Why Fiat S.p.A. Is Killing the Dodge Grand Caravan

No more minivans: The Dodge brand is being retooled around high performance vehicles like this 2015 Challenger R/T. Source: Fiat Chrysler.

Last week, senior executives at Fiat Chrysler Automobiles (NASDAQOTH: FIATY  ) spent a full day briefing analysts and media on the company's plans for the next five years.

This is a big deal. Newly merged 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 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.

I outlined the whole plan last weekend 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, taking a closer look at the products, strategies, and expansions that the company plans to put in place over the next five years.

On Monday, I talked about FCA's plan to take Jeep to new markets around the world. Today's entry will cover FCA's surprising plans for its longtime mainstream U.S. brand, Dodge.

A bold, brash, Hemi-powered makeover for Dodge
This is where FCA's five-year plan got really interesting -- or really confusing.

Not long after we heard from Chrysler chief Al Gardner that his brand had won the "internal turf war" for the right to be FCA's mainstream U.S. brand, we heard from Dodge chief Tim Kuniskis that a slew of new Dodge models are on the way -- and several of those models seem to overlap with Chrysler's planned offerings.

But they won't overlap in image. While the Chrysler brand is going mainstream, the Dodge brand is going all-in on "performance" -- or at least on the idea of high performance. 

That's a big change from the family friendly Neons, Intrepids, and minivans that were the heart of the Dodge brand not so long ago. But there's a sound business reason behind it.

The cold hard reasoning behind Dodge's hot new attitude
We got a hint of Dodge's new attitude last month, when Kuniskis revealed the refreshed Dodge Charger and Challenger at the New York International Auto Show. I was there, and I was struck by how Kuniskis embraced the term "muscle cars," almost as if he saw the idea as the heart of the Dodge brand.

Apparently, he does. 

If the Wrangler is the essence of Jeep, then the Charger and Challenger -- Dodge's two big, brash, retro, Hemi-powered rear-wheel-drive bruisers -- and the Hemi-powered Durango SUV are the essence of the Dodge brand as it's now seen within FCA.

Why? Demographics. This slide from Kuniskis' presentation says it all:

Can your fuel-sipping import-brand sedan do that? Dodge's Charger can. Source: Fiat Chrysler.

Kuniskis said that Dodge's average customer is 10 years younger than Chevrolet's, nine years younger than Ford's (NYSE: F  ) , eight years younger than Toyota's (NYSE: TM  ) , and five years younger than Honda's (NYSE: HMC  ) . 

Reaching younger buyers is the Holy Grail of automakers' marketing ambitions. As a group, young adult Americans are far less interested in cars than their parents and grandparents were at the same age. 

That trend has automakers worried. Companies like Ford and General Motors (NYSE: GM  ) have emphasized technology and connectivity in their entry-level models in an effort to get the attention of twenty-something consumers.

FCA is doing that, too. But it seems to think it might have found another way to young car buyers' hearts. 

Kuniskis argued that cars have "become commoditized" and "America's drivers have been abandoned" by bland offerings, something he blames on import brands. As he sees it, there's an opportunity for an American brand focused on performance to gain ground with those much-desired younger buyers. 

And so the Dodge brand is being retooled to attract more of those buyers.

The details on FCA's plan for Dodge
Here's how FCA plans to rework Dodge's product portfolio over the next five years.

Source: Fiat Chrysler.

We already knew that the Challenger and Charger are being refreshed for 2015. But as you can see, several current Dodge stalwarts aren't part of the future plan. Production of the midsize Avenger has already ended, and the Grand Caravan minivan will expire in 2016. The compact Dart and midsize Journey crossover will stick around, but they'll be revised in 2016 to "better align with Dodge brand DNA," Kuniskis said. 

What does that mean? Here's what we know: The Journey will be replaced in 2016 with an all-new crossover that will share a platform with the Dart. Both it and the Dart will see turbocharged engines offered, as well as new higher-performance "SRT" variants that will have all-wheel drive and more powerful turbo engines. 

The mighty Dodge Viper sports car, briefly rebranded as an "SRT" product, will return to the Dodge brand portfolio under the new plan. Source: Fiat Chrysler.

Meanwhile, the high-end Viper sports car is coming back to Dodge. (FCA is doing away with the separate SRT brand it established a couple of years ago. "SRT" will once again become a high-performance designation under the umbrella of FCA's U.S. brands.) 

And if you look way over on the right hand side of the chart, you'll see a "B Sedan/Hatch" coming for 2018. "B" means subcompact, but we don't know anything more about that new Dodge yet.

One more interesting note: FCA isn't expecting Dodge to contribute to its five-year sales growth. Nor is there any hint that FCA plans to expand the brand beyond North America.

Source: Fiat Chrysler.

Dodge sold 596,300 vehicles in 2013, and it's expected to lose about 50,000 sales this year with the demise of the Avenger. From there, as you can see in this chart, FCA is mostly just hoping Dodge will recover that lost ground, getting back up to 600,000 by 2018.

(By the way, it says "E Sedan" and "E Coupe" way over on the right; those are the next-generation all-new Dodge Charger and Challenger, which are due in mid-2018 as 2019 models.)

So, will this work?
Tire smoke and roaring Hemis make for fun presentations. But beyond the brash, macho muscle cars, there's an intriguing bet being made here.

FCA could easily have added Dodge to the list of defunct American car brands and put all of its chips on Chrysler and Ram in the U.S. market. Instead, it's betting that with a shift in emphasis, Dodge can find a place as a profitable niche brand that captures more young buyers.

Twenty years ago, Dodge sold an awful lot of minivans and sedans. But Dodge's fortunes waned as consumers moved on from minivans, preferring crossover SUVs instead. 

Now, Dodge is reaching back to its muscle-car heritage -- and bringing that vibe to an overhauled lineup that will emphasize performance while (mostly) offering practical value as well.

Will it work? I think FCA has a good chance of hitting its five-year goals for Dodge -- if the products deliver on the high-performance promise while also delivering the quality and practicality needed to compete with mainstream alternatives. We'll find out.

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Read/Post Comments (23) | Recommend This Article (4)

Comments from our Foolish Readers

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 6:27 AM, PhilLC1 wrote:

    I feel that they have a good chance to pull it off with Dodge; but I'm dying to read your comments about Lancia...do some homework on the brand before please :-)

  • Report this Comment On May 14, 2014, at 9:54 AM, vet212 wrote:

    That should explain why Fiat cannot make a profit without huge infusions of money from the Italian government. they can or will not make a vehicle large enough or useful enough for a family nor will they build one that foes not require constant maintainance or the ability to last 200000 miles

  • Report this Comment On May 14, 2014, at 11:19 AM, MaxxTheKatt wrote:

    They sell a lot more Dodge Caravans then they do Chrysler Town and Country vans. They want Dodge to be the performance side of the equation. Then lets have a high performance Dodge Caravan. My first Dodge Caravan and a Turbo Charged 2.5 four. It was fast and fun. Give the Dodge Caravan a bolder more aggressive adventurous look with hot performance. The people will buy it.

  • Report this Comment On May 14, 2014, at 11:19 AM, hunter3203 wrote:

    Can you say disaster? Chrysler has traditionally tried to be a competitor to Cadillac and Lincoln, not a mainstream brand. Whereas Dodge has ALWAYS been the mainstream brand. YTD through April, Dodge has sold more the TWICE as many vehicles as Chrysler. What do you think is going to happen when they drop the Caravan? Those buyers will NOT automatically buy a Town & Country instead. Those buyers will cross shop ALL of the competition and Chrysler will LOSE MOST of those buyers. There is no reason that Dodge can't be both the mainstream brand for the Chrysler group AND offer performance versions of their vehicles.

  • Report this Comment On May 14, 2014, at 11:34 AM, whychange wrote:

    I like my Grand Caravan, the new ones look like boxes and are UGLY. Guess i will be looking for a new brand!

  • Report this Comment On May 14, 2014, at 12:08 PM, LungsOfSteel wrote:

    "Chrysler has traditionally tried to be a competitor to Cadillac and Lincoln, not a mainstream brand."

    Um, where did you get this from?

    Chrysler's competitors traditionally have been Mercury and Buick.

  • Report this Comment On May 14, 2014, at 12:25 PM, Taz wrote:

    So there are no big sedans that can compete performance-wise with the Dodge Hemi's? How about my Genesis R-spec? 429hp under the hood. See ya Dodge!

  • Report this Comment On May 14, 2014, at 12:48 PM, TMFMarlowe wrote:

    @LungsOfSteel: Depends on how far back you go. We could argue that Lincoln is a Buick competitor, too. But I bet we'd agree that the mission for the Chrysler brand has changed a whole bunch of times; that's kind of the problem. It's not a strong brand right now.

    @PhilLC1: I'm familiar enough with Lancia's history. But as of right now, I'm not sure it has a future. I'll share details when I get 'em, but it does not appear to be a meaningful part of FCA's plan right now.

    John Rosevear

  • Report this Comment On May 14, 2014, at 12:58 PM, TMFMarlowe wrote:

    @Taz: For the price of your Hyundai ($48k) we're talking an SRT Charger (starts at $44.3k)... 470 hp for 2014. Choose your drag race opponents carefully...

    John Rosevear

  • Report this Comment On May 14, 2014, at 1:33 PM, emjayay wrote:

    whychange: The "new" Grand Caravans you think are boxy and ugly are the OLD ones from the dark days of Chrysler before FCA. The actual new ones are coming out shortly, but no concepts or sneak peeks have popped up anywhere so no one so far has any idea what they will look like.

  • Report this Comment On May 14, 2014, at 1:45 PM, emjayay wrote:

    The article never really addressed what the headline promised. Nothing much new.

    I understand marketing something aspirational rather than an appliance, even though VW is a huge brand in Europe and people actually do buy appliances In large numbers, like Corollas. Maybe Chrysler should think about how they have the worst reliability reputation particularly with Fiat, and Toyota has had the best for years.

    But I don't understand Chrysler's marketing decision, particularly with the minivans. The Japanese have so far led the way in branding: most cars are built as regular (Toyota) and premium (Lexus) brands. But the different brand cars aren't just badge engineered like Chrysler and Dodge minivans, but are really different vehicles built on the same basic structures. Chrysler already has the same kind of brand images with Dodge and Chrysler, but have muddled it over the years.

    Meanwhile, if you asked people what a Dodge Caravan is almost everyone would say "a minivan" but most of them would have no idea what a T&C, Quest, Odyssey, or Sienna was.

  • Report this Comment On May 14, 2014, at 2:22 PM, softwarengineer wrote:

    Fiat Makes an American Engineer Like Me Smile

    They're making the MBA/CEO controlled Toyota, Chevy and Fords look very bad. Of course Fiat doen't have to know how to make a 4000+ lb car get 31 mpg city and 300+ hp V-6 [nor does any foreign company for that matter]. They've got the rocket scientist engineers in America to control that aspect. They have honesty on recalls. They avoid planned obsolence too, now that its engineers in the management seat IMO.

    I just got a 2014 Dodge Charger [a little known secret BTW, the dealer and I agree, the V-6 is faster than the emi 0-10 mph]. Ohhhh....get the 5 speed American designed auto transmission [not the German 8 speed]....its faster, has a longterm track record and at the dealer I went to for 2014, was the only option on a Charger anyway....LOL

    BTW....I saved my average mpg hwy for the V-6 [for both friends and the dealer to witness, no one would believe me otherwise], using cruise control to accelerate....39-40, not the 27 mpg the stats print on it....LOL

  • Report this Comment On May 14, 2014, at 3:34 PM, CSET wrote:

    Fiat S.p.A. may be killing the Wrangler, they just don't know it yet. A recent press release said that the up coming Wrangler would have an independent suspension. The problem with going this route would be the cost. Often independent suspension lifts cost 3 times as much as lifting a vehicle with double solid axles. Depending on the engineering you may not be able to lift the vehicle at all.

    Changing the suspension should soften the ride, but consider the Grand Cherokee. I had a 1999 model with double solids and it rode great, except at very low speeds on rough terrain were it rocked violently.

    Thousands of Wranglers are lifted every year. Open any 4 wheel drive mag and look at the ads as well as the articles. Not only could a poor design hurt Fiat, but many of the aftermarket companies that make all the products through out the mag. Wranglers have more options for mods than any other vehicle with 4 wheels that has every been made.

  • Report this Comment On May 14, 2014, at 4:00 PM, flfordparts wrote:

    that's to bad because the mini van was their best vehicle in the line up. the rest of the line up is typicle 1970s fiat .problematic.and now with the announcement of moving their head quarters to the UK they may as will keep right on moving back into bankruptcy .

  • Report this Comment On May 14, 2014, at 6:20 PM, Desktopguy wrote:

    They need to keep the Caravan

    That was their bread and butter.Just spruce it up some and put a Vac in it.And it would the Mini Van Of the year.))))

  • Report this Comment On May 14, 2014, at 8:40 PM, asdlkfad wrote:

    Yet another moronic "news" article from Fool that the fools at Yahoo post. No wonder Yahoo is a failure; if it wants to be taken seriously, it needs to provide credible new sources, and Fool is not one.

  • Report this Comment On May 14, 2014, at 10:33 PM, jimmyneilb wrote:

    I don't see why the GC going away is a big deal. Chrysler will still have the minivan market covered with the T&C, which sells better in the states anyways. I expect they will expand the trim offerings on the T&C to cover the price range that both vans now cover. Will they lose market share? Likely, but they also need time at that plant for a forth coming crossover.

    I love that Dodge is going performance. I have a Charger RT and it is an amazing vehicle. Can't wait for the Hemi/ 8 speed combo.

  • Report this Comment On May 15, 2014, at 4:12 AM, arkbiz wrote:

    I bought a new 1995 Dodge Grand Caravan. It had cool features, lots of space and it went fast.

    Unfortunately, it was in the shop all the time, so unreliable that I couldn't take it on trips. At 30K miles the engine (well, the belt tensioner) fell apart cartoon style, spewing parts onto the street. So I bought Japanese. Actually, one Honda Odyssey and one Toyota Sienna. Both lasted a long, long time w/o many problems.

    More recently, I had an MB Sprinter badged as a Dodge. For two years - TWO YEARS! - Chrysler couldn't tell me where it could be serviced. Only when I contacted their then owner, Cerberus, did the company find its voice.

    As I understand it, easy credit is what's keeping the new Chrysler going. I don't think the company has a great future.

  • Report this Comment On May 15, 2014, at 9:59 AM, True411 wrote:

    Fiat is the anti-Chrysler.

  • Report this Comment On May 16, 2014, at 2:01 PM, TMFMarlowe wrote:

    "The article never really addressed what the headline promised. Nothing much new."

    Really? Did you read it? They're killing the Grand Caravan to narrow the Dodge brand's focus on high performance. That's very new, and I think I made it very clear in the article.

    John Rosevear

  • Report this Comment On June 02, 2014, at 7:31 PM, Topkat wrote:

    "Chrysler has traditionally tried to be a competitor to Cadillac and Lincoln, not a mainstream brand."

    Um, where did you get this from?

    "Chrysler's competitors traditionally have been Mercury and Buick."

    The second comment is correct. Chrysler, the make, has ALWAYS been competitive with MERCURY and BUICK....NOT CADILLAC and LINCOLN.

    The former Chrysler Corporation's traditional competitor in the all-out luxury field had always been the now-defunct IMPERIAL DIVISION.

    (which, and let's not AGAIN get into arguments otherwise about this , because it's getting REALLY OLD ) was separated from the Chrysler Division in 1955, to become it's OWN MAKE and DIVISION.

    The reason why IMPERIAL was spun off from Chrysler as it's own make back then was the following philosophy :

    "You can't sell a high-priced car (IMPERIAL) under a medium-priced nameplate (Chrysler) .

    So, IMPERIAL became it's OWN make and division.

    Will it ever come back ?

    It was SUPPOSED to have at the same time that the Challenger....but the plans (and the prototype) were scrapped.

    IMPERIAL needs to come back...as should PLYMOUTH...that way, Chrysler doesn't have to be something that it's not...

    a low-priced volume brand .

    and something that it NEVER WAS...

    An all-out luxury brand.

    Check out these links It will PROVE what I've said:

    https://www.youtube.com/results?search_query=chrysler+corpor...

    https://www.youtube.com/watch?v=YfVqAGz5OWc

    https://www.youtube.com/watch?v=wOy6_uk3k3k

    http://www.imperialclub.com/~imperialclub/Repair/Lit/Marque/...

  • Report this Comment On June 02, 2014, at 7:35 PM, Topkat wrote:
  • Report this Comment On June 02, 2014, at 8:30 PM, Topkat wrote:

    The Chrysler Town and Country was originally a station wagon (and a limited-production coupe and convertible).

    It would have made more sense to move the T&C back to it's original roots ( in the modern interpretion of the station wagon, the crossover),

    ...and let Dodge keep the Caravan, which over the decades , was the far more successful, sales-wise, of the two.

    Even a niche-brand, which Dodge is now being positioned as....

    needs a volume vehicle in it's line-up to "help pay the bills".

    Just include in it's lineup an all-wheel-drive SRT Caravan. Problem solved !!!

    A luxury T & C crossover can serve as the replacement for the defunct Pacifica...while at the same time , give Chrysler a competitor for luxury crossover vehicles like the Buick Enclave, Lincoln MKT, and GMC Acadia Denali

    Fiat , again, has proven just how LITTLE it really understands the American car market. Discontinuing the most successful Dodge product of the last 30-plus years (not counting trucks, which sadly, are not Dodges anymore) is the PROOF .

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