What in the world is FCA doing?

[ViperSmith]

Dodge being slashed to two cars. Thinking the price of oil may not go back up? Is Sergio insane? Sure, short term it may make some money but it is a disaster of a long term outlook.



FCA goes all-in on Jeep and truck brands on cheap gas bet

http://o.aolcdn.com/dims-global/dims3/GLOB/legacy_thumbnail/750x422/quality/95/http://www.blogcdn.com/slideshows/images/slides/378/136/8/S3781368/slug/l/jp016-025wrub0irl29dqn5plp6m4l76tu1h2-1.jpg

It's no surprise that as SUV and truck sales remain strong in the wake of unusually cheap gas, Jeep and Ram truck sales are taking off.

What is a surprise is that FCA CEO Sergio Marchionne thinks that cheap gas will be a "permanent condition," and feels strongly enough about it to change up North American manufacturing plans.

Jeep appears to be the biggest beneficiary of the product realignment. In addition to increasing the sales estimates for the brand worldwide upwards to 2 million units a year by 2018, the brand will get a flood of investment for new product and powertrains. Consider the Wrangler truck to be part of the salvo, as well as the Durango-replacing Grand Wagoneer three-row announced in 2014 as part of the original five-year plan.

The Dodge Dart and Chrysler 200 sedans will soon be phased out sooner than originally planned. The company's presentation to investors states that the "market shift from cars to trucks and UVs [utility vehicles is] now seen as permanent shift in demand," and FCA wants to respond as quickly as possible. This change will leave Chrysler with the 300 as the brand's only car and Dodge with the Charger and Challenger.

In December 2015, combined sales of the Dodge Dart and Chrysler 200 were 15,310. The Jeep Cherokee, which uses the same platform as the Dart and 200, outsold both models combined, with 24,049 sales.

Both the Dart and 200 had troubles from the beginning. Marchionne recently blamed designers for the 200 not receiving a Consumer Reports 'recommended' rating, and the Dart was one of the lowest-scoring cars in a CR reliability study.

Courtesy of Autoblog

[swexlin]

Is a bit odd. I very much like my Dart, and it has been very reliable, but I understand that some have not. It seems to be hit or miss in terms of quality issues, much like, dare I say it, the Gen 5.

I must admit, I've had many trucks, just to have and show, but never "needed" one. I'm now in a larger house, and some stuff (like the Pirellis for the Viper, hauling mulch, lawn mower, etc!!) won't fit in the Dart. When it comes to replacing it as a daily, I think I'm going back to a Ram,

As for the 200 - don't see many on the road. It's an odd duck - basically, a big Dart. I think most people simply step up to a Charger or 300.

Also, the Dart is more expensive to insure than many think. For the second year in a row, my annual premium went up 5%, due to repair costs on these things. (Viper premium went up 0.06%). I have a top-flight rates (verified by two different agents) due to my good record. I can't imagine what younger people with less than stellar records are paying.

[Mr White]

I suppose his long lost twin brother has been placed in charge of design.

I would surmise that with the narrow focusing of products, he expects the other fiat brands to fill in the gaps left behind.

[Vprbite]

Betting that gas will stay this cheap sounds foolish to me. Especially considering it was made artificially cheap by Saudi Arabia to stop our burgeoning shale oil industry. Why invest billions when you can't produce oil as cheaply as it is being sold right now? But it won't last forever. And even with cheaper gas, people still like buying less of it. Especially with salaries being frozen and such.

I am wondering if I would buy a 10k dollar, nothing exciting about it car that got great mileage just to daily drive, to keep my truck and my Viper for their intended uses. Let the cheap daily take the beating, the miles, the wear and let it be cheap on maintenance. I've flirted with the idea. I wonder how many people are doing that same thing now? If we could get an extremely affordable hybrid, that might really change how people see them. Get your cheap hybrid, and still be able to afford your Tahoe or pickup truck or jeep for camping trips, hauling stuff, trips with the family. Jeeps are much nicer than they used to be for daily driving (I prefer them old and simple) but they have also gotten painfully expensive.

[swexlin]

I am wondering if I would buy a 10k dollar car that got great mileage just to daily drive, to keep my truck and my Viper for their intended uses. Let the cheap daily take the beating, the miles, the wear and let it be cheap on maintenance. I've flirted with the idea. I wonder how many people are doing that same thing now?.

I am, and have for a few years now. Have a cheap beater daily, and my good cars (formerly an SRT8 and Viper, now just a Viper).

[Snakebit]

Wow, hard to believe. Those big cars and trucks are not for everyone. They need something small and entry-level to get new drivers in.

[99RT10]

We all were worried and pondered if the Viper would survive when in reality I think we should be wondering if FCA will survive. I think if gas prices go up, which they will, you might see Dodge/Chrysler disappear in 5-8 years. :eek:

[donk_316]

As an oilfield guy, I will PROMISE you that oil will go way up. The lack of oil producing wells being drilled will catch up to us and everything will go upside down price wise.. What was $34 will go right back up to $150 if not higher.

This isn't the norm we are experiencing, this is a correction, man made correction to set themselves up for the future.

[Rare Snake]

Sergio sure has some crazy ideas, I don't understand them either. Especially getting rid of the Town & Country name, which people have known since forever. The replacement name if you're curious...the Pacifica. I think this is an extremely stupid move, but that's just my opinion.

[SlateEd]

We all were worried and pondered if the Viper would survive when in reality I think we should be wondering if FCA will survive. I think if gas prices go up, which they will, you might see Dodge/Chrysler disappear in 5-8 years. :eek:

^Sad because it's true

Really... in the last few years, every German luxury sport brand has brought its smaller offerings INTO the US market for entry level AND Performance buyers... Merc CLA AMG, Audi S3, BMW M1. And Ford is bringing the RS to the US this year... Exciting cars come in small packages sometimes, WTF is so hard to see about that?

[viper_eddie]

I believe Saudi Arabia has enough cash reserves to keep prices artificially low for another 3-5 years but after that they'll have to raise it too. This should have been a short term profit boost for FCA but to make it permanent sounds kind of foolish especially with basically all other brands investing in hybrids/electric cars. They might get a nasty wake up call one day and be gone.

[TrackAire]

I've never understood Chrysler's marketing, even before the Fiat merger and Sergio.

Why name a new compact car the "Dart"....when I was growing up if you had to drive a Dart, it was literally one of the biggest POS on the market, especially the bare bones model. Re-using old names that were kind of failures in the past is not going to help future sales.

Why name a new car the 200?.....you already have a larger, better and more upscale model called the 300. I instantly compare the two and see the 200 as 67% of a 300, lol. Didn't they have rapper Eminem in the advertisements for the 200?....who was the genius behind that move?

Why would Chrysler not come out with a 4 door Jeep Wrangler in the 80's and 90's?.....they would have made a killing since it would have had much more mass market appeal. Proof is I see the majority of Wranglers on the market now as 4 door vehicles.

Why not offer the Jeep Wrangler with a V6 turbo diesel? That would have given the Jeep Wrangler both a hardcore SUV image, 4 door family car and a decent fuel economy car since it would get any easy 25 mph on the free way. That truck would have killed it during the 2005-2012 model years with unstable fuel prices, unknown economic futures, etc. We now have the ecodiesel in the Ram 1500 and from what I see, it is very well accepted and desirable.

Amazingly, every time a manufacturer brings to market what people request, they sell a ton of that vehicle.

[Nine Ball]

Agreed with Mr White. I think the smaller vehicle segment will be better represented with Fiat products, as they are more popular than low-buck Dodge vehicles. I see Fiats everywhere, even when I'm travelling in Europe. The Dart and the 200 are both boring looking vehicles, to me. I had a Chevy Cruze, and thought it was actually an attractive car for the $20K price tag. Being cheap doesn't mean it has to be boring looking, and someday manufacturers will figure that out.

Also agreed with TrackAire at some of the weird Chrysler marketing. And re-branding failed names. Example, why put the name "Charger" on a 4-door sedan? Just silly stuff. I also remember as a kid in the 70's that the Dart was junk. My favorite Charger back then was orange and had a Confederate flag on the roof. Sometimes, Dodge misses the mark on retro.

[Coloviper]

World is a changing! The focused direction for FCA in this article has been known for many months now. Nothing new for information in this article. Dodge is the performance division, Chrysler the luxury division, Jeep the fun youthful and sporty division and RAM the working man's division. The rest will be cramming the European likes down our throat. All the high mpg, gas sipping stuff will all be the Fiat, etc. euro stuff.

Sergio is VERY black and white in his thinking. No grey area, it is on or it is off.

Gas prices will absolutely rise again. Funny world as we are one short war (Saudi and Iran) away from an overnight unprecedented hike). WTI is returning to just above shut in levels for some companies and with all the M&As we will see in this sector in 2016, it will reset the business models to a much lower barrel break even in the E&P sector as the $75/$85 barrel E&P guys go bankrupt or are forced to sell off. I would not bet against the rise in gas prices.

This only goes to show that why Sergio needs to retire in 2018 or sooner. He is rather erratic in his approaches. He thinks he can change the world of automotive but he is not that influential nor that powerful. His emphatic pushes to merge with GM only further prove the point that he is not in Dodge's best interest.

[Bill Pemberton]

The one key that was alluded to, was FCA may have someone else do the small cars for the future. Sergio has been very intense about his concept of mating with another automotive corporation , to lower costs and still offer the consumer a wide product range. First it was GM and other unlikely suitors, but when one considers the marriage with Mazda on the new Fiat 124 Spider, could a line from that Japanese company , redesigned and badged for Dodge or Chrysler be in the works? Heh, all speculation, just logically trying to see if this is more of the end result as it has not been a secret what Sergio thinks is the long term stability and competitive edge needed in increasingly complex automotive manufacturing process.

[ViperPete]

Why does Chrysler keep making questionable decisions? They are the most exciting brand and for the last 25 years their marketing choices and company directions have been questionable at best.

What about the governmental mandate about required fuel economy? How is that going to work when all they have are gas guzzlers?

[Camfab]

It's simple enough, you can't produce what doesn't sell. I think it's the right choice, give the people what they want. Chrysler can't make a desirable small car. They should stick with what sells, Jeep, big rear wheel drive cars and trucks, end of story. When gas prices rise, they rise, no one ever considered Chrysler as a Japanese car replacement anyway. As far as fuel economy mandates, you just payout the ass and buy credits from Tesla. That's exactly what they are doing now.

[Mr White]

Chrysler can't make a desirable small car.

They have and they can, they just chose not to.

[plumcrazy]

And re-branding failed names. Example, why put the name "Charger" on a 4-door sedan?

ill never understand a FOUR DOOR charger, FOUR DOOR CHARGER DAYTONA....seriously WTF ?

[Snakebit]

Pulling completely out of racing, killing the Viper after '17 and now trimming back the remaining product offerings .... it's probably time I find something I like about Ford.

[ACR]

The 200 and Dart are poor competitors in the market-space and the the numbers illustrate that; in this game sales dictate everything. Ram and Jeep have always weathered the storm, Sergio knows that, it's actually a decent move (particularly with Fiat there to fill gaps). He's letting Dodge focus on what it's good at, muscle cars, trucks, and blue-collar luxury cars.

[ViperSmith]

The 200 and Dart are poor competitors in the market-space and the the numbers illustrate that; in this game sales dictate everything. Ram and Jeep have always weathered the storm, Sergio knows that, it's actually a decent move (particularly with Fiat there to fill gaps). He's letting Dodge focus on what it's good at, muscle cars, trucks, and blue-collar luxury cars.

Dodges issue of sticking to performance is that what they have been doing isn't going to last long. The Hellcat is kaput in a few years due to EPA.

They really need to get into next generation powertrains (electric assisted, more FI, etc) if they want to remain in the game. They are behind the ball with next gen stuff.

[ViperSmith]

And I agree with the price of gas. I think we'll see 2-3 good years of low prices as the Saudi's try to flush out competition before we see prices jump up again. Then again, we are a short small war away from prices skyrocketing as well.

Banking on fuel prices being low is just stupid.

Banking on them being high hasn't worked out well, just drive through Western PA, Nebraska, etc.

[TrackAire]

Dodges issue of sticking to performance is that what they have been doing isn't going to last long. The Hellcat is kaput in a few years due to EPA.

They really need to get into next generation powertrains (electric assisted, more FI, etc) if they want to remain in the game. They are behind the ball with next gen stuff.

I wonder about the Hellcat and other extreme performance cars being kaput. What I really think the government cars about is money, not the environment. The environmental claims only help increase the governments bureaucracy which in turn makes them more money, keeps them relevant and allows them to thing they're in control. Bureaucracy means jobs, pensions and security to these redundant government agencies. EPA for one is a huge revenue sucker.

If the government had a way to "tax" performance, they'd let the manufacturers build whatever they wanted as long as it made the government revenues. Right now we have the "gas guzzler" tax. Other countries impose a horsepower tax. If the big three auto makers could lobby the government to have some sort of " performance tax" for the lower mpg cars, the government would be be all for it since they only care about the revenue. (proof: you can own a machine gun or silencer, you just have to pay the tax permit and submit paperwork and be approved). I'm pretty sure large companies that produce a lot of pollution can also get carbon credits, etc....it's just another form of taxation. I hate the term "taxes" when dealing with performance cars, but it is what it is. Give the consumer the ability to buy what they want if they can afford it. The market will dictate what that dollar figure performance taxation will be. Too much tax and the system will fail to sell. It will achieve an equilibrium of performance to tax cost, just like it has in so many other markets, both here and abroad. In the end, the government makes more money and that is why they would be all for it....and crazy performance cars continue to get produced.

[WANTED]

I think we have been here before. Lets go back and view what happen in the early 70's. Muscle cars were selling but the government and insurance company's step in to make some money. Government = TAXES, Insurance = HIGHER PREMIUMS on muscle cars. Then S*** hit the fan and most if not all cars had MUCH less horsepower. Here we are again. Its been a good run but seeing the FORD PINTO MAKING A RETURN. JMHO

[Vprbite]

I think we have been here before. Lets go back and view what happen in the early 70's. Muscle cars were selling but the government and insurance company's step in to make some money. Government = TAXES, Insurance = HIGHER PREMIUMS on muscle cars. Then S*** hit the fan and most if not all cars had MUCH less horsepower. Here we are again. Its been a good run but seeing the FORD PINTO MAKING A RETURN. JMHO

The pinto was low on horsepower but big on BOOM!

[Camfab]

They have and they can, they just chose not to.

They never have, and the number of failures proves they can't. It's not a choice, it's a business failure.