Sergio Marchionne’s final five-year plan shows how FCA Group is leaning on its upmarket brands for future growth

A range of electric Maseratis, an Alfa Romeo supercar to crown an expanded range, massive expansion for Jeep and an £8 billon push towards electrification and autonomy are the major global ambitions for Fiat Chrysler Automobiles (FCA) for the next five years.

For the Fiat, Chrysler and Dodge brands, however, the ambitions are smaller and based on reduced line-ups sold in limited markets; in the case of Fiat in Europe, this involves premium electric city cars.

To understand why FCA will mainly concentrate on the Jeep, Alfa Romeo, Maserati and Ram truck brands, you need to follow the money, the markets and the barrage of regulations heading the way of the motor industry.

Alfa Romeo brings back 8C and GTV, and adds two more SUVs

Jeep, Alfa Romeo, Maserati and Ram generate 65% of FCA’s revenue and are expected to account for 80% of it by 2022. Of the four brands, three have a global presence and focus on the premium market, with their potential margins fat enough to cover the cost of meeting future regulations.

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Reducing CO2 emissions and developing fully electric cars are the most expensive of these regulatory challenges. But there is also the need to develop autonomous systems — that technology currently adds £22,000 to the price of a car, according to FCA chief technology officer Harald Wester — and increase vehicle connectivity.

The most striking market development in the past decade is the exponential shift to SUVs and crossovers. This segment has helped Jeep sales rise from a few hundred thousand units to more than 1.9 million.

That growth, along with the rise of Ram pick-ups, has enabled the company to eliminate its long-standing debt — a point that FCA boss Sergio Marchionne made by wearing a tie for the announcement, having long promised to break a sartorial habit and wear one when his goal of wiping the debt was reached.

Ram, a brand created out of a Dodge nameplate in 2009, is also a major profit driver — sales are up from 263,000 in 2007 to a forecast 770,000 this year — and operates in concert with Fiat Professional, that brand’s successful van division. Combined, the two divisions are the second biggest maker of commercial vehicles in the world.

Jeep, Ram and Fiat Professional dwarf Alfa Romeo and Maserati, but FCA sees the two Italian premium brands as the future of car making.

Jeep confirms new entry-level model to sit below Renegade

The target for Alfa Romeo is to reach 400,000 sales annually — a previously missed target, with Marchionne admitting to poor execution of the previous plan despite the excellence of the Giulia and Stelvio. Key to this goal are smaller and larger SUVs bookending the Stelvio, a new GTV coupé and an 8C supercar halo model.

There will also be long-wheelbase versions of the Giulia and Stelvio for the massive Chinese market, where much growth is hoped for, as well as a substantial facelift for the Giulietta.

Despite flatlining sales, albeit at a much higher level since the launch of the Ghibli and Levante SUV, Maserati is being built up to compete with Tesla and Porsche. The new plug-in hybrid and fully electric versions of the Alfieri coupé and cabriolet supercar will spearhead the marque’s leap towards a sub-brand of all-electric models called Blue, along with the next-generation Quattroporte and Levante.

A smaller Maserati SUV (likely based on the Stelvio) is also due, along with a major refresh for the Ghibli, eight plug-in hybrids and Level 3 autonomy for all models by 2022.

The goal is to generate global sales of 100,000 and a 15% margin by that year.

It’s ironic that the ‘F’ and ‘C’ of FCA are now the lesser brands. Along with Dodge, neither Fiat nor Chrysler received its own presentation at the event, prompting many to question their long-term future.

The FCA line was that the event focused on its global brands. Fiat will remain centred on Europe and South America, while Chrysler and Dodge are North American only.

Maserati to take on 'Porsche and Tesla' with Alfieri, new SUV and four EVs

An electric 500 and a 500 Giardiniera estate are Fiat’s big news for Europe, on the basis that the 500’s premium pricing can accommodate the extra cost of electrified tech. There will also be new Fiat crossovers for South America.

Chrysler will essentially become a brand focused on MPVs and ride-sharing; a new deal with self-driving firm Waymo for 62,000 Pacifica MPVs points to this future.

The five-year plan unveiled last week is the last led by Marchionne, who was appointed the boss of a near-bankrupt Fiat in 2004. The red results figures continued with his takeover of Chrysler in 2009, but it was this audacious manoeuvre, together with the spinning out of Ferrari, that has underpinned the survival of the group — and has seen the value of FCA rise from around $5bn in 2004 to more than $70bn today.

Many might question Marchionne’s handling of Fiat, Chrysler and the soon-to-die Lancia brands, but there’s no denying that his sometimes brutal bets on brand and product have paid off spectacularly. His successor will be no less busy.

Read more 

Jeep confirms new entry-level model to sit below Renegade

Alfa Romeo Giulia coupe to pack 641bhp with F1 hybrid tech

Maserati to take on 'Porsche and Tesla' with Alfieri, new SUV and four EVs

Alfa Romeo brings back 8C and GTV, and adds two more SUVs

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Comments
11

4 June 2018
The plan is effectively to create a much bigger version of JLR across 4 brands rather than 2. A brand cull is necessary and losing the carcus of Lancia is a good thing as it was never going to be revived from its current position. Chrysler and Dodge will ultimately have the same fate, if they continue to be starved of new product. While losing some of these brands may be a little sad, it is important for FCA to invest in the marques that are genuinely aspirational. Its not difficult to see a trend towards cars being more expensive to meet legislation, but owners demanding cars that last longer and/or have better resale value. If that is the case universally loved, aspirational brands and well engineered product, will play a major role in succeeding.

4 June 2018

Absolute rubbish - many brands have been resurrected from scratch and the Lancia nameplate still has a good name despite its neglect, not captialising on this premium brand is madness.

 

 

One day soon the SUV bubble will burst and when it does SUV centric companies will be in the doodoo.

XXXX just went POP.

5 June 2018
typos1 wrote:

 

One day soon the SUV bubble will burst and when it does SUV centric companies will be in the doodoo.

I really really really hope this comes to pass, typo1. I'll be dancing round the room when we get the "car" market back.

4 June 2018

Sergio Marchionne is a bean counter, not a car guy. Cars like the Tipo, Mito and Ghibli are trash. The sooner he is replaced with someone who wants to invest in ALL of the FCA brands, the better!

4 June 2018

The reality is that there is no profit in ordinary cars, and if you can't make a profit, you should leave the market for others to lose money on. 

The profit is in premium brands and SUVs, where people are prepared to pay more. Ford has realised this in the US already and is ending car production altogether there, save for the Mustang. 

The only way I can see to avoid this economic reality might be to impose big import tariffs on cars built overseas.

5 June 2018
With no end in sight to the raping of the middle class there may not be a market for 'affordable' brands in the future. Depressing.

5 June 2018

I love Alfas and have owned many of them and really want the brand to succeed. However, they may be pushing them upmarket, but the buying experience, where I live at least, is far from it.

The local Alfa dealer shares showroom space with bargain basement 500s, Citroen C3s and nasty Jeeps. You literally have to wade through 0% financed Tipos to see the the single £65k 4C and Giulia Quadrifoglio on display. The demonstrators are parked along the road, attracting dirt and needing a 5 minute walk, even in the rain, to get to them.

Contrast this with the nearby BMW and Audi dealers where every car is fabulously prepared and a nice row of demonstrators await potential purchasers near the showrooms.

The Alfa sales guy is a fantastic bloke and he saves the day, but unless you are a committed Alfisti, why would you stop there on your way to the BMW shop, no matter how good the Giulia and Stelvio are?

5 June 2018

Is the Tipo being axed? It only seems to have been launched recently, and is still being marketed (I've seen web / social media adverts for it)

The saloon version is a popular Irish hire car for tourists.

5 June 2018

Trash, what a stupid thing to say, the TIPO, has won loads of awards and is selling really well all over Europe, the UK, no, but then Focus, Golf, And Astra sales are nothing like they used to be, and you clearly have NEVER driven the Ghibli, it is a great car, just because you dont like it does not give you the right to say it is Trash, The MiTo, well, that has been a staple for years and continues to sell, so what if its based on a Punto, the latest MiTo models are not to bad at all, for their size and price.

 

5 June 2018

I’m coming out in defence of the Tipo here, because after driving the most of the current offerings in the C-segment I liked it enough to spend my own money on a new one. There seems far too many comments on here generally that are passively dismissive rather than first-hand experience in order to back up why something can be regarded as crap. In real word situations, rather than blasting around Millbrook in someone else’s car, there is very little between the Astra, Golf, Focus and Tipo, so unless driven at 8/10’s and above most of the differences, although perceptible, are small. Small enough for the Tipo to be a contender, based on price, spec and material quality. I’m just getting a bit fed up with the way everything outside of a select group of cars in any class is discredited as not worth being in the market, like we’re all supposed to buy the same stuff that has been passed as unimpeachable.

I’ll say this about the Tipo: The 1.4 TB engine is a peach, the larger infotainment screen is sharp and intuitive and in this new Street Grey with the black accents and bigger wheels it stands out nicely, so much so that in the 6 weeks I’ve had it I’ve been approached no less than 4 times in public places and asked about it, receiving positive comments, which always makes one feel pretty buoyed. Maybe seeing something other than Focus, Astra and Golfs brings interest and variety to the tedium of modern (mainstream) motoring, as not all of us can afford to wade past the bulk of reasonably attainable cars and go straight to the flagship material.

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The Fiat 500 is a deserved success story for the brand, offering bags of style, a fine drive and low costs

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