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Keep in mind, Chrysler’s incentives were averaging $4,908 per vehicle in September. Marchionne’s going to be singing the “ask me again in the medium-to-long-term” song for a while.
11 Comments on “Sergio Marchionne On A September To Forget...”
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I guess what’s scary is that the CEO of a major automaker — make that 2 automakers — doesn’t understand what market share is. His excuse for all the automakers losing market share in September is backlash from ‘Cash for Clunkers.’
By definition, market share is a zero sum game — it always adds up to 100% for all automakers. Which means that they could not ALL have fallen, no matter the external forces.
Sergio’s issue is not what is going on with all automakers in the US, just what’s going on at Chrysler, which has had declining market share since the recession hit. If he can’t fix that soon — and how can he, the new product pipeline is so lean? — then there is no Chrysler.
Chrysler’s problem is a declining market share in a declining overall market. What if Marchionne by some miracle or slight of hand does solve Chrysler’s declining market share, but the overall market remains depressed due to a lingering recession, high oil prices or Peak Oil?
It seems to me the profitability he sees coming from making cars people want and maintaining market “discipline” on pricing may be wiped out by the decline in the size of the overall American market.
After all in manufacturing, volume has to be enough to cover variable and fixed costs over time even for cars that people want to buy at list prices. And raising prices even more is not the answer in a weak market as more sales will be lost.
The total American market volume may be so low that Chrysler’s market share will still not be profitable. Then what?
Meh, he speaks English but oddly I really didn’t comprehend hardly anything. He should run for office.
Three observations – Sergio neglects to mention that most of the Chrysler/Dodge car line-up is already past its sell-by date.
Chrysler as a brand may already be damaged beyond repair, thanks to the Sebring.
Last but not least, FIAT will have to spend money to bring in new models.
To gear up an existing plant for a new platform, it costs almost 1/2 a billion USD and there is no guarantee that Fiat’s existing designs will sell well in North America.
The FIAT brand’s volume sellers in Europe are not very large cars by North American standards, but they are contemporary. Take the FIAT Bravo for instance:
This deal is similar to Saturn. Sergio and Penske are pretty smart in my opinion.
These are “recovery bets”… Spent a few million to get exclusive rights to one or more brands and if the NA market doesn’t return to 15+M annual sales on the right timetables, walk away.
Don’t want to miss out on a “V” shaped recovery, but also don’t want to spend billions to get in early on an “L” or a “U”.
Other than the Lancia Thesis, which I believe is going out of production soon, the FIAT Group doesn’t sell anything larger than what North Americans consider to be a compact car. FIAT wants to use the “next gen LX platform” to build large sedans for Alfa Romeo.
Both FIAT and Chrysler have nothing.
One other item not mentioned is that FIAT could leverage the Jeep brand for production outside of North America.
For instance, Grand Cherokee and the Wrangler would do well on Russian roads in the Winter. They would have to be produced in Russia, or face stiff tariffs.
An AVERAGE incentive approaching ~$5k?????
Is that figure right? Good god.
I wonder even when they bring over cars from Fiat if they can restore Chrysler/Dodge. From what I have read in Consumer Reports and elsewhere, Fiat’s current cars in Europe are not exactly models of reliability.
his accent was not a problem, but the quality of the sound was. What the hell did he say, if anything?
As far as $5k and even $6k incentives, these were ROUTINELY given by the automakers (not Honda, but most others) at the end of each model year. In 2009, these same discounts were given, unvoluntarily, by US, the long-suffering Taxpayers that are bailing out these losers, to the tune of $4,500 a car for 700,000 clunker replacements.
Fiat’s product lineup makes the K-cars look big. I haven’t said anything about durability/reliability.