Posted: July 15, 2011 |  AUTHOR: KEN FOX | CONTACT ME

 

I used to own a Lancia Beta Coupe when living the singles life in Marina Del Rey, California. The car was sleek, beautifully appointed, and with the most colorful lit up dashboard (at night). It was a 5 speed stick shift. It also hummed when starting out in first and second gears. The problem was it was owned by Fiat and had a Fiat engine and their electronics. There were 22 fuses in that car, 11 in the fuse box under the dash, and 11 “in-line” under the hood. The car would often just die. When that happened I had to call a tow truck and have the car towed to the only one of two places that repaired Fiats. After dropping the car off I would later get a call from the repair place saying the problem was a 95 cents (in-line) fuse. Thus was the story of Fiat’s earlier entry to the U.S. that earned it the nick name of FIAT=Fix It Again Tony. I subsequently bought a Toyota Corolla, followed and by two Honda Accords. Fiat left the U.S. in 1983 with additional complaints regarding access to parts and availability of quality service.

Fiat’s U.S. re-entry has been carefully calculated and well planned. Sergio Marchionne, Fiat’s CEO, saw an opportunity with Chrysler’s demise and bankruptcy. He took the risk of owning part of Chrysler, initially 20%, but more importantly managing the company globally as CEO. Fiat would share its small car technology with Chrysler.  His longer term vision was to leverage its dealer base, assembly plants, real estate and intertwine that with Fiat’s global brand equity. Fiat has continually met performance hurdles and subsequently bought the rights to more of Chrysler’s ownership. It went to 46% ownership of Chrysler, and in late May 2011, Fiat paid $500 million for the U.S. Treasury’s remaining 6% of Chrysler, putting Fiat’s ownership at 52%.

Fiat’s reentry into the U.S. was in March 2011 with the launch of the Fiat 500. The car is being assembled in Mexico but using U.S. made engines. It’s U.S. launch used social media extensively, targeting a younger audience who may be familiar with the car brand from seeing it on trips to Europe, but not remembering the Fix It Again Tony slogan. Fiat also used the U.S. Chrysler dealers, which had to compete for the limited 135 Fiat dealerships allowed in the targeted 41 markets. Selected dealerships had to build or designate a separate area to sell the Fiats, called “Fiat Studios.” The U.S. launch allows potentially younger but all  buyers many options to have dealers customize their new cars using 14 exterior colors, 14 seat colors, six wheel styles and a multitude of decals and stripes.

Fiat’s plans call for the launch of other models in the future, including a Fiat 500 convertible, and the highly desired Alpha Romeo, which left the U.S. in 1995. Fiat also plans to launch an all-electric car in 2012.

The Fiat 500, called Cinquecento in Italy, was a great success when it was launched there in 2001. The U.S. question is, will the Fiat 500 or Fiat in general be successful in the U.S.? The Fiat 500 is a small car, which may be good for gas mileage but not all U.S. shopper preferences. Competition in 2011 for small and innovative cars is fierce. Nissan launched the Leaf, the first all-electric car earlier this year. GM launched a Chevrolet Spark and a new Volt hybrid, with other Japanese and Korean small, hybrid or all electric cars planned or launched.

Sergio Marchionne is a trained accountant and finance CEO. However, his confidence, vision and leadership serve Fiat well. He has motivated the Chrysler dealers who survived the Fiat 500 selection process. His leadership is bringing new excitement to Chrysler and to Fiat. Another key question is what is the future for the Chrysler brand name? One strategy is to make the Jeep a global brand, but that brand name doesn’t say Chrysler or Fiat. Chrysler is planning to redesign its key offerings, and time will tell how Chrysler sales will do. Under Margionne’s leadership, they have redesigned the Jeep Grand Cherokee, which appears to be a success.

Think about a future visitor to a Chrysler showroom looking at Chrysler models and nearby seeing a glistening new Fiat (studio) showroom, with potentially a variety of new vehicles, including an Alpha Romeo line and Fiats. By the way, did I mention that Fiat also owns: Maserati and Ferrari?

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©2017, The Global Galaxy blog is produced by The Soundings Group, LLC, Charleston, South Carolina, USA, www.thesoundingsgroup.com. The company is an international business consulting firm, specializing in new market assessments, market entry strategies and marketing guidance. The scope of Global Galaxy is to cover timely international trends, issues and business building ideas. Its purpose is to educate, inform and stimulate thinking for business opportunity analyses.

 

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