Fiat’s Future In America And Elsewhere: A Counterpoint

Our own Ed Niedermeyer recently penned an excellent and well-thought-out article involving the whole Fiat-Chrysler imbroglio.  Now, I don't work for Fiat. However, I do live in, arguably, Fiat's most important production center. You can't go anywhere without running into someone who works at Fiat. Heck, Fiat owns 50% of the car market in my city! So, you ask? Well, sometimes I have professional dealings with Fiat people. On occasion, I go to social functions where I mingle with Fiat people from Italy, Brazil, Argentina. Being who I am and what I do, you can well imagine that at these times I drill these people with questions on Fiat and their views. I gather much valuable info on the going-ons at the company. Granted, they come with a Brazilian-sized distortion as the people here are mainly interested in Fiat in this country. However, Chrysler is at the forefront of many of the conversations I have with Fiat guys and gals these days. As I talk to people at all levels of the company, from high brass to middle managers, I believe I have a window into o mundo da Fiat. Take a journey with me as I sum up what Fiat guys are saying. In off, of course. Just so you know, this summary is an amalgam of what I've been told. I kept my two cents out of it. Except for the conclusion. That much is mine. Fiat-Chrysler management difficulties: Oh, they're real. Very real. Some of it has to do with cultures clashing. Others have to do with attitudes. Some guys at Chrysler cannot understand that their boss is now called Luigi and doesn't speak or understand English very well. This happens up and down the company. Some managers resist the new reality. And some workers cannot wrap their minds around the fact that Fiat is changing everything. At to shop-floor troubles, Fiat is implementing production changes. Full-scale, Japanese methods inspired changes. It is closely watching the workers and was dismayed at the level of disfunctional processes, methods, work, ideas found in some North American plants. They are aggressively weeding out the bad seeds. They recognize that there are many good, interested, intelligent guys on the line. These guys are being pampered and promoted. But yes, Fiat was surprised that the work ethic (not to mention the quality of the work) was not something easily found in North American factories. As to management level troubles, suffice to say culture. Don't want to start a flame war, but some managers really have trouble wrapping their heads around the fact that little, foreign, dark-haired people who have names full of vowels are now calling the shots. Compound that with the fact that sometimes some South Americans are paraded around as examples and go North to make presentations, suggestions and decisions. Take that as you may. And, no, I have no proof. But I hear this comment all the time. Fiat-Italian Management Style: A little crazy. A lot of impromptu decision-making. Makes follow through difficult. But makes things very agile. Quick response to market realities. Though some people call it into question, one must not forget that Italy is Europe's third largest economy (still?). Bigger than Britain (or was until recently). Yes, they have troubles. Yet they manage to do some things right. Berlusconi was a circus act and gave Italy a bad name. Monti seems much more professional and seems sincere in his efforts to modernize. Dart: Refer above. All the organizational, operational changes have made the launch difficult. Fiat people are mindful that the market is closely watching this launch. They are trying to get the kinks out. Many people in the company prefer it this way. The consumer will not get a "beta version" of the car. People have told me they are mimicking the Linea launch in Brazil. They delayed it over a year. Launch dates came and went (IIRC) six times. By the time the car came out, it had nary a hiccup (though the car is not a hit, their -few- owners are happy and are future buyers and word-of-mouth propagandists of  future Brazilian Fiat larger cars like possibly a Brazilian Dart, or so Fiat do Brasil hopes). 500: Sergio Marchionne had to cite big numbers. Americans like big numbers. As it is, the car is selling what in reality they expected. Internally, there's no surprise. It seems to be holding up well and buyers are happy. Akin to Brazil in the Linea's case, they realize the 500 is gaining but a beachhead in the ole US of A. Because they don't know if or when or what others products will be launched in America. Though, apparently, the 500L, Panda and Punto are heading Canada's way soon enough. Brazil: They sell about 750,000 cars a year here. The Uno is a hit and giving the 25-year market leader VW Gol a serious run for the money. Their other mission critical car (the Palio family) debuted to some mixed reviews and a lot of price shock. Their new Siena had just been launched. It has been positively reviewed so far, though they're trying to move it up market, which is always a risky move. It is yet another crucial car to maintain Fiat's position in the Brazilian market. They sell almost (if not as many cars) here as they do in Italy. They are certainly much more profitable here than anywhere else. The market now sells 3.5 million cars. Some analysts say this will grow to 5 million in 5 years. How many markets are growing like this? If Fiat keeps their share Fiat could be selling close to 1.25 million cars in Brazil in a few years. Now for a bit of gossip. Lots of people down here are frustrated. Brazil was Fiat's golden boy (and cash cow). Now, all eyes are on Auburn Hills. Much money has been diverted and that is surely good for America, but bad for Brazil. However, they have to tread carefully. With Toyota and Hyundai about to launch new products at the entry level, it could well be that Fiat will (almost surely) lose market share. As the market is also not growing this year, they could end up losing absolute sales numbers. Brazil has sustained Europe through thick and thin. Let's see if they have the ability to not throw the baby away with the dirty water. Europe: Yes, they're hurting. Exactly because of that, plans have been delayed or frozen. Of course they're doing a juggling act. If they launch the new cars now, they may sell slowly and lose that novelty factor that so spurs car sales nowadays. The kind of people who buy Fiat cars are spooked right now. They are holding on to their old cars. When the crisis blows over they'll come back en masse. And because of the crisis they'll be looking for more affordable cars. Of course you can't delay forever or the cars will get stale. Fiat's Future: It's like the man (Marchionne) himself has said over and over. It's all about the 6 million cars. Pre-crisis Fiat sold around 2.5 million cars worldwide. Chrysler about 4 million. The future was guaranteed. Along came the crisis. Fiat shed 750,000 sales? Chrysler dropped below 3 million? (Numbers out of my head hence the question marks) That's why a Mazda, or better yet, Suzuki (who they already collaborate with), are cited all the time. À la Renault-Nissan, they could then be a presence worldwide. Fiat and a little Chrysler in Europe, Chrysler and a bit of Fiat in North America, Fiat and a few Chryslers in South America, Suzuki with a sprinkling of Chryslers and Fiats in Asia. They could then become one of the really big elephants in the proverbial crystal store again (along with Toyota, GM, Ford, VW, Renault-Nissan, Hyundai-Kia and possibly a Chinese group or two). Conclusion: Lots and lots of question marks. It all depends on how it goes. If Fiat can pacify Chrysler, if the integration of Fiat-Chrysler works, if Americans really buy smaller-engine cars, if the new platforms prove successful, if they keep their position in Brazil and manage to break into Russia and China, if Europe recovers. However, there are good, solid reasons for hope of a better future. Dark clouds abound, but here and there, there are rays of sunshine. They are well-positioned in some key markets. They've established a foothold in North America. They have a big presence and are a player in markets all over the world (except Asia). The cars are more reliable than ever before, yet still manage to be engaging and more fun than some of the competition and most owners are satisfied. Their new engines are renowned and studied and copied by other makers as they really do point a way into an ever more frugal future. However, do they have the capacity to overcome the difficulties? You can be an optimist or a pessimist, but the reality is… Only time will tell. from The Truth About Cars http://www.thetruthaboutcars.com

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