Friday, July 1, 2016

FCA's Woes Continue...To Nobody's Surprise

Alexander Carabitses

FCA US LLC has no clue and has never had a clue with regards to what it's doing.  The first six months of 2016 have been a PR nightmare for FCA, mostly because the company and its leader, Sergio Marchionne, are showing their incompetence.  It was about two years ago when I presented my amateur and delayed report on the company's dazzling five year product plan.  I admit, I was quite impressed when it was first released and I did have confidence that everything would arrive on schedule, despite previous letdowns from the company.  However, it was at this moment when I forgot one of the most important rules of life: If something seems too good to be true, then it probably is not true.  Last year, around this time, I also reported on the many products that were either delayed or shelved, and believe me, there were many.  Now, as of this year, FCA is beginning to look like a pathetic company that the government will have to bail out for a fourth time (Chrysler was loaned money in the late 1950s).  New product ideas have been added as of this past March (a Jeep Wrangler pickup, a body-on-frame SUV, and a Ram midsize pickup), more products have been delayed (Maserati Alfieri and countless Alfa Romeos), and worse, the company is killing off both of its passenger cars, the Dodge Dart and Chrysler 200. Subsequently, FCA has made mention of the fact that the next Chrysler 300 will be front wheel drive and that the next Dodge Charger will be built on an Alfa Romeo platform. Keep in mind, neither of those models will be on sale until 2019 or later.

This new product strategy of FCA, which is one that is primarily banking on crossover and SUV sales continuing to surge and gas prices staying at around $2.50 per gallon, is the main reason for the company's decision to kill off the Dart and 200.  According to them, they have found that neither of these two vehicles are selling well and aren't profitable whatsoever.  Now in all fairness, FCA has said that these models will come back if Sergio can find a company that will build these models for him, this way the cost can be split between two companies.  While I can buy that the Dodge Dart hasn't been selling well (mostly because it never has done well), the claim that the Chrysler 200 isn't doing well due to low demand is completely bogus.  From what I have heard, sales of the 200 began to decline when Chrysler significantly reduced the amount of cars that it was producing, in preparation for the model's sendoff.  I also find it hard to believe that the 200, a midsize sedan, is not profitable.  Midsize sedans are the most popular passenger cars and this is the first time I've heard anyone say that a midsize car isn't profitable.  Again, the Dodge Dart is another story entirely. Oh, and if anybody out there truly believes that Sergio will manage to find a partner to build these two cars, do not bet on it.  FCA's progress on finding an all out partner for the company itself should serve as a great indicator of how this will end up. Although automakers in all segments of the market are launching crossovers and SUVs like there is no tomorrow, they are still staying committed to producing good passenger cars, just in case the inevitable happens and gas prices rise, which will in turn lead to passenger cars becoming popular again.

It is a pretty safe bet that is FCA spent less time analyzing market trends, more vehicles would launch.  As it is, money is playing a big factor in the launch delays that we have witnessed in recent years, so it seems entirely pointless to shift strategies every year or so, when at least some previously planned models could launch and have a chance to make the company money.  Now FCA has placed all of its eggs in one basket, thinking that its expertise in non-passenger car vehicles will save it, but like I said before, it's risky to think that this will work.  Chrysler has referenced the fact that it plans to produce hybrid versions of several upcoming SUV and pickup truck models, but these hybrid versions will not really benefit the company long term in sales, and it certainly will not work wonders for them when even more stringent fuel economy/carbon emissions laws are passed. Hell, if gas prices rise in the next year or so I can even picture them changing their product strategy again, further starving dealers from product.  And speaking of dealers, FCA is also just now realizing that it made an ass of itself with its original Fiat dealer strategy and is making changes in this area as well.

The fact of the matter is that FCA is all over the map.  Sergio is still desperately searching for a partner after being rightfully told by GM CEO, Mary Barra, to go and pound sand.  Many analysts have felt that PSA Automotive would be a great partner for FCA, but given that PSA has recently announced plans to return to the US, it doesn't make much sense to take on such a burden if they will eventually have a presence in the North American market.  In the end, a Chinese car company will probably scoop up FCA and take on the challenge of trying to turn around the biggest shit show of a car company in this business.  I never thought I'd be saying that the only ones in the world who can save FCA are the Chinese; it's both remarkable and ashamed.

I would like to thank all of you for reading, and and I also want to wish everybody a happy, safe, and fun Fourth of July Weekend!

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