What do you do if you’re an overlarge organization fighting a losing battle for market share in a down market, with high fixed costs and a stultified bureaucracy, facing more nimble competitors? If you’re Time magazine, you interview Chrysler-controlling Fiat CEO Sergio Marchionne. And if you’re Sergio facing a similar situation for Chrysler, you tell the troops that an Apple a day keeps the Sebrings away. “Since he took over as chief executive of Italy’s Fiat in 2004, the chain-smoking Canadian-Italian has used Apple as a model, focusing on the way Steve Jobs transformed it from an also-ran computer company into a global icon of cool. He encourages Fiat managers to take a close look at Apple’s branding prowess and even asks them to benchmark their activities against the company. His biggest success at Fiat is the 500 — a tiny, very cool 21st century version of a 52-year-old Italian icon once driven by movie stars such as Marcello Mastroianni and Sophia Loren — which Marchionne calls ‘our iPod.'”
Unfortunately, Time no longer has the kind of clout it once had, where it could summon presidents and captains of industry to its elegant HQ for a quick chat. Do they still have an auto industry reporter? Anyway, so no Marchionne quotes. Instead we get the usual trip to a friendly expert to reaffirm their own hypothesis.
If Marchionne is to succeed, he needs above all to reposition Chrysler from maker of clunky, overpowered gas-guzzlers to purveyor of must-own, energy-efficient vehicles. “The challenge for Fiat Chrysler is to move away from popular products and into ‘pop’ products, full of cool environmental technology and on the right side of history,” says Carlo Alberto Carnevale, a professor of strategic management at Bocconi University’s business school in Milan and a close watcher of Fiat. “In that sense, it’s the same bet as Steve Jobs’. That’s why Marchionne uses that metaphor.”
The question is: does it apply? We shall see.
Is this very different than Toyota launching Scion?
Scion was meant to appeal to youth, and it was kind of cool at first, and thusly appealed to all ages, before Toyota debased it to appeal to average American at which point nobody thinks its actually cool.
Can Fiat really launch one ground breaking innovation after another? Can Fiat instill emotion in average car buyers?
If they can do that, then they win, however they describe the program.
I look forward to trying a Fiat 500 whenever they get here. Lets hope they don’t ruin them for American market.
Time magazine? Why would anyone read Time magazine? Its full of one minute reads with silly cultural overlay.
So insead of ” baseball, hot dogs, apple pie and Chevrolet, we’ll have “calcio, salsiccia, Apple iPod and Fiatsler”? Doesn’t have quite the same ring.
Some one should ask this CEO why Chrysler Factories are coming back on line on June 27th, when they dozens of Product around North America and not sold or even being asked for eh?
What is Apple. It is a premium product sold at a premium price. Techies like them for their attributes, and they then pick up a snob appeal that drives well-heeled buyers their way.
I hope it works. Actually, it has been done before, because this sounds a lot like Chrysler Corporation when Walter Chrysler was running it in the 20s and 30s.
If Marchionne is serious, this is good for car people because the driving philosophy of the company will be a series of well-engineered and innovative vehicles that will be attractive to both car people for their performance and features and non-car people for their image. This kind of product-centered philosophy is Chrysler’s only hope. I hope he succeeds.
I also wonder if anything even remotely of the sort has ever crossed the mind of Fritz Henderson or anybody else at GM. They should be concerned.
Cars are commodities, especially small FWD cars.
Because of that any automaker would envy Apple’s de-commodification of the mp3 player, a very fungible good.
However, Apple is different in a number of ways:
1) Apple didn’t just rely on marketing bullshit and image; they actually were first to market with a better product. Apple had the first high capacity truly portable hard disk based mp3 player.
2) By getting its ass kicked by MS in the OS market Apple learned about the network effect the hard way. But Apple did learn, and it gave the iPod a huge market advantage by initially making iTunes downloads incompatible with other devices. iTunes is what really made the iPod.
3) $200 is not $20,000. The iPod had a big battery issue, and from what I know the iPod is still basically a throw away when the initial battery dies. People will overlook this kind of issue in a $200 device (as long as they can get the more-expensive-than-the-device media off of it first); they will not overlook an issue like that in a $20,000 car. And Fix It Again Tony is well known for its issues.
The 500 is a one trick pony, Fiat doesn’t have any other retro cars to pull off. It will sell well as a fashion accessory, but after that the cars will actually have to compete on merit.
There is a big difference between wanting to de-commodify your cars and actually doing it.
Some other Fiats worth resurrecting are the 124 roadster and coupe and the X1/9. They were good looking and fun to drive. However, for them or the 500 to succeed, Marchionne will have to put enough into engineering and quality control to avoid “Fix It Again Tony” issues.
OSX in its various iterations is technically superior to Windows (based as it is on a Unix core). It’s easier to use, does not suffer from malware, and is ergonomic. People buy a Mac because of this, and, even more so, because it IS cool. Steve Jobs (in his healthy days) came across as a pretty neat and interesting guy. Bill Gates comes across as an unfunny, no-personality geek, and, let’s face it, no one wants to get cozy with Steve Ballmer.
An I-Pod also looks cool, is colorful, and simple to use. Plus, its tied to a large software repository essentially created by Apple (I-Tunes). Who really wants a brown Zune that “squirts?”
Now, let’s look at Fiat/Chysler and compare. Are their products technically superior to those of other makes? No.
Are its products cooler looking than, say Audi/VW, or BMW/Mini? No.
Do Chrysler products make you “feel good” about your purchase? Probably not.
Is your local Dodge dealer as much fun to visit as the Apple Store? Do you even need to ask?
So, while I wish this new corporation well (not really), I doubt a Fiat or a Dodge will ever be considered cool.
Crap/irrelevant brand turns itself into must-have?
That’ll take a generation. 20 years? Also assuming everyone else stands still. Fiat don’t have that sort of time.
Make light of it all ou want, at least they have leadership with a vision. That’s far more than they had going for them for years now. And far and away more than GM has going for it.
// He encourages Fiat managers to take a close look at Apple’s branding prowess //
Many on this site have pointed out how the big 3 eroded because they never focused on keeping brands healthy. Here’s a guy that’s finally trying to do that. He faces tremendous odds in turning it around, but at least he is trying. Give him credit for that…
I can understand the often stated analogy that “Apple is the BMW of computers” They are a premium priced niche/boutique product line that delivers a superior user experience. Personally I hope they stay that way rather than getting too big or upbiquitous, that will ruin them.
How could Chrysler pull off an Apple style turn around? Maybe by “restarting” and publicly restating their corporate agenda with principles such as aiming for the niche rather than the broad appeal. Total dedication to quality of user expereince in all of its facets. Ignoring the general cross currents and fashions of the market. Being truley innovative and independent in its thinking. Looking ahead for the long term rather than the next quarter’s financial reports.
Of course much of this Toyota and Honda and the Korean brands have been doing for decades.
Personally I will always be drawn to fiesty niche players than brands that try to be all things to all people. GM, Microsoft, Toyota, and even Honda are all being hobbled by the “all things to all people” motive.
So New Chrysler is at the same stage as Apple was with Sculley? I eagerly await Fiatsler’s Newton.
If Marchionne is really serious about this, he should have kept his mouth shut. Better to have worked towards this image internally and then let others compare you to Apple.
He’s set himself up for public failure at something which isn’t going to happen anyway.
It’s tough to compare Chrysler to Apple because Apple, even during its darkest hours, has always had fans with a deep interest in its continued survival and a willingness to pay big bucks for its products.
BMW is probably the closest car company to Apple, and I would politely say that neither Chrysler nor Fiat have even the slightest resemblance to BMW in quality, brand image or intelligent design.
I remember the cab-forward Chrysler designs. They had genuine promise. I enjoyed driving one of them, a rental with 5500 miles on it, during a trip to Florida. But I remember the power windows were already starting to creak. I loved driving that car – I remember acceleration and handling were very good, and I loved the way it looked. But something falling apart after 5550 miles does not a premium product make.
That’s a really hard impression to defeat, and quite honestly the thuggish styling of the 300 has no appeal to me whatsoever. I’m not a thug and don’t want a thug car, however good it may be in other respects.
D
The other big difference between Apple and Chrysler is that Apple has a core of users who upgrade their computers to take advantage of new features. These are the folks who carried Apple through bad times and good times. Apple had interesting and useful products to sell prior to the launch of the iPod.
Chrysler does not have the core users. Chrysler does not have product to carry them through the launch of the Fiat 500. Even then, the sales of the Fiat 500 won’t generate enough profits to keep Chrysler alive. And if Fiat gets its products into the US, and Chrysler-izes them with enough cup holders, they’ll still have to compete with Toyota and Honda.
So it’s really more like bringing Atari or Commodore back from the dead, and having THAT become the iPod. Except for one thing … You can’t buy Commodore or Atari products.
@Jeff Puthuff
As long as Sergio Marchionne doesn’t become Chrysler’s Gil Amelio…
Crap/irrelevant brand turns itself into must-have?
Lucky Goldstar to LG ring a bell???
Heh, come to think of it, imagine BMW building $14,000 economy models, minivans, pickup trucks, pedestrian sedans, and even spinning off a badge engineered second division, all in the pursuit of market dominance and selling as many vehicles as possible . . . 1) barf! 2) LOL
LG is no must have. Not like Sub-Zero or Apple or Nintendo. Not even the same league. How can you tell? Imagine if people would stand in line for a day or two waiting for a product launch. Consumerism at its finest.
This sounds like a rotton apple.
One selling point for Apple is that their stuff works well for a long time. While most businesses replace their PCs on 18-36 month time frames, you could keep your Macs for longer than that.
Can Dodge say the same? Aside from the Mercedes-based Sprinter, I would say no.
It is rather encouraging that Marcionne is getting his inspiration from an American success story instead of just trying to mimic what the Japanese do out of some misguided sense of fanatic romanticism. We’ve suckered ourselves for too long by comparing how the “typical” Japanese CEO acts compared to how the “typical” American CEO acts, often using our worst CEO’s to distort the comparative results.
Sounds to me like the beginnings of a focus from Chrysler, the likes I haven’t seen from them in almost 20 years. More power to them, as long as they don’t try their hand at those “I’m a Mac/I’m a PC” commercials.
“Make light of it all [y]ou want, at least they have leadership with a vision.”
And your money.
Well, i hope he can come up with more “must have” cars like the Fiat 500.
This is the right(only?) way to go.
You couldn´t sell even the best car in the world, if it looks ugly or dull.
Maybe with a low price, but then you´re not making any profit.
It takes a LOT of money to run a car company, A LOT. Small cars, at best have only been break even propositions. People do not buy 20k cars like they do $250 washing machines. They expect them to last, always work, and provide some value for their investment. The idea that most automotive consumers will purchase a Fiat like vehicle on anything but price alone is flawed and destined for failure.
“As long as Sergio Marchionne doesn’t become Chrysler’s Gil Amelio…”
It’s been a long time since I read Jim Carlton’s book ( http://www.amazon.com/Apple-Intrigue-Egomania-Business-Blunders/dp/0887309658 ) but if I recall correctly, Amelio deserves more credit than given. Amelio cleared out the deadwood and acquired the NeXT operating system from Jobs. I doubt he had the charisma and branding insight that Jobs has.
“The idea that most automotive consumers will purchase a Fiat like vehicle on anything but price alone is flawed and destined for failure.”
One word: MINI
If Marchionne is to succeed, he needs above all to reposition Chrysler from maker of clunky, overpowered gas-guzzlers to purveyor of must-own, energy-efficient vehicles.
Marchionne, please, please, please sell off every “overpowered” Chrysler vehicle to another manufacturer. Let them have the “Mopar” and “Hemi” names too. You’d get cash to build “pop” products and those poor suckers, cough Nissan or Hyundai cough, would get stuck with full size trucks with V8 engines. Everyone knows Americans prefer small expensive European cars. Why weigh down Fia… I mean New Chrysler with those clunky trucks.
The neon did great for Chrysler in the 90s… then they lost their mojo… and got it back somewhat with the PT Cruiser… and then lost it again.
Bringing the 500 over is a no brainer, but then I think a spunky ad campaign for a car the size of the neon based on a fiat chassis with an automatic transmission and crazy fuel economy for the americans would work wonders. Then they need something akin to the 200c for a midsize. Maybe a new PT cruiser or some other crossover.
Yeah i think they can get their mojo back it just takes one revolutionary car to start building the momentum then you apply it to the different market segments.
If Sergio is truly serious about injecting “Mojo” into his notional North American lineup, he’d better start by scrapping the names “Chrysler” and “Dodge”, both of which currently enjoy all the cachet of “gonorrhea”.
Buckshot
One more word: “niche.”
And the Jeep Panda will be as successful as the Apple Newton.
Buckshot:
Lots of words :)
How many Mini’s were sold in the US last year? How many Mini’s were sold world wide last year? … Not enough to make a difference, and most certainly not enough to save the company.
Chrysler is still burning through $1,000,000,000 each and every month, and that’s before the sales crashed even harder. If the Mini brings in $1,000 of profit, then according to my ancient slide rule, they will need to sell 1,000,000 cars EVERY MONTH.
Problem is, the OEM’s became distracted and drunk on the truck/SUV profits, forgetting to maintain a balanced portfolio.
The American Consumer “thought” when fuel prices escalated, they would want small fuel efficient cars. Reality is, as fast as the consumer switched to small cars, they switched back again.
The American Consumer “thought” when fuel prices escalated, they would want small fuel efficient cars. Reality is, as fast as the consumer switched to small cars, they switched back again.
Only the really, really, REALLY dumb ones….
Pete,
It was incredible the market share shifts to and back from small cars. Significant numbers of people.
Ever calculate the total fuel cost differences between a car that gets 25mpg one the highway like my charger R/T does v 35mpg or even 50 mpg? Law of diminishing returns pays a critical part. I’ll take the safety of the bigger car for my family’s protection.
If I was ChryslerCo I would much rather sell a niche Fiat over automotive jokes like the Compass and Caliber.
“Cars are commodities, especially small FWD cars.”
—————-
Thinking like this is what killed GM.
Here’s what’s similar between Apple and Fiat.
Both companies on a good day are able to make sexy products. Apple has produced a number of clunkers and Fiat has developed many horrible cars. But both have a clue of what sexy is. BMW, in contrast, and typically for a German car maker, has an inherent understanding of all things fatso.
Both companies have also come back from the brink. Near-death experiences have a way of protecting you from complacency. (No guarantee of course, look at Chrysler).
Both companies, on good days, understand the necessity of making a product pleasureable to operate, also known as the man-machine-interface. A Panda is pleasant to drive, just as the cheapest iPod is a joy to use.
Is that enough to save Chrysler? Of course not. Nobody says so, either. But I think it’s a good sign that Fiat is studying Apple.
iTunes is garbage. Too many restrictions as far as Account Registrations/Authorized Devices.
The Automotive equivalent would be a Car that only allows you to drive to pre-registered destinations.
Ugh, it makes me sad that this idiot running Fiat has a Canadian passport. Do we give these out to anyone with the cash now? As for comparing the absolute top computer company with his POS worst 2 car companies in the world……….well, I guess it can’t hurt! I’m sure he can pick up Steve Jobs laundry once Fiatsco fails. Maybe all y’all can get him a US passport as he clearly belongs in the land of the former big 3 and the new home of the big collapse. Obama??
OSX in its various iterations is technically superior to Windows (based as it is on a Unix core). It’s easier to use, does not suffer from malware, and is ergonomic. People buy a Mac because of this, and, even more so, because it IS cool. Steve Jobs (in his healthy days) came across as a pretty neat and interesting guy. Bill Gates comes across as an unfunny, no-personality geek, and, let’s face it, no one wants to get cozy with Steve Ballmer.
An I-Pod also looks cool, is colorful, and simple to use. Plus, its tied to a large software repository essentially created by Apple (I-Tunes). Who really wants a brown Zune that “squirts?”
Ironically, it’s exactly this kind of attitude that New Chrysler is looking for.
Making different into better is what marketing is all about, and there is none more different at it than Apple.
To quote jpcavanaugh:
“…the driving philosophy of the company will be a series of well-engineered and innovative vehicles that will be attractive to both car people for their performance and features and non-car people for their image.”
That sounds like it SHOULD BE the philosophy of ALL car companies. Making huge profits for the shareholders should be a byproduct.
It’s an apples-and-oranges comparison (sorry.)
The only way ChryCo could ape Apple would be if they got a lot – a lot – smaller and devoted their efforts to niche-market products.
Apple doesn’t even market to businesses or low-end personal computer users. They don’t want that market because with that market comes the mundane, workaday reputation that will ruin their snob appeal and hip cred. A $500 Macintosh would undermine the Apple image.
OTOH, is ChryCo really ready to dump 75% of their product line to focus on hip, niche market products?
If they want to be niche marketers, IMO they would do better to copy Harley Davidson, which rose to its current level of success by marketing low-tech vehicles that were desirable both because of their cost (high $$$) and because they oozed that retro-cool panache that makes them different from their competition.
Harley doesn’t make sportbikes, dirtbikes or beginner bikes (and before someone says it: No, Buell =/= Harley.) They know that selling a “cheap bike” would damage their reputation far more than what would be offset by increased sales. They don’t try to be all things to all people. Instead of saying “please buy one of our motorcycles” they ask “do you have what it takes to ride one?”