brands

Flagging Fiat Sales: No Easy Answer

October 14, 2015 by admin Leave a Comment

The Fiat brand has this 500X crossover in its portfolio.

It must be tough sitting in a meeting of Fiat Chrysler brand heads, especially if your brand is underperforming. Sixty-eight straight months of year-over-year sales improvements puts an enormous pressure on executives to succeed. Sure, the streak will someday be broken, but the last thing any brand head wants is to be blamed for ending it.

Fiat Chrysler has enjoyed a tremendous rebound over the past six years as two separate and distinctly different companies were merged, Ram was separated from Dodge, and Chrysler was reassigned as a mainstream brand. In addition, the Fiat brand was brought back to the US in 2012 followed two years later by Alfa Romeo. FCA is on a roll and is continuing to gain market share.

Jeep, Ram, and Chrysler are continuing to grow, but Dodge sales are down with most of that loss attributed to a discontinued product, its midsize Avenger sedan. Dodge is right where it is supposed to be as a newly minted performance brand and sales should bottom out by early 2016. As far as the Italian brands go, Alfa Romeo’s gradual roll out will receive a major boost late next year when the gorgeous Giulia compact luxury sedan debuts.

Fiat 500L

Pictured: Fiat 500L.

That leaves one brand we’ve scarcely mentioned, the eponymous Fiat marque.

Certainly, FCA had high hopes for Fiat when the first of its North American 500 models was officially presented at the 2011 North American International Auto Show in Detroit. Many believed that the diminutive vehicle would pull in customers as high fuel prices coupled with Italian enchantment would drive interest in the brand.

Unfortunately, that hasn’t happened even as new models arrived, including the compact 500L followed by the 500X crossover. Under normal market conditions all three models should provide strong sales, however this market is anything but normal as lower gas prices, excellent financing rates, and intense competition has buyers looking elsewhere. Indeed, Fiat brand sales are down 10 percent year-to-date through September and would be off by more than 20 percent without the new-for-2016 500X n the product portfolio.

The Fiat sales drop may not have a tremendous impact on FCA’s overall sales, but it isn’t something that can easily be dismissed. Perhaps that is why the company’s CEO and President Sergio Marchionne decided earlier this month that Fiat brand head Jason Stoicevich should move on.

Indeed, last week, as part of a larger shuffling of brand managers, Stoicevich was reassigned to head of fleet operations and small business sales in the US. However, by the next day Stoicevich resigned and left the company altogether. Notably, no reason has been given for his abrupt departure.

Chrysler brand chief Alistair Gardner also was reassigned, but his sales numbers were sound. Additional management shuffling was also accomplished as Timothy Kuniskis now oversees three brands: Dodge, Chrysler and Fiat.

Alfa Romeo Giulia

Alfa Romeo sales should see a spark turn into a flame when this Giulia sedan
arrives on the market in late 2016.

We might speculate on the reasons why Stoicevich left, but that theorizing would not necessarily be correct. Stoicevich was in charge of Fiat for two years and seven months and may have been disappointed with the reassignment especially with new product on the way. One of those products is the reborn Fiat 124 Spider, a new model that shares its platform with the Mazda MX-5 Miata.

It has been thought by some that the 124 Spider will be shown at an upcoming auto show, with The Detroit Bureau identifying Los Angeles as that venue. The Los Angeles Auto Show kicks off next month just ahead of Thanksgiving and is the first of four important North American shows where automakers roll out new products. Detroit, Chicago and New York follow.

With the 124 Spider in the fold, the Fiat brand should get a fresh look from customers even if its sales are small in number. As for increasing those sales to reach 50,000 units per year, Fiat may need some help in the form of higher fuel prices. Certainly, the 500X and 124 Spider will contribute, but sales of the other two models may continue to decline or at least stabilize at levels far below what FCA management wants, but probably not to the detriment of Kuniskis’ place at the management table.

Fiat photos copyright Auto Trends Magazine; Alfa Romeo photo copyright Fiat Chrysler.

Does Volkswagen Need a Budget Brand?

February 27, 2013 by admin Leave a Comment

Volkswagen GTI — Older VW platforms would underpin
any new brands models.

The Volkswagen Group is made up of 12 brands, going beyond its eponymous Volkswagen moniker to include such makes as Audi, Bentley, Porsche and Skoda. Not every brand is fully owned and, in the case of Suzuki, VW’s relationship with this Japanese make is a strained one.

The Volkswagen Collective

Still, the VW empire has enabled this German automaker to lay claim to being one of the top car manufacturers in the world, vying with Toyota and General Motors for the No. 1 position in global vehicle sales. For several years Volkswagen has said that it intends to overtake its competitors, with 2018 the target year. Auto Trends internal data reveals that this prospect is likely to be realized much sooner, occurring no later than 2015 and perhaps as early as this year.

To get there, Volkswagen will continue to target emerging markets, with an eye to reaching more customers in India, Africa and elsewhere. Consumers in those markets, however, may find that even the cheapest-priced Skoda or SEAT model to beyond their budget and will, therefore, consider budget brands such as Tata, Dacia and the soon to reemerge Datsun, a Nissan undertaking. Although VW may not field a model as cheaply priced as the proposed $3,000 Datsun, it is looking at serving a market with a price point below US$8,000.

Brand Dilution

With 12 brands to manage, adding a 13th brand may seem counterintuitive. SEAT and Skoda already serve the bottom of the market, therefore extending the product portfolio of one or the other seems to be a much more plausible approach. Besides, wasn’t multiple branding one of General Motors problems when it went bankrupt in 2009 and cast off Pontiac, Saturn, Saab and Hummer?

To answer the question in the last paragraph first the Volkswagen Group is not General Motors. The structure of the two companies prior to 2009 was far different. GM was held down by legacy costs as well as supporting brands it had no desire to maintain. VW’s collection of brands is mostly that a collection makes that were usually long established before VW bought each one.

SEAT and Skoda could easily fill in the gap, but as the IHS has noted Volkswagen will make use of previous generation platforms for the budget brand while its other brands will employ its modular architecture. Current B- and C-segment platforms, now being phased out, would underpin the budget brand. Importantly, the costs for building these models have already be wrung out, enabling Volkswagen to deliver low-priced cars that won’t compete with its latest technologies.

Budget Branding

Volkswagen’s strategy here is to clearly protect its existing brands while allowing its yet-to-be-named new brand to enter markets where it is looking to expand. China is, of course, a significant market for the new brand and will likely be one place where these vehicles are built according to Autocar. Base development would take place in Germany with Volkswagen hooking up with a local partner to assemble these vehicles in China.

Once established in China, the VW budget brand might have the resources to build locally in Russia, India, Africa and South America. Several things must happen first including the groups continued absorption of its newest brands, stabilization of the auto industry and the establishment of the budget brand in China. Those plans might, however, become unglued if economic instability, war or a natural catastrophe occur, challenges that might affect the entire globe, not just VW’s plans and its desire for global preeminence.

Global Competitors

Just as Volkswagen hatches its own plans to reach new customers, General Motors and Toyota will not be sitting by idly. GM is currently seeking deals in China to expand its own production in a bid to reach 5 million units annually, while Toyota may simply absorb one of its home-grown competitors, perhaps wresting control of Suzuki from Volkswagen or making a play for Mazda.

So, to answer the question posited in the title: No, Volkswagen does not need a budget brand, but it will use that brand to acquire new customers. Its strategy to deploy older vehicle platforms may be a sound one, a cost effective method that may help Volkswagen with its global ascendancy and keep it on top.

7 Car Brands You Won’t See in the USA Anytime Soon

May 23, 2012 by admin 2 Comments

Tough market and competition keeps some automakers away.

The U.S. auto industry is the second-largest in the world, having been bypassed by China in 2009. China’s ascendancy came as the U.S. market tanked, but its recovery is in progress and promises to be a good one. Car manufacturers the world over prize both markets, desiring the U.S. because of its high profit margins and China for its volume. Not all brands are present in both markets and we can think of several makes that aren’t likely to make an appearance in the U.S. anytime soon.

1. Renault — Big in Europe and in the Americas from Mexico on south, Renault is no stranger to the U.S. market. The French automaker partnered with American Motors Corporation in 1980 and assumed controlling interest of AMC in 1983. Throughout much of the 1980s, Renault and AMC models were sold across the US until Renault sold AMC to Chrysler in 1987. Renault’s presence in the U.S. market ended in 1992 when its rebadged Eagle Premier model was dropped by Chrysler. Today, Renault and Nissan are in a strategic alliance with the latter likely keeping the former from ever showing up stateside again.

2. Peugeot — Like Renault, French automaker Peugeot also sold its cars in the United States, beginning distribution in 1958. Its models, however, were less than inspiring and the market for Peugeot cars never thrived. By 1991, Peugeot exited both the U.S. and Canadian markets, although it has since reestablished a presence in Mexico. Don’t expect to see the latest Peugeot models on U.S. highways within the next few years despite its all-new alliance with General Motors. China is a more practical expansion point for this automaker with GM, perhaps, nixing any possible plans for U.S. distribution.

Editor’s Note: In February 2019, Peugeot announced it will return to the U.S. market, setting 2026 as its re-introductory date. Likely, the company will debut its latest models through a car-sharing service.

3. Skoda — The Volkswagen Group is bent on leading the world in car manufacturing and its Skoda subsidiary will be doing its part to contribute a significant sales boost. The Czech automaker was largely unknown outside of eastern Europe until VW came calling and buying in 2000. Skoda products share platforms and parts with Volkswagen products, but one model could find its way to the U.S. However, Volkswagen is much more interested in promoting its eponymous brand than launching Skoda stateside, thus any Skoda product sold here will likely carry VW badging.

This Skoda MissionL is a Chinese-bound model.

4. SsangYong — It looks difficult to pronounce, but a Korean friend of mine says that the double “S” in SsangYong is treated as a hard S. No matter, this once bankrupt automaker was rescued by India’s Mahindra & Mahindra, a company with its own designs on the U.S. market. Those designs have been thwarted in a legal tie-up with its one-time U.S. distributor and could take years to untangle the mess. SsangYong may prove to be the avenue by which Mahindra makes its official U.S. debut, but we don’t see that happening within five years, if at all.

5. Samsung — Korea’s big electronics company began building cars in 1998, just before the Korean economy tanked. Two years later Renault bought a controlling stake in the automaker, increasing it to 80.1 percent where it is today. Samsung cars are rebadged Nissans, the latter a strategic partner of Renault. Nissan Motors is on a quest to increase its market share in the U.S., with an eye of overtaking Honda as the second-largest Japanese automaker in America. Allowing Samsung badged models would only undercut its U.S. efforts, thus the only Samsung you’ll ever see is the one you watch, make calls on or use to wash and dry your clothes.

6. Holden — Okay, trick submission. Holden cars have recently made an appearance in the United States with its Monaro coupe sold as the Pontiac GTO and its Commodore as the Pontiac G8. When Pontiac died, Holden’s presence in the U.S. went with it, but only for a little while. Today, the Chevrolet Caprice is sold as a pursuit vehicle to law enforcement agencies only. That car is the Holden Commodore-Pontiac G8 and is one model that may eventually be sold to retail customers. As far as Holden getting a hold in the U.S. market, we that think brand-happy GM has learned its lesson. At least we hope that it has!

7. Tata — We’ve known for years that Tata Motors has been planning to sell its uber-cheap Nano in the United States. A European-spec model, the likely precursor of the U.S.-spec model, has been built. However, it still hasn’t been sold. Tata has been exporting its cars to other emerging markets and it seems likely it will continue to find markets where competition is thin in the ultra-low-cost entry-level market. As for a U.S. model of any kind, Tata may be content with managing its Jaguar and LandRover brands, highly profitable lines for this Indian car company.

The U.S.-spec Tata Nano is not ready for prime time.

Other Brands

There are scores of other brands around the world that either have a more localized presence or simply have little interest in entering the highly-competitive and expensive U.S. market. Maruti, an Indian automaker controlled by Suzuki, is busy expanding its presence throughout this vast republic of 1.3 billion people. Russian and Chinese manufacturers may someday sell cars stateside, although it seems likely that a Chinese brand such as BYD will set up shop here first. Brands that don’t make it to the U.S. need not look longingly at the U.S. market as the cost of entry is too high and the competition fierce.