Thursday, July 24, 2014

Fiat Changes Chrysler's Direction.

Chrysler New Yorker photographed in College Pa...
Chrysler New Yorker photographed in College Park, Maryland, USA. Category:Chrysler New Yorker Fifth Avenue (Y-Body) Category:White Chrysler sedans (Photo credit: Wikipedia)
Dodge Intrepid photographed in College Park, M...
Dodge Intrepid photographed in College Park, Maryland, USA. Category:Dodge Intrepid (first generation) Category:White Dodge sedans (Photo credit: Wikipedia)
1993-1997 Chrysler Concorde photographed in USA.
1993-1997 Chrysler Concorde photographed in USA. (Photo credit: Wikipedia)

In previous postings I talked about your marketing niche and your place in the marketplace and how difficult it can be to change that niche or marketing group. Today I am going to look at one of the major players in the auto industry Chrysler whose parent company announced a couple of months ago what their product direction is going to be and see if they are making the right or wrong decision in the long run.

Chrysler has been down a very rocky road over the last 35 years. After almost going bankrupt in the 1980's it came back with vengeance only to fall back into mediocrity again.

It was then acquired by Daimler the owner of Mercedes which produced mixed results with some award winning products but misdirection elsewhere. Then came the disastrous sale to Cerberus which Mercedes sold ownership but had control over the products offered by Chrysler and finally the government bailout and sale to Fiat.

Recently Fiat has announced how it intends to move forward with its Chrysler Division and re-image the nameplate that has suffered for several years. Fiat plans to change the marketing direction of the division to increase sales.

For those not familiar with the brands, Chrysler was supposed to be the luxury brand, Plymouth the volume and lower end brand, and finally Dodge was originally the middle brand between Plymouth and Chrysler (there was a fourth brand Desoto that was slotted between Plymouth and Dodge before that brand was discontinued in 1960). Shortly after Chrysler was acquired by Daimler, the Plymouth brand was dropped then in 2009 Dodge trucks became the Ram brand. The Dodge Viper which was the performance superstar of the Chrysler lineup was to be the star of a new brand called SRT which were the sport trim levels on several Dodge cars but they have since been put back under the Dodge umbrella.

The first major change will be that Chrysler brand will become the volume nameplate of the division. Car buffs are howling over the decision that turns what was once the luxury brand of Chrysler Division in the volume leader. However, any thoughts of Chrysler being a true luxury brand went out the window years ago and especially after the 90's when cars such as the Chrysler New Yorker was built on the same LH platform as the Dodge Intrepid with little to tell them apart other than the front grill of the car. It appeared that Chrysler was following the bad example of General Motors of the 80's and 90's instead of other companies who were more successful at creating unique luxury cars that stood apart from their more common brethren.

At this point in time there is few car buyers out there that think of Chrysler as a luxury brand beyond some that do like the one shining star in the Chrysler lineup and that is the 300. Now Fiat does not intend to completely abandoned the luxury market, instead it is bring back Alfa Romeo to the United States to sell the upscale cars. Analyst are questing whether the Alfa Romeo brand will be able to take a bite out of the luxury car market from other better known brands.

Next Fiat intends to make Dodge the performance brand which has been off and on for years. The new Challenger Hellcat is an example of the future of the division. The Dodge Caravan will be eliminated in favor of the Chrysler Town and Country. Once again there is little difference these days between the two vehicles as both are the work horses of the rental car fleets. As mentioned above the Dodge Viper is back and the Dodge lineup will see more performance oriented cars.

Some of the most aggressive plans Fiat has involves the Jeep nameplate that Chrysler acquired more than 20 years ago and has been one of the bright spots for Chrysler. While the Patriot and Compass vehicles have not won over car enthusiasts or buyers, the new Jeep Cherokee seems to be a winner giving the every day drive what they are looking for in a vehicle but still offering its core enthusiast a model that makes them happy in the Trailhawk edition. Fiat also intends to take Jeeps unique niche globally by expanding its reach in Europe and Asia. They also intend to build a new large sport utility vehicle and reintroducing the Grand Wagoner name to go head to head in the larger SUV market.

There is also smaller plans for the RAM division. The new ProMaster which is a full size front wheel drive cargo van has already arrived and plans are for a smaller cargo van called the ProMaster City to compete with the likes of the Ford Transit Connect. Beyond that their bread and butter pick up trucks that have taken a big bite out of General Motor's market share over the last few years will get updates and then new models over the next few years.

It will be interesting to see how Fiat's plans will work out. As I have mentioned numerous times it can be extremely dangerous to radically change your core market too quickly as both Nordstrom and Wal-Mart found out a few years ago. However, in this case the Chrysler brands with the exception of Jeep the brands have been so marginalized over the last 35 years the change in direction will most likely not hurt Fiat in the long run. With that being said, what Fiat needs to do now is produce cars that excite the marketplace and bring buyers into the showrooms and that is going to be a tough sell.

Just a note of disclosure: I worked for a division of Chrysler for 5 years and have previously been a shareholder of Ford.