FCA'S 'REAL' VALUE by John Crawford

Okay, so the Groupe PSA-FCA merger is happening, which must be a huge relief to FIAT CHRYSLER AUTOMOBILES, because the company is in deep trouble on both sides of the Atlantic.

Recently, whilst writing about the Jeep Wrangler I mentioned the fact that FCA is struggling with a cash problem, and that it’s only ‘value’ to the French company is FCA’s HQ building and its dealers’ forecourts – which could facilitate an easy option for Groupe PSA to once again attempt to sell its vehicles in the USA.

However, this rather broad statement needs some greater definition and a little history lesson. First of all, I omitted to mention FCA’s only cash producer – its RAM truck division.

Like all of the American carmakers, FCA’s trucks are making money, and these are also valuable to PSA, which produces commercial vehicles (vans), but not trucks.

And, here’s where the history lesson comes in. About a year before FCA Chairman Sergio Marchionne passed away, he and his successor, Mike Manley, were struggling with solutions for the survival of FCA. Marchionne had invested USD$5 billion in Alfa Romeo; greenlighted the Maserati Alfieri, and pumped more money into trying to keep FIAT alive.

None of this was helping the FCA balance sheet, and if FCA could not find a partner to help it move into EVs and autonomous vehicles, then serious decisions had to be made, like offloading the only vehicles making any money – Jeep and RAM trucks. This decision also presumed someone would come along and scoop up Alfa Romeo and Maserati.

Around about this point in time, FCA was struggling with net debt of around USD$6 billion, and servicing that debt was fast becoming a serious issue. Thankfully, Jeep and RAM were still bringing in the dollars, and thanks to a ‘fast start’ provided by the new Alfa Romeo Giulia and Stelvio, the Italian marque was generating more cash than previously. Maserati has always been cash positive, but barely. Certainly not sufficient to pay down the massive debt.

By the time Marchionne passed away, his successor, Mike Manley, announced that FCA had climbed out from under its debt load, so the need to sell Jeep and RAM to raise money was off the table.

When Marchionne literally harassed GM to ‘partner’ with it, his efforts were publicly and vocally rebuffed by GM Chair, Mary Barra.

It became embarrassing to continue to report Marchionne’s desperate appeals for ‘someone – anyone’ to partner with FCA. Which is why the Groupe PSA ‘takeover’ solves FCA’s biggest issues, and that is the massive cost of getting into EVs and autonomous vehicles. FCA has NO plans, concepts or ideas in the pipeline.

However, despite FCA's profit improvement for 2019 (generated almost entirely by the RAM truck division), as I have predicted on a number of occasions, don’t expect FIAT CHRYSLER to be around for long in its current form.

Carlos Tavares, Groupe PSA’s Chairman, is a very smart operator. He will strip whatever value he can out of FCA, which probably means a lifeline for Jeep, and an ongoing commitment to RAM, but I forecast that you will see most of FCA’s other US-produced vehicles bite the dust.

Chrysler's ONLY passenger car in North America, the 300C, is going downhill fast. Remember, it was launched in 2004 and is now a very old vehicle, built on a version of the 2002 W211 Mercedes-Benz E-class platform.

New FIATS will follow the same route as new Vauxhalls and Opels – meaning, they will be built on PSA platforms, and badged appropriately.

FIAT is an Italian icon, and PSA would not be so foolish as to mess with the bad PR it would catch by dumping the 220-year-old symbol of the Italian automobile industry.

Plus, FIATs that are produced more cost-effectively on PSA platforms would find a ready market among Italians with a romantic attachment to the iconic Italian brand.

This asset-stripping by PSA won’t get any pushback from FCA’s current boss, Mike Manley, because, as I reported over the weekend, he looks like taking over as Chairman of Jaguar Land Rover, when Dr. Sir Ralph Speth steps down mid-year.

Which brings me to a point I have been making for a number of years, but is becoming more obvious as the years roll on. The future of carmakers will be wrapped up in more mega mergers, takeovers and shutdowns as the industry consolidates into just a few mega-makers, running collections of brands – much as Volkswagen has been doing for decades.

I believe the COVID19-inspired shutdown of Chinese industries may slow its stealthy commandeering of the world’s car market, and also, I think, many companies which have invested vast sums of money to make their cars more cheaply thanks to Chinese JVs, will get their fingers burned, but China will recover and with it its auto industry.

Also keep in mind the Chinese concept of a ‘Joint Venture’ is that the Chinese partner owns 51% of the JV.

See, life is what happens, when you're making plans.

"YOU BOUGHT A JEEP?" by John Crawford

“You bought a Jeep?” was one of the brand’s most successful ad campaigns in Australia. It achieved rare ‘cut-through’ among all the SUV advertising, and lifted Jeep sales at a time when they were on a plateau.

Then, a new CEO for FIAT CHRYSLER AUSTRALIA, personifying the worst elements of: “I’m from head office, and I’m here to help” said the campaign demeaned the Jeep brand, and stopped it. Plus, I might add, the current improvement in Jeep sales. They've never really recovered to a ‘robust’ number, since that decision by the now-departed CEO Steve Zanlunghi.

In a typical Australian, no bullshit fashion, the campaign took a phrase that may have been commonly used by friends and family, disbelieving that the prime subject had chosen a Jeep over competing SUVs, despite recalls, product failures and its image as a crude piece of product engineering.

Voilà, it worked. Jeep sales went on the upswing, but of late the old pendulum has swung back to the south.

Although it isn’t consistent with my general opinion of SUVs (‘Yuk’ x 2) I climbed up behind the wheel of one of Jeep’s most iconic models, the Wrangler.

The outside flanks are adorned with badges and decals highlighting Jeep’s rugged, outdoor image, whilst the inside is quite a tasteful treatment, but you never get the feeling you could ‘hose out the interior’ as you would with a Land Rover Defender. It looks like Jeep is having a punt both ways – even leather-faced seats and a proper audio system!

The Wrangler isn’t really as authentic as Jeep would have you believe, because in the marketplace it simply had to compete with SUVs which were both competent off-road and reasonably comfortable inside too.

We bounded up and over a short off-road course, and the huge Dueller tyres worked well when scrambling for traction.

When we appeared in front of a group of owners of various Fords and Chevys in a bush clearing they gave the thumbs up when they spotted the badge and Jeep's seven-barred trademark grille. You can't mistake a Jeep for anything else.

But back to the sales performance. In Australia this year, it’s pretty horrible.

Down Under, the arse has fallen out of Renegade and Compass sales, and the Cherokee is down about 30%.

In the USA only Grand Cherokee and Gladiator (below) are holding up the side. Mind you, Grand Cherokee is very civilised, considering it's the platform on which the Mercedes-Benz MLA is based - no complaints there.

In the USA, it’s serious. Jeep’s market share is behaving like a see-saw. Normally, about 4%-5%, Jeep has resorted to spending more dollars than it wants to on marketing, to bolster sales. Adding to marketing costs depletes profits – it’s a clear case of Yin and Yang.

Jeep’s PR machine wound itself up to full-volume over the past 20 years plugging Jeep’s connections to one of America’s most iconic off-road hotspots – the Rubicon Trail. However, it seems like the gentrification of the SUV means that Jeep is in a sort of no-man’s land – not quite the Rubicon Trail, maybe headed for a cul-de-sac.

So, following the Groupe PSA-Fiat Chrysler Automobiles merger(?), with the French company adding the famous Jeep brand to its catalogue, you’d have to ask, has Jeep got a future, or will it just become a carbuncle on PSA’s portfolio?

The ONLY place you can guarantee to sell Jeeps in any numbers, and the numbers are shaky right now, is the good ‘ole USA. European buyers have more product to choose from than at any time, and given the level of competition, European SUVs, led by Land Rover, are as competent as Jeep, more comfortable and represent more sophisticated product engineering and finish. Anyway, who really goes off-road these days?

Plus, the compeitiors have more money to spend on development and refinement. Jeep is the ONLY division of FCA in the USA which brings in decent returns, and thus the US corporation is absolutely dependent on growing Jeep’s sales NOW! Plus, right now, FCA is struggling for cash!

So, is the Wrangler a civilised Jeep? Surprisingly, yes. The ride around town is quite acceptable, the interior finish is of a high standard, with tight trim margins and good quality materials. And, I'm reminded about that great response to excessive tyre noise - "that's what the stereo is for."

Off-road, it was much as you expect, although on a couple of serious terrain differences, the rear hatch sprung open a couple of times due to torsional twisting of the upper structure. Also, when you fold down the rear seat, there’s no restraining mechanism, so every time you traverse a serious bump, the back seat rises and falls with a bloody great thump! 

Oh, well – you can’t have everything – especially when you ‘bought a Jeep’.

Maybe the answer is provided by saxophinist Ben Webster:

John Crawford

BRAND GENESIS - HERE TO STAY? by John Crawford

Despite a massive investment by Hyundai, which included luring the immensely talented designer, Luc Donckerwolke from Bentley Motors, and hiring the skilled and canny Manfred Fitzgerald as Head of Brand Strategy – there are some who question Hyundai’s staying power in this elite market segment.

Luc Donckerwolke (left) and Manfred Fitzgerald - Canny Partners in Crime

Lack of appeal of high-end passenger cars has decimated brands like Cadillac, and sent many European brands scurrying to plug holes in their catalogues with upmarket SUVs, so what does the appearance of the Genesis G80 say about intention, aspiration and longevity?

Make no mistake, ‘loss of face’ is just as important to Koreans, as it is to Japanese, perhaps more so. I think Hyundai has decided ‘in for a penny, in for a pound’ because it has an upmarket Genesis SUV already signed off, and this sexy, slinky high-end sedan has looks, lust appeal and lots of lovely, subtle touches in its overall appearance.

I think this is a car which discerning luxury car consumers will buy – even if they’ve never heard of the brand, nor worry about its Korean parentage.

I see Luc’s sophisticated input here in every surface and especially the interior.

Yes, it’s going to cost Hyundai big time, and big Won as well, so will it go the way of the ugly Nissan-Infinitis? Or, will it blossom into a Korean Lexus? My money’s on the latter.

The financial success of Hyundai and Kia globally will bankroll a gamble on the G80.

John Crawford

YES, ANOTHER 'MERGER OF EQUALS' by John Crawford

Despite the 'Happy Families' photos of Carlos Tavares of Groupe PSA, and CEO of Fiat Chrysler Automobiles, Mike Manley, at the formalisation of the PSA-FCA 'merger' it looks as though Manley won't be sticking around as the subjugated (conquered?) 'joint leader' of the new enterprise.

The word going around is that Jaguar Land Rover Chairman, Sir Ralph Speth, is stepping down mid-year and the post will be filled by none other than?

You guessed it, Brit-born Mike Manley - who it appears would rather 'run something' than play second fiddle in the pan-European duo which is PSA-FCA.

Keep in mind, the ONLY value FCA has to Groupe PSA is its American headquarters and U.S. dealership forecourts, which would be useful for PSA to have another tilt at the American market, on the cheap. Oh, and in the carve-up PSA also gets all of FCA's European assets (?) FIAT, Maserati and Alfa Romeo, et al.



Nice brands to have in PSA's growing catalogue, even if they don't make money.

John Crawford

SIMPLE CAR-JACKING RUSE by John Crawford

Watch this clip and weep. It's so simple and it works every time. You wouldn't even wake up quickly enough unless you've been alerted to the simplicity - no violence, just common sense, and trusting people's naiveté. Click on the link:

                            2:07 Now playing Watch later Watch later Add to queue Add to queue                

John Crawford

MEASURING ADVENTURE BY KILOMETRES by John Crawford

My good friend Hans Tholstrup has made a meal of distance – many times, but the unearthing of some famous photos taken in 1970 urges me to again pay tribute to a man many people, especially me, admire for his achievements.

Hans, born in Denmark, was inspired to a life of adventure when he met his idol,  Thor Heyerdahl.

The Danish explorer and five companions sailed the Kon-Tiki, a raft constructed of balsa wood and other native fibres, 5,000 miles from Peru to French Polynesia in 1947, to demonstrate that ancient peoples could have made long distance sea voyages, to populate islands in the South Pacific.

Emulating his hero, in 1970 Tholstrup announced a plan to circumnavigate the Australian continent in a 17ft open boat, following in the footsteps of explorer Matthew Flinders who, with George Bass, explored the east coast of Australia in a tiny sailboat named ‘Tom Thumb’.

Recently I was given a series of black and white prints, showing Hans and famous Australian radio quizmaster, Bob Dyer, christening Hans’ own ‘Tom Thumb’ on a dock at Rose Bay in Sydney Harbour.

Bob Dyer ran a hugely successful quiz show called ‘BP Pick-A-Box’, sponsored by the British oil company. Hans’ craft was also sponsored by BP, among others, so who better to christen the boat than Bob Dyer.

It was a voyage of similar distance to Heyerdahl’s (9000 nautical miles) and took him just over a month. His boat was powered by a single 80hp Mercury outboard, and carried a 100 gallons of fuel.

I attended the press conference after his return, and laughed along with the rest of the media pack when Hans answered a question from a young reporter who asked: “How did you handle the navigation?”

To which Hans replied seriously: “I always kept the land on my left.”

However, that was just the start of a life of adventures for Hans Tholstrup.

In 1971 he raced a Falcon GT at Mount Panorama, Bathurst.

In 1972 he rode a dirtbike from Rockhampton across Australia to Perth.

Photo: Getty Images

Then, in 1975, he took a 10-day ‘How to Fly’ course in California, and successfully flew solo around the world in a single-engined Grumman AA1B trainer.

Showing his never-say-die attitude to adventure, he was momentarily halted when a seagull crashed into the prop over the Pacific. Hans managed to land the aircraft on a beach in French Polynesia, then deduced that if he cut the same amount from the opposite side, he would be able to fly to Papeete, to get a replacement, with only slight out-of-balance from the shortened propeller!

In 1976 he decided to drive a tiny Mini Moke from Hobart in Tasmania to Cape York in Queensland. There was the difficult issue of crossing Bass Strait, so typically Hans devised a novel solution.

He lashed the Moke, onto an Avon inflatable, attached a Mercury outboard, and simply sailed the ‘Rubber Duckie’ from Launceston to Flinders, on Victoria’s Mornington Peninsula, before continuing on to Far North Queensland.

With that exploit behind him, he approached me with the ‘crazy idea’ of driving a Mini Moke in the 1977 Singapore Airlines London-to-Sydney Car Rally.

I agreed, and we finished the 30,000km event at the steps of the Sydney Opera House after driving through 30 countries in 30 days!

In 1983, Hans Tholstrup devised a plan to cross from West to East in a car powered only by the sun. He relied on racing driver Larry Perkins and his brother Garry, to build the ‘Quiet Achiever’ to his specification and, once again sponsored by BP, Hans and Larry set off from the Western Australian capital.

Another good friend of mine, Tom Snooks, accompanied the team to record the crossing:

Hans and Larry completed the historic BP Solar Trek across Australia, with no overseas technology to draw on, no plans to follow, no previous mistakes to look at or learn from, yet in eight months they designed and built a whole new machine that ran for over 4000 kilometres with only some broken wheel spokes and a number of punctures. They took 20 days to make the crossing,

The journey of The Quiet Achiever would coincide with the 70th anniversary of the first crossing of Australia by a motor car – when in 1912 Francis Birtles drove a Brush car from Fremantle to Sydney, in 28 days.

Then in 1987, Hans created the very first ‘World Solar Car Challenge’ with entrants driving solar cars south along the Stuart Highway from Darwin to Adelaide. The biennial race was run for 32 years, becoming the most famous solar car event in the world.

In 1999, Hans again took to the sea in a boat similar to Tom Thumb and sailed it from Darwin, island-hopping, to Japan. Somewhere along the way he also drove a Datsun Cherry from the top of Norway, to Capetown, South Africa.

Hans has a restless spirit, and his agile brain is always trying to figure out some new adventure to pursue, however for the time being, he lives a quiet life in northern Queensland, where I visited him in 2018.

He’s man I am truly proud of, he’s a high achiever, of great integrity and someone I am honoured to call my friend.

Hans was made a Member of the Order of Australia in the 2008 Australia Day Honours for “service to conservation and the environment through the development of renewable energy technology and the exploration of alternative fuel sources."

John Crawford

ANOTHER GM PAX CAR GOES TO GOD by John Crawford

Continuing the catalogue clearout, GM kissed goodbye to the Chevrolet Impala this week.

It was 60 years ago the 'folded paper' flying coupe graced the Chevy showrooms.

John Crawford