoming the mainstream brand for Chrysler Group, significant growth, again, with Jeep,” said Chrysler sales vice president Reid Bigland.
Fiat purchased the final stake in Chrysler on New Year’s Day. It expects to close the deal, and create Fiat Chrysler Automobiles by the end of this year.
“Sergio Marchionne’s aggressive 5-year plan reflects his long-standing goal of creating a powerful global automaker. The combined Fiat Chrysler Automobiles group can now coordinate its total reach, while allowing each brand to focus on specific goals,” said Kelly Blue Book analyst Karl Brauer. “Examples include a streamlined performance role for Dodge and a high-volume mission for Chrysler, while also leveraging the iconic Jeep brand on a global scale. These changes won’t happen overnight, and the long-term success or failure of Marchionne’s plan might take a decade or more to assess, but today marks the beginning of a new direction for Chrysler that should prove fascinating to watch either way.”
The ambitious goals laid out at the analyst meeting are meant to turn the company into a global competitor.
“I think most of the company’s constituents would be disappointed if they didn’t see aggressive goals here,” said Edmunds.com analyst Bill Visnic.
But, Visnic also says the goals are realistic, especially with the pull-back from similar models in different brands.
“It is openly admitting that we need to try to determine how we want to manage these brands, and do a better job of managing these brands.”
The meeting was held in a build that once served as the North America Headquarters of DaimlerChrylser, a merger that started with high hopes and ended in failure.
Marchionne says Fiat Chrysler Automobiles will be different, because it was created in an environment of understanding, trust and mutual respect.
“The history of the auto industry is littered with examples of alliances that failed because there was a lack of a will to share, because there was distrust and inequality.”
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