Monday Musings: Will FCA Become The Auto Industry's Parts Car?

By Author: Harvey Briggs, Date: Aug 28, 2017
img

After essentially being gifted Chrysler Group by the U.S. Government and riding an industry upsurge to renewed profitability, Sergio Marchionne was being hailed as a genius by the press just a few years ago. The shiny four-door Jeep Wrangler – designed and launched under the previous regime – was flying out of showrooms. Pickup trucks now rebadged Ram – again a strategic decision made during the DaimlerChrysler years – have been hauling heavy profits into the corporate coffers. Even the liberation of Ferrari was seen by some as a bold stroke for a company that needed a bit of cash to invest in its Chrysler, Dodge, Fiat, Maserati, and Alfa Romeo brands.

But a funny thing has happened in the past year or two. The company has struggled and now its pieces may be more valuable than it is as a whole.

Chrysler is essentially a one-product brand with the excellent Pacifica as the only new product on showroom floors in 2017. Dodge seemingly can’t sell anything that doesn’t have a Hellcat badge on the quarter panel. And, sales of both Fiat and Alfa Romeo cars in the U.S. remain a rounding error for car companies like Ford, GM, BMW, Toyota, and Mercedes Benz.

Marchionne has been begging for a partner, approaching GM, VW, and others to invest in his shrinking empire. Now comes word that Chinese SUV manufacturer Great Wall is interested in purchasing the Jeep brand from FCA. While FCA is denying anything is in the works, a company that doesn’t have the cash to invest in either electric or autonomous technologies would certainly entertain talks for its most valued asset if it could secure a future for the rest of its brands.

Selling Jeep, however, is a short-term solution to a long-term problem, a problem that FCA won’t solve without some visionary leadership and right now that seems to be lacking. Current leadership has put them in this precarious position by creating a line up bloated with SUVs, trucks, and crossovers; a diesel scandal of its own; and a new product strategy that only seems to be focused on power and performance. FCA is living in the past with few products and concepts that can carry them into the future.

With this product line up, factories that produce some of the lowest quality products in the industry (with the exception of the Pacifica and Ram pickup), and little future potential, it’s not surprising that other car companies aren’t interested in FCA as a whole. The only real assets the company has are its brands. Having already spun off Ferrari that just leaves Jeep as their one brand with any real value. Chrysler, Fiat, Dodge, Maserati, Alfa Romeo, and Ram might be worth something to the right company looking to fill a specific gap in its product/brand line up, but anyone buying one of those brands will need to make a significant investment in products and marketing.

It’s hard to see great brands like these continue to struggle when they’ve been given so many chances over the past few decades. But as companies like Volvo, Jaguar, and VW/Audi (even with all their troubles) demonstrate, there’s no substitute for great products and that only comes from leaders with vision and focus.

Right now, unfortunately, the only thing Marchionne seems to be focused on is finding a buyer.

author-img
Harvey Briggs

Harvey Briggs is the Founder, Editor, and Publisher of Rides & Drives. He has also written for Car and Driver, Winding Road, and the luxury lifestyle blog, Pursuitist.com. His passions run from fast cars, small planes, boats and motorcycles to music, travel, and sports. When he's not on the road testing the latest cars, he been known to turn up on stage playing rock and blues guitar at clubs around his hometown of Madison, Wisconsin. Follow Harvey's adventures on Instagram and Twitter @harvey_drives and find him on Facebook. Though keeping up could be a problem. As Harvey says, "If I don't slow down, time can't catch me."

Ford uses tequila to stimulate innovation

Ford uses tequila to stimulate innovation

Rides & Drives | Carolyn Briggs | Jul 20, 2016
Is the Ford F-150 America’s greenest vehicle?

Is the Ford F-150 America’s greenest vehicle?

Rides & Drives | Carolyn Briggs | Apr 26, 2017
Monday Musings: Electrification, Autonomy, and Latent Consumer Needs.

Monday Musings: Electrification, Autonomy, and Latent Consumer Needs.

Rides & Drives | Harvey Briggs | Apr 24, 2017