The purpose of any merger is to reap the benefits of a larger market share and see potential costs savings. However, a big part of a merger’s success is determined by how the new company tackles both the strengths and weaknesses of the combined assets. It is important that the new siblings do not compete with one another to ensure the merger can expand the group’s presence in the market.
Fiat against Peugeot, Citroen and Opel?
The Fiat brand presents the biggest area of uncertainty for the new group. It currently faces a number of challenges, including an aging lineup, lack of key models and minimal presence outside of Italy and Brazil. In contrast, Jeep is an appealing counterpart, benefitting from a strong reputation among consumers worldwide.
Fiat’s global sales highlights the difficult situation the brand is facing. In 2009, when Chrysler Group was acquired by Fiat Group, brand sales accounted for 3.7% and 8% of global and European markets respectively. However, as of November this year, market share has fallen to 1.5% globally and 5% in Europe.
Alongside the need to renew their model lineup, Fiat must work to strategically position themselves in the market. The lack of brand identity means it is difficult to both describe and place Fiat within the automotive landscape. Over the last two decades, their product plan has lacked strategic vision, including an unusual combination of city-cars (Seicento, 500, Panda, Uno, Mobi), big wagons (Croma, Freemont), midsize pickups (Fullback) and sport cars (124 Spider, Coupe, Barchetta).
Carlos Tavares intends to reposition Fiat as the ‘small car’ brand of the new group. It is likely that the strategy will place Fiat in a new field, away from its siblings – Peugeot, Citroen and Opel. This is because it would be difficult to add a fourth mainstream player to the already crowded portfolio.
It is likely that the new strategy will place Fiat in a new field, away from its siblings – Peugeot, Citroen and Opel.
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As a result, Fiat will be able to operate in a new segment and make use of its best values: charming, friendly, lovely and funny cars. Instead of adding more models in the B and C mainstream segments, that would most likely result in cannibalisation alongside its French and German cousins, Fiat will be able to focus on iconic models, including city-cars, subcompacts, small SUVs and small MPVs. It is important to consider that city-cars accounted for 42% of Fiat global passenger car sales in H1 2019, and more than half of its volume in Europe.
This repositioning would exclude the Punto and Tipo from the product plan for the coming years.
DS or Alfa Romeo
The other big question that emerges from this merger is how the premium strategy will take shape. The current state of affairs for the Alfa Romeo and DS is quite complex. For instance, despiteDS Auto recording a sales increase of 8.2% to 43,700 units in September 2019, it is facing serious issues with its line-up. Apart from its two SUVs, the remaining products posted double-digit sales decreases and two of them are due to leave the market shortly.
FCA is also facing a number of challenges, with predictions for Alfa Romeo 2019 sales dropping to less than 100,000 units – this being approximately 25%-28% less than in 2018. This negative trend seems to be in juxtaposition to their product offensive that began in 2016, featuring the Giulia and Stelvio. Nonetheless, the lack of new products since 2017 has damaged the expected growth seen in 2018.
It seems that the new group will aim to position the brands in differing markets. For example, DS is likely to boost its Chinese operations through new products that could eventually arrive in Europe, while Alfa Romeo will focus on North America and Europe, receiving a lifeline from the incoming Tonale C-SUV. Nevertheless, this does not mean that either brand is safe from failure. If the strategy does not work, DS does not have a healthy heritage to support it.
Jeep to share its SUV DNA with Peugeot and Opel
Tavares is aware that Jeep is the crown jewel of FCA, however, despite new vehicles expected to hit South America and European markets in 2020, the brand needs more products. To achieve this, the best approach would be to share the costs with other mainstream brands – and the best candidates are Peugeot and Opel.
As Opel hopes to expand its presence outside of Europe, presenting itself as the German brand of the group, they could start developing SUVs in collaboration with Jeep. With Jeep positioned as the American off-road lifestyle-oriented brand, its SUVs could instead wear a mainstream European style under Peugeot and Opel brands. On top of this, we must remember that SUVs accounted for 40% of PSA+FCA’s passenger cars global sales in H1 2019, and Jeep represented 49% of its SUV volume during the same period.
Lancia and Vauxhall will survive
It is unlikely that the newly merged company will discontinue Lancia in Italy and Vauxhall in the UK, as they are not the only unique-country car brands in the world. For example, Holden is only available in Australia and New Zealand, Jetta operates purely in China, and Samsung exists solely in South Korea. In the case of Lancia, the brand could benefit from the new Fiat city-cars/SUVs replacing the current Ypsilon, one of the top-selling cars in Italy.
Interessantissimo articolo di Fiatgroupworld (è un analista di JD Dynamics) sulle sfide del posizionamento dei marchi della galassia FCAPSA in particolare il destino di Fiat. Ovviamente siamo nel campo della speculazione più totale.
Destino del marchio Fiat: il primo grafico mostra che dal 1980 ad oggi il marchio Fiat ha più che dimezzato le vendite in un mercato mondiale che è triplicato di dimensioni. L’ internazionalizzazione ha portato risultati disastrosi in Cina, Nord America ed India. Nel 2009 Fiat aveva in Europa una quota del 8%, dopo 10 anni sono al 5%. Durante gli anni di Marchionne è stata favorita Jeep e non darei torto su questa scelta. Adesso però la situazione in Europa diventa molto pesante. Manley ha già annunciato che a causa delle nuove normative europee Fiat dovrà abbandonare il segmento A per ritornare nel segmento B. Il problema è che le citycars rappresentano già oggi più del 50% delle vendite europee del marchio Fiat. Se decideranno di fare una nuova Punto si troveranno a concorrere in casa contro 208, C3 e Corsa. L’idea di distanziare i marchi (ad esempio Fiat e Citroen più sul low cost con Opel e Peugeot più verso il premium) richiederà comunque anni. L’ analista di Jato suggerisce di lanciare Panda e 500 ingrandite per non dare troppo fastidio ai marchi PSA e presidiare la fascia di prezzo sotto i 15.000 euro. Un discorso simile avverrebbe per i crossover, Fiat ha assolutamente bisogno di suv che però andrebbero a scontrarsi con le varianti Opel, Peugeot, Ds, Jeep e Citroen.
Jeep accoppiata con Opel? L’analista suggerisce una forte condivisione tra Opel e Jeep, nonostante il buon andamento Jeep ha assoluto bisogno di nuove piattaforme per Compass, Renegade, Cherockee e Mini Jeep. La base EMP, appositamente modificata, permetterebbe a Jeep di continuare l’espansione internazionale nei fuoristrada soft mentre Opel potrebbe rappresentare il marchio germanico della nuova società.
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