Fiat S.p.A.'s Big Plan Starts With the Chrysler 200

Chrysler brand chief Al Gardner unveiled the all-new 2015 Chrysler 200 sedan in Detroit in January. The new 200 is the centerpiece of FCA's plan to make Chrysler a mainstream contender in the U.S. Photo: Fiat Chrysler

Last week, senior executives at Fiat Chrysler Automobiles (NASDAQOTH: FIATY  ) spent a full day briefing analysts and members of the media on the company's plans for the next five years. This is a big deal. FCA's global product portfolio is currently a messy mash-up, with many areas of overlap -- and several important market segments where the company has no strong offerings at present.

This plan is CEO Sergio Marchionne's road map for changing all of that. If it's successful, FCA will be transformed into a thriving, competitive, substantially more profitable global automaker.

But that's a big "if." The plan is ambitious and expensive, and FCA is not exactly rolling in cash at the moment. There are reasons to be optimistic, though, starting with this: Marchionne's last five-year plan was also seen as overly ambitious -- but Fiat and Chrysler largely delivered on its goals.

Last weekend, I outlined the whole plan, and summed up how it will affect each of FCA's brands. This week, I'm going into more detail on FCA's plans for each of its brands, looking in more detail at the products, strategies, and expansions that the company plans to put in place during the next five years.

Yesterday, I talked about FCA's plan to take Jeep to new markets around the world. Below, you'll find the full scoop on the brand that FCA is counting on to lead its mainstream U.S. efforts: Chrysler. 

A big change for an old American brand
Marchionne and his team unveiled several surprises last Tuesday, but this might have been the biggest surprise of the day: The Chrysler brand is going mainstream.

For decades, Dodge was the old Chrysler Corporation's mass-market brand, the one that had the full line of vehicles and went head-to-head with Ford (NYSE: F  ) and Chevrolet. Chrysler was the company's luxury brand, aimed at Cadillac and Lincoln. (Chrysler's third brand, Plymouth, was a value-priced line of cars sold alongside the expensive Chryslers.) 

That has all changed. Now, it's the Chrysler brand that will compete directly with Ford and Chevy -- and with Toyota (NYSE: TM  ) , Honda (NYSE: HMC  ) , and Hyundai, brand chief Al Gardner said. Meanwhile, Dodge will become a niche high-performance brand. 

New products for mainstream Americans
Gardner said that Chrysler had won the internal "turf war" with Dodge for the right to pursue mainstream, mass-market American customers with a full lineup of vehicles. That lineup will include new entries in market segments that were primarily covered by Dodge in the past.

Source: Fiat Chrysler

As you can see in this slide from Gardner's presentation, Chrysler's plan starts with the just-launched 200 sedan, a midsize contender that has received strong early reviews. In the U.S., the midsize sedan segment is where the big sales numbers are: Toyota's Camry, Honda's Accord, and Nissan's Altima are the biggest sellers for each of those brands here in the States.

Those three, plus Ford's hot-selling Fusion, represent the top of the segment. I got a close-up look at the 200 after it was unveiled in Detroit in January, and I think it has some intriguing features that could help it gain significant ground against those heavyweights. But right now, it's too early to tell how well it will be received in the marketplace.

There are more new products coming for Chrysler beyond the 200 and the just-refreshed full-size 300 sedan. An all-new Town & Country minivan will arrive for 2016, along with a new small sedan, to be called the 100. Midsize and full-size crossover SUVs will follow.  As you can see in the slide, FCA is planning both conventional and hybrid versions of the all-new Town & Country and full-sized crossover.

Ambitious growth goals as the brand steps to the forefront
Chrysler isn't just betting on the 200, though. Each of these new products will be expected to contribute incremental growth to Chrysler's annual sales.

Source: Fiat Chrysler

As you can see, FCA expects that this new lineup -- along with the imminent demise of the midsize Dodge Avenger sedan and the end of the Grand Caravan minivan in 2016 -- will take the Chrysler brand from the roughly 350,000 vehicles it sold in 2013 to 800,000 annual sales by 2018.

Nearly all of those sales will be in North America. While FCA talks about Chrysler's "global" and "worldwide" sales in lofty terms, its plans are squarely focused on North America (and especially on the U.S.).

That's a change. Chrysler has been building some vehicles for sale as Lancias in Europe. The Lancia Flavia is a rebadged version of the last-generation Chrysler 200 convertible, while the Thema is a rebadged 300, and the Voyager is a Lancia-ized Town & Country minivan. 

The Lancia Thema is the Chrysler 300's Italian twin. It's sold in Europe, but it's Italian in name only: Like the 300, the Thema built in Brampton, Ontario. Photo: Fiat Chrysler

FCA hasn't been clear on its plans for the Lancia brand, but it appears to have been largely left out of the company's plan.

Will this plan work?
Any evaluation of any automaker's growth plans starts with this question: How good is the product? That's the question with Chrysler. The 200 looks promising. But right now, the jury is out. 

The new 200 checks a lot of important boxes -- on paper. But will it sell? Will it capture those buyers who had been gravitating to the now-discontinued Dodge Avenger and some buyers who might otherwise be buying an import -- or a Ford?

When we can answer that question, we'll have a better read on FCA's chances with the Chrysler brand. Stay tuned.

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Read/Post Comments (3) | Recommend This Article (3)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 14, 2014, at 12:11 AM, skybluedingo wrote:

    omg chrysler sucks and they make bad cars, the new generation of car buyers don't even know what the hell a 300c is. This company mismanages its car portfolio like a kid managing his pokemon cards, dodge shouldnt be a "nitch " car brand, they should offer a better financing rate for there challenger and get rid of the chrysler brand all together what a weak car brand.

  • Report this Comment On May 14, 2014, at 8:28 PM, antonio311 wrote:

    Chrysler makes some of the best cars on the planet! I've personally owned more than 3, each with over 200,000 trouble free miles. Fiat is a great company & together they will only take sales & market share from the others for 1 reason...they make better cars. Watch & see how many sales the new 200 gets & the new Cherokee has been selling out as fast as Chrysler can make them. People like Skybluedingo can't even afford a Chrysler product, so they often hate on the companies products because they're jaded & jealous. Chrysler & Fiat make world class products, that's why they're the fastest growing auto company on the planet. =))

  • Report this Comment On May 15, 2014, at 12:51 AM, DomVendetta wrote:

    skybluedingo

    Are you for real? Are you regurgitating 1980's and 1990's Chrysler stories.

    This Brand to include Dodge trucks are on the rise and their sales for multiple quarters prove that. The trend will continue as these vehicles head and shoulders above years gone by.

    You go ahead and buy a gm or a blue oval based on the past. smh

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