It’s not a secret that FCA has a difficult time convincing the US consumers that a subcompact car is the right choice to drive. In a country where the borders are separated by oceans and two other expansive countries, there’s not much call for tiny cars to prowl the roads. While the Fiat 500 has been popular among city dwellers, that market is severely limited and extremely competitive as well. The profitability of these small cars isn’t anywhere near what some of the other models from FCA offer and with the retirement of Sergio Marchionne drawing closer, profitability is the key factor that’s being considered.
Over the fourteen years that Marchionne has led the way for FCA, the company has moved from one that was troubled and continuing to hemorrhage money to become one that’s now profitable and able to grow. There are several brands under the FCA umbrella and Fiat will be limited to only the 500 and Panda models and these will only be sold in Europe, Brazil, and other foreign markets where this brand has been successful. The plan is to also pull out of China as the Fiat name hasn’t gained the traction desired.
Other Changes for the Company are Looming as Well
Fiat will not be the only brand that’s reduced for FCA. The Chrysler brand is going to be limited to domestic operations only, which makes us wonder if this brand will have more than two models in the future or if it will continue to be one that’s limited to only two nameplates. There are also rumors that the Maserati and Alfa Romeo brands will have their earnings reports consolidated, which is a signal that these two brands may be sold off in the near future as a package offering to one of the other automotive manufacturers.
On a positive note, even with the reduction of markets for Fiat, the cash-heavy brands of Jeep and Ram are ramping up for global expansion. Jeep has been one of the most profitable brands for FCA for a long time and the Ram trucks offered are ready to compete in the global market to be used for the truck needs around the world. This is certainly significant as the use of SUVs and pickup trucks are more prevalent in a variety of markets than in the past when small cars were the most popular choices.
Making these changes should continue to allow FCA to remain profitable and allow Sergio Marchionne to retire peacefully with the knowledge that he was instrumental in bringing the FCA brands back to the profitability and respect they deserve in the automotive market. These changes were all outlined in the recent five-year plan that was part of the presentation that took place during the annual meetings for FCA. As we see these changes take place it will be interesting to see how the reductions and expansions take place to give us the vehicles we want to drive in the future.
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