Exported From Italy
During a series of recent interviews, Sergio Marchionne addresses a wide range of issues, including queries about several major investment initiatives in metro Detroit.
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Sergio Marchionne, the visionary, transoceanic CEO of Chrysler Group and parent company Fiat SpA, isn’t one to take shortcuts.
For example, Fiat could have reintroduced Alfa Romeo to the United States market by slapping a nameplate on the upcoming Dodge Dart, but Marchionne wasn’t willing to jeopardize the brand’s image to meet short-term sales goals. He also doesn’t back down when confronted with limitations.
He had forecasted that the Fiat 500, built in Toluca, Mexico, would sell 50,000 units in its first year of sales in North America, but only 26,000 vehicles were sold. No matter. Fiat, he says, will pick up orders elsewhere, particularly in South America. While Marchionne was disappointed with the Fiat 500’s initial results, he says the forecast should be taken in the context of the company hitting its two-million sales estimate last year. “In the scheme of things, a 24,000-car miss out of a two-million target is a rounding error,” he says.
Q: You have talked about how important Fiat is to Chrysler’s future, but how important is Chrysler to Fiat’s? Would it be fair to say that Fiat needs Chrysler as much as Chrysler needs Fiat?
SM: Without a single doubt. I’ve been working on both sides of the table here for a long time, and I don’t understand Chrysler without Fiat, or Fiat without Chrysler. I don’t like either one as a stand-alone company. Fiat is a complex animal. One reason, looking at it as a global corporation, is its importance to the stockholders. Another is that you cannot underestimate the importance and relevance of the contribution made by the premium sports cars to Fiat’s earning potential, which has been crucial.
A number of things have happened inside Chrysler that have been totally driven by Fiat. (The 2013 Dodge Dart) would not have existed in the 30-month time frame we are talking about ... yet it is here. This architecture was nowhere to be found (within Chrysler). That engine was nowhere to be found. The dual-clutch transmission was unknown to this (Chrysler) side of the business. Forty miles per gallon was pie-in-the-sky. We could never have done it at Chrysler alone.
Q: Looking out three to five years, where does the alliance go? What kind of further changes would you like to make? And, considering the battles you had with Italy in general and unions in particular, should we believe that — unless something happens over there — more and more of this global alliance will be based in Auburn Hills?
SM: If we run into additional difficulties in trying to bring an industrial project forward in Europe, I think that we will, by definition, shift our interests and our resources and our plan to develop our assets within the group, including in North America. Our remedial course of action in Europe will be (that we will have) no expansion there.
Q: When the Chrysler/Fiat merger happens, when the integration is complete, how many global platforms will you have? How many do you have now?
SM: On the SUV and passenger-car side, if you (don’t count) pickups and commercial vehicles, there will be five architectures — micro, small, compact, SUV, and large — that will probably account for 90 percent of our global volume. That will be down from more than a dozen just on the Chrysler side. Architectural rigor was not a Chrysler strength.
Q: What other things would you like to do with architectures and powertrains?
SM: Our architectures and powertrains are good. I think we need to develop a higher level of brand discipline to make sure that we focus on the right brands going forward, and turn the ones that are global into truly global brands and the ones that are regional into regional brands. I think we have two brands that are potentially global because of their DNA: Alfa Romeo and Jeep. Jeep is established now; Alfa is a work in progress.
You’ll notice that we have been incredibly careful in launching Alfa in the United States, because when we launch it, it had better be a premium brand or we shouldn’t be doing it. Alfa is potentially a BMW contender, so there are some things you cannot do because the market will not pay that level of pricing for a car that does not offer the uniqueness of a premium brand; some things I will not do, (such as using) a standard architecture, because that would run counter to its premiumness. It would be easy for me to slap an Alfa Romeo body on that (Dart) architecture. I can do that in 18 months. But you would not get the powertrain and suspension of that car, so why would you spend 10 grand more to buy an Alfa as opposed to buying a Dodge Dart? We can’t afford to do that, so we need to be very, very careful.