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1 Detroit Automaker Continues to Embarrass Itself

By Daniel Miller - Jan 26, 2016 at 1:03PM

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FCA will try to convince investors the best is yet to come with an updated product plan on Wednesday.

FCA must expand beyond SUV and truck sales to remain a viable company. Image source: Fiat Chrysler Automobiles. 

You can call me stubborn, but in my opinion (and for the purposes of this article), Fiat Chrysler Automobiles (FCAU) is still a Detroit automaker. Over the past couple of years, Fiat Chrysler has done some impressive things. Most of those things, though, revolve around selling a ton of Jeep SUVs and full-size Ram trucks.

Outside of that, though, it's easy to argue that the company continues to embarrass itself when it comes to adapting -- especially when you look at the strategies of crosstown rivals Ford Motor Company (F 2.21%) and General Motors (GM 2.65%).

Consider this
If you blinked last week, or just perhaps avoided looking at financial news thanks to the doom and gloom of plunging oil prices, you likely missed a ton of important information from General Motors. In fact, here's a fun exercise: Let's compare recent press-release headlines from GM and FCA over the past couple of weeks.

General Motors

  • GM Reports Third Consecutive Year of Record Global Sales
  • GM Launches Personal Mobility Brand: Maven
  • GM Increases Earnings Outlook for 2016; Announces Increased Returns to Shareholders
  • GM Woos Used Car Buyers With New Online Service
  • GM Takes Top Honor in IHS Automotive Loyalty Awards

Fiat Chrysler Automobiles

  • FCA Strongly Rejects Allegations by Two U.S. Dealers
  • FCA U.S. Sales in USA: December and Full Year 2015
  • Separation of Ferrari From FCA Completed
  • Sevel Plant in Atessa Hires More Than 300 Young People
  • FCA Announces New Chief Operating Officer Systems and Castings

It clearly looks as if GM is having a much more pleasant time early in 2016. Sure, part of that could be chalked up to different styles of marketing and/or public relations, but that's part of the game. It goes far beyond this example, though. Consider the difference in long-term strategies here.

Alfa Romeo is unproven in America, so far. Image source: Fiat Chrysler Automobiles.

On one hand, FCA has been preaching that it's working very ambitiously to bring Jeep back to its global No. 1 position for SUV sales. That's certainly a profitable strategy, and it's necessary given that FCA needs to fund its entire company turnaround, which also involves reviving its luxury sport brand, Alfa Romeo, in the U.S. market. Ask yourself, though, what you've heard from FCA about electric vehicles and the new era of transportation. If you're like me, you've heard little to nothing.

On the other hand, we have Ford and General Motors. Detroit's two largest automakers have continued to pump out SUVs and full-size trucks, similar to FCA, but they have also taken huge strides to develop mobility solutions and electric vehicles. Those two strategies will be critical for automakers to adapt to the new automotive industry.

First up, let's take a look at electric vehicles. Ford is committed to investing an additional $4.5 billion in electrified vehicle solutions through 2020. That will help fund the addition of 13 new electrified vehicles to its product portfolio by 2020, and it will ensure that 40% of Ford's global nameplates will be electrified by the end of this decade.

Same topic, different automaker: General Motors' Chevrolet Bolt electric vehicle probably didn't turn heads with its exterior at the recent North American International Auto Show. However, savvy automotive industry people understand its significance for both the future of electric vehicles as well as the future of ride-sharing. Here's a snippet from Mike Colias, GM journalist for Automotive News, that puts it nicely:

More than three years ago -- when Uber still wasn't quite a household name -- GM engineers and designers began work on a car that could not only serve as a private buyer's daily driver but also fit well into a ride-sharing world.

"This car says we've been thinking about the future for a long time," said Pam Fletcher, GM's executive chief engineer for electrified vehicles. "We recognize that the sharing economy is coming."

Smart mobility
It goes beyond designing and producing electric vehicles for the future, though. Think about how many start-up companies are trying to change the way America, and the rest of the world, travels: Uber, Lyft, Zipcar, Sidecar, Zimride, and Moovit, among many, many others. Those start-ups were proof that Detroit automakers missed an opportunity to expand the horizon of their business strategies -- but now they've taken notice.

One of the headlines above noted GM's debut of Maven, a new car-sharing service that combines and expands multiple programs under a single brand. More specifically, GM is launching its car-sharing program to more than 100,000 people in Ann Arbor, Michigan, with GM vehicles available at 21 parking spots across the city -- and additional city-based programs will launch across major U.S. cities later this year.

Ford has also been doing plenty of testing with smart mobility projects over the past year and has tested more than 25 mobility programs across the world that include car-sharing, parking assistance, shuttle service, and big data, among many others.

Meanwhile, one of FCA's largest strategies to help survive ever-tightening fuel economy regulations doesn't seem to be developing a legitimate electric vehicle lineup, but rather stockpiling emissions credits for a time when its operations exceed its CO2 limits. In the five years ending September 2014, FCA had bought 8.2 million emissions credits, which was six times more than the second-biggest buyers, and the company has a stockpile of 13.8 million credits. While it's a necessary move for FCA, it certainly seems shortsighted. Furthermore, FCA's answer to adapting to the future of transportation in the automotive industry, as well as car-sharing, thus far eludes me.

One thing is clear: Two Detroit automakers are way ahead in adapting and planning for the rapidly evolving automotive industry, and one seems to be embarrassingly behind at the moment. I hope FCA picks up its slack -- sooner rather than later. A good start would be convincing investors the best is yet to come, and FCA will have another opportunity to do that on Wednesday, when it announces fourth-quarter results and an updated product plan.

Daniel Miller owns shares of Ford and General Motors. The Motley Fool recommends Ford and General Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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