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Tue May 6, 2014
Fiat Chrysler union ready for another 5 years
It's a big day for Fiat Chrysler Automobiles.
The Italian-American company's CEO, Sergio Marchionne, will outline a strategic plan for the next five years.
The marriage between Chrysler and Fiat surprised many in the auto industry just by surviving.
Now the company is strengthening that union, by exporting its strongest brands around the world.
When Fiat agreed to a kind of corporate shotgun marriage with a fresh-out-of-bankruptcy Chrysler five years ago, a lot of people thought Fiat's CEO Sergio Marchionne was crazy to do it.
Dave Sullivan of Autopacific had his doubts, too.
"It looked at the time that Chrysler was beyond any and all repair. Think about it. The Dodge Nitro? Jeep Compass? There were some pretty sad products."
But Sullivan says Marchionne apparently saw something others didn't.
He first focused on transforming the biggest potential moneymakers: the Jeep and Ram truck brands.
Today, the RAM pickup is gaining ground on the GMC Sierra.
And the Jeep brand is an automotive rock star, at least in the U.S.
Sullivan says there's a lot of consumer demand for the Jeep Grand Cherokee and the Wrangler.
"They can't make enough Jeep Wranglers," says Sullivan. "That plant is running full tilt in Toledo."
Marchionne also threw more money into advertising to try to get people who had written Chrysler off, to give it another look.
The ads were good, and they created some buzz. Lots of people remember the one featuring rapper Eminem that ran during the 2011 Superbowl:
Chrysler followed up with an ad titled, "Halftime in America," featuring Clint Eastwood, and another, "God Made a Farmer," featuring RAM trucks.
Somehow, Chrysler's new CEO, a guy who was born in Italy and grew up in Canada, knew the company could make Ram pickups quintessentially American, and that the slogan "Imported from Detroit" could be a good thing.
Chrysler sold 732,000 Jeeps last year, but most of them were in the U.S.
A new focus on overseas sales
Marchionne says the brand needs to enter new markets.
"We need to take that number across the world and really find out how far we can take Jeep," Marchionne told reporters at the 2014 North American International Auto Show. "It is an incredible brand and has an incredible unexploited potential and we need to take it there."
There's a lot more work ahead if Chrysler and Dodge are going to win back customers the way RAM and Jeep are doing.
And the Italian side of the company has its challenges, too.
Richard Hilgert is an analyst with Morningstar and says Europe's recession hit Fiat's sales there hard.
"Marchionne had to turn around Chrysler, and then had a similar crisis develop in Italy," says Hilgert.
So, to the surprise of people who thought Chrysler was nearly dead, it was Chrysler that ended up paying the bills, while Fiat's sales plunged 40%.
Now, it appears sales are on the upswing in Europe.
Hilgert thinks it's time for Fiat to focus a bit on some other potential moneymakers.
"Alfa Romeo and Maserati have a lot of global brand recognition that this company has not capitalized on," he says.
An irreplaceable CEO?
But there's something else Dave Sullivan of Autopacific would like to know about Fiat Chrysler: Who will take over from Sergio Marchionne in five years?
Marchionne is a kind of super CEO. He's known to carry six separate Blackberries to manage his workload.
He runs a company with two headquarters, separated by an ocean, and does a lot of his sleeping on planes.
"We haven't really seen anybody kind of bubble up internally that could fill those shoes," says Sullivan.
But for now, five years in, the corporate marriage between two struggling carmakers appears to be beating the odds.