Monday, January 6, 2020


You may never have heard of Auburn Hills, Michigan, but it's where you'll find the headquarters of the Chrysler division of Fiat Chrysler Automobiles.

Now, this division of FCA relies on only one product badge to sustain it financially - Jeep.

The rest of its product line is aged, irrelevant and very forgettable. Mind you, Jeep has its moments too, with global sales looking like a roller coaster most of the time - especially with its constant safety recalls.

At the Consumer Electronics Show (CES) in Las Vegas this week, FCA showed its 'Airflow' concept. Why? It has little chance of building it, and no resources to budget for it. Also, the 'Airflow' name dates back to 1934 - how's that for leveraging history?

Maybe some bright spark at its new (maybe) partner, Groupe PSA, in Paris may think it's worth gambling on, but I think not.

FCA is devoid of a number of things: product, inspiration, talent, foresight, product planning, and most of all - funds.

The late Sergio Marchionne (former Chairman of FCA) recognised that if FCA was ever going to survive, it needed a partner. Finally, the FCA management has convinced Groupe PSA to come to the party.

Make no mistake. Groupe PSA recognises one thing, and one thing only - acquiring (sorry, merging) with FCA is its footprint into the USA. It's far cheaper to take over (sorry, merge) with a loser, to get a foothold in the American market, than foolishly invest in establishing your own operation.

The name of the game these days is - volume - that's what makes running a car company viable. It doesn't really matter how you achieve it, so long as you can increase economies of scale.

As I wrote many months ago, who will survive in the years to come? Only huge car making conglomerates, made up from mega-mergers and acquisitions. The joint ventures, mergers, acquisitions and other link-ups are going to come thick and fast in the next few years.

What happens to badge loyalty among potential buyers? 

Well, it's this way. As an example, if you look at Peugeot-Citroen today, there is very, very little to distinguish one brand from another.

Both marques use the same engines, the same platforms, the same transmissions, the same suspensions - the only thing which differentiates them are the external body panels, the interior trim, and the badges.

The Renault-Nissan-Mitsubishi Alliance is going down the same road.

Mind you, the same thing occurred when GM did a deal with Toyota to 'create' the Holden Apollo, which was a Toyota Corona with Holden badges.

And that was years ago, which I remember vividly, due to a consumer  I met at the Sydney Motor Show who was a rusted-on Holden fan, and he impressed on me that Holden would not 'sell a car made by someone else' - until I lifted the hood and showed him all the Toyota and Japanese-language stickers on the components under the hood.

Really, don't ever invest any capital in believing that most car buyers know what's going on. They don't. To be truthful, they are not really hurt by such deception anyway.

The intrinsic value of car company heritage and engineering brilliance is going to be seriously blurred as the automotive world moves to anodyne concepts like electric and autonomous vehicles. There'll be no value in marque history, brilliant engineering achievements and unique product values - they'll all be pretty much indistinguishable from each other.

By the time all this happens, this old dinosaur will have joined all the other extinct species. Which is probably okay too.


1 comment:

  1. Another great article John. One minor correction: the Holden Apollo was a rebadged Toyota Camry, not Corona (which the Camry replaced).