Sergio Marchionne's ambitious plan to revive Chrysler with a wave of new products divides the world into halves--one set of vehicles engineered by Chrysler for itself and Fiat and another set engineered by Fiat for itself and Chrysler.
The alliance starts to bear fruit in 2012 and gathers momentum with a spate of launches in 2013.
Marchionne said this month that the two automakers were now "inextricably intertwined."
The greatest cross-pollination of Chrysler and Fiat expertise will take place in the middle of the market. Chrysler engineers are taking a European Fiat platform called the C-Evo and re-engineering and widening it into a new platform called C/D that will spawn a fleet of vehicles.
If all goes according to plan, seven or eight new Chrysler, Dodge, and Jeep vehicles will come off that C/D platform aimed squarely at the middle of the domestic market. There will be two compact sedans in 2012 to replace the Dodge Caliber and Chrysler PT Cruiser.
And in 2013 there will be a wave of vehicles, including a compact crossover to replace the Jeep Patriot; a midsized SUV to replace the Jeep Liberty; midsized sedans to replace the Chrysler Sebring and Dodge Avenger; a midsized crossover for Chrysler; and possibly a midsized crossover to replace the Dodge Nitro.
More than any other factor, it was the failure to field strong competitors to vehicles such as the Honda Accord, Toyota Camry, Ford Escape, and Toyota RAV4 that led to Chrysler's sales collapse and eventual trip into bankruptcy last spring.
The two partners will lean heavily on each other to engineer and manufacture products.
"From an architectural standpoint, we're going to end up with the world [divided] into two parts," said Marchionne at the Nov. 4 unveiling of Chrysler's five-year business plan. "A part will be handled by Fiat for itself and on behalf of Chrysler, and another one will be handled by Chrysler for itself and for Fiat."
All vehicles below the compact sedan segment for Fiat Auto and Chrysler Group brands will be engineered in Italy and built there or in Fiat factories elsewhere. All larger vehicles--starting with the replacements for the Caliber and PT Cruiser and including minivans, large SUVs, and pickups--will be engineered by the Chrysler team in Auburn Hills, and most will be made in North American factories.
That means, for example, that Fiat will drop out of its minivan alliance with PSA/Peugeot-Citroen. Future Fiat and Lancia minivans will be engineered in Auburn Hills and made in North American factories for export.
On the flip side, starting in 2013, Lancia could export to North America a subcompact five-door hatchback that would become the entry model for the Chrysler brand. Dodge also will get a subcompact engineered by Fiat and imported to the United States.
But it's in the midsized segment that Chrysler benefits--starting in 2013.
In July, Fiat handed over to Chrysler the C-Evo platform with European specifications to serve as the underpinnings of a new group of vehicles.
For the United States, Chrysler is widening the platform by 1.6 inches. By redoing the platform, Chrysler could avoid the mistakes made by other automakers. In the 1990s, Ford brought its European mainstream Mondeo sedan to North America and rebadged it as the Ford Contour and Mercury Mystique. But U.S. customers found the sedans too cramped.
Philippe Houchois, analyst for UBS in London, estimated that Chrysler and Fiat could produce a combined 750,000 units annually off the C/D platform.
A better fit than Daimler?
Dave Cole, head of the Center for Automotive Research in Ann Arbor, Mich., said the Fiat-Chrysler alliance balances the needs of two carmakers in a way that Chrysler's merger with Daimler never did.
Such synergies weren't possible between Daimler and Chrysler because "what they were essentially doing is taking two companies with little product overlap and somehow sticking them together. It was just not in the cards that they would be able to pull that off."
Marchionne and his team face some big obstacles as he aims for U.S. market share in the 13-14 percent range. Chrysler is now hovering around 9 percent.
Houchois said, "Marchionne's plan is probably too ambitious on market share and extremely cautious on market assumptions."
If Chrysler can't hit Marchionne's market share target, he said, it could still achieve sustainable volume if the market itself grows.
John Wolkonowicz, analyst for IHS Global Insight in Lexington, Mass., said the plan sounds good, but Chrysler has to sell some vehicles between now and when the new products start arriving to pay for the planned new product assault.
"If they actually get to the new products," he said, "they have a fighting chance."
(Source: Automotive News)