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Fiat Chrysler Maps Out Another 5 Years

May 1, 2014
5 min to read


Via The Detroit News


On Nov. 4, 2009, Sergio Marchionne took the stage at the Chrysler Technical Center in Auburn Hills to outline his vision for the born-again automaker.

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The five-year plan Marchionne and his newly assembled executive team outlined at that daylong briefing for analysts and journalists offered an unprecedented view of the future plans of an American automaker, albeit one now controlled by an Italian company. It charted a course for the new Chrysler from the gates of history’s graveyard back to the top tier of the U.S. automobile market.


Marchionne promised big things for the company that Fiat had just acquired for nothing from an Obama administration eager to unload Chrysler to anyone willing to cover the electric bill: a return of the Fiat brand — and Fiat small car technology — to the United States, a rebirth of the Chrysler brand, even an electric vehicle to feed the administration’s appetite for green technology.


In four-and-a-half years, Marchionne and his team have accomplished most — but not all — of what they promised. They went above and beyond projections in some areas, including paying back the money they borrowed from the U.S. and Canadian governments six years ahead of schedule and buying the rest of Chrysler from a United Auto Workers-run trust on Jan. 1.


Now, on May 6, the management team will hold another daylong briefing in Auburn Hills to outline a new five-year plan, not just for Chrysler but for all of the brands of the newly constituted Fiat Chrysler Automobiles NV.


“They’ve made pretty good progress, considering where they came from,” said David Cole, chairman emeritus of the Center for Automotive Research in Ann Arbor. “The next step is to more fully integrate Fiat and Chrysler. They’re really in the middle of that right now.”

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Before the 2009 briefing, many observers assumed Fiat had agreed to take up the burden of the bankrupt automaker simply to get control of its coveted Jeep brand. Others, including many financial analysts, worried that Chrysler’s liabilities would soon drag down a resurgent Fiat and promptly cut its credit rating.


Instead, Chrysler became the life raft that kept a struggling Fiat afloat as the European car market sunk to depths not seen in decades. And while Jeep has in fact become the spearhead of the company’s global growth strategy, Marchionne has made big investments in Chrysler, Dodge and Ram, too.


Marchionne made good on promises to share platform technology with Chrysler and bring an electric vehicle to market in the United States. A special “Aero” version of the Dodge Dart satisfied another key demand of the Obama administration: introducing a compact that got more than 40 miles to the gallon.


But other elements of the last five-year plan have been scrapped or delayed.


Alfa Romeo has yet to make the triumphant return to the United States that Marchionne promised four years ago. The Chrysler 200 and Jeep Cherokee were introduced later than scheduled, while plans to replace the Dodge Avenger, Jeep Compass and Jeep Patriot failed to materialize. So did the new Fiat-built Dodge and Chrysler subcompacts that were supposed to be in showrooms by now.

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On the other hand, Chrysler has introduced substantially upgraded versions of the Jeep Grand Cherokee and Ram 1500 pickup that were not part of the product plan in 2009.


“This is going to have an effect on your balance sheet,” said Gualberto Ranieri, vice president of communications for the company. “There have been a number of changes to the plan, but the (overall) investment has been bigger than was originally intended.”


Since emerging from bankruptcy, Chrysler has announced investments of more than $5.2 billion and added more than 13,000 hourly employees.


That has been great news for communities such as Sterling Heights, where a Chrysler assembly plant originally slated to close in 2009 has instead become a state-of-the-art manufacturing facility building the all-new Chrysler 200.


And it has not just been hourly employees that have benefited from a resurgent Chrysler.

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When Ranieri showed up for his first day of work at Chrysler’s Auburn Hills headquarters, there were just 7,500 men and women working in the largest office building in the United States after the Pentagon. Today, there are 14,000 — and that is not counting the hundreds of employees who have been moved off-site to other facilities in metropolitan Detroit, including Chrysler House: the company’s new satellite headquarters downtown.


The headcount is not the only thing going up at Chrysler, either. The company’s U.S. sales have risen for 48 consecutive months. That is partly due to a rebounding U.S. car and truck market, but Cole said it also is a testament to Chrysler’s improved quality and upgraded interiors.


“It’s day and night from Nov. 4, 2009,” Ranieri said. “That business plan was labeled as wishful thinking. The question was: ‘Are you going to die in 2010 or 2011?’ Nobody thought we were going to be alive in 2012. The news today is that Chrysler is kicking and alive, when five years ago it was labeled as dead.”


Cole said he thinks there may be more news to come as Marchionne pursues his overarching goal of turning Fiat and Chrysler into a global automotive powerhouse capable of moving 7 million vehicles annually.


“They may not have the economies of scale they may ultimately need for that,” Cole said. “It wouldn’t surprise me to see another partner drop into the game. I would guess that Sergio is keeping his eye open.”

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