Afterthoughts: The Possible Suitors For An FCA Vehicle Partner

[William Maley]

A couple of weeks ago, Fiat Chrysler Automobiles CEO Sergio Marchionne made headlines when he announced that the Chrysler 200 and Dodge Dart would run their course - i.e. no second generation. Instead, the company would focus on building utility vehicles. This threw everyone in the automotive press into a frenzy with equal groups calling Marchionne a genius or a lunatic. But Marchionne also mentioned that the 200 and Dart could continue on if a partner could be found and build vehicles under a contract, a.k.a. badge engineering.

 

This move presents a lot of risk for FCA. Badge engineered vehicles have never been a true success for anyone. There is also an added risk of trying to find the right partner to build these new vehicles.

 

I have decided to figure out a possible list of suitors that FCA could go for. Some of these suitors have a history with the brand while others don’t have any history at all.

 

Mitsubishi - Chances of happening: 1 to 10%
The Japanese automaker has a long history with Chrysler. During the late 70’s to mid-nineties, Chrysler imported a number of Mitsubishi vehicles to rebadge and sell (Colt, Colt Vista, Conquest, and Sapporo to name a few). Then there was Diamond Star Motors - a joint venture between the two of developing and building a group of coupes - Eagle Talon, Mitsubishi Eclipse, and Plymouth Laser. Even now, Mitsubishi allows Chrysler to sell a rebadged version of the Mirage G4 sedan - the Dodge Attitude in Mexico.

 

But Mitsubishi doesn’t have a midsize sedan. A few years back, the company announced a joint partnership with Nissan/Renault to develop a new midsize sedan. However the partnership was dissolved and Mitsubishi was back to square one. Then there is the case of the Lancer compact sedan. While most automakers have introduced new or refreshed versions, the Lancer has stayed the same. More concerning is Mitsubishi not having a real plan for the next one or a timeframe.

 

To put it bluntly, Mitsubishi is currently marooned at sea with no sign of help coming for their car lineup.

 

Hyundai - Chances of happening: 0 to 3.5%
Hyundai is currently on a roll in many markets with an impressive lineup. But that wasn’t always the case. For example, the Korean automaker partnered with Chrysler to sell a rebadged version of the Hyundai Accent in Mexico, the Dodge Altitude in the oughts. This was because Hyundai wasn’t in the Mexican market untill last year. Going with Hyundai gives FCA access to a well-rounded if a bit boring looking midsize sedan (Sonata) and recently redesigned compact (Elantra).

 

But Hyundai is very constrained on production. All of Hyundai’s factories are working overtime on getting vehicles onto dealer lots. Hyundai is also beginning to change some of their production capacity to focus on building crossovers to meet the growing demand for utility vehicles. The possibility of FCA getting any vehicles are very slim.

 

Mazda - Chances of happening: 10 to 35%
The most recent partnership FCA has developed is with Mazda. A few years back, the two announced a deal where the next-generation Mazda MX-5 Miata would form the basis for a new Alfa Romeo Spyder. But Alfa Romeo decided to go their own way and the Miata deal fell into Fiat’s lap. The end result was the 124 Spider which debuted at the LA Auto Show. Extending the partnership would be beneficial for Mazda. The Japanese automaker would have more vehicles on the ground, albeit with different badges.

 

But this partnership could bring some problems. If Mazda was to give the 3 and 6 to FCA, they would be essentially competing with itself. Also, would FCA want to make any changes to the 3 and 6? They already did this with the 124 Spider and there are concerns about reliability due to the changes made.

 

Volkswagen - Chances of happening: 0 to 2%
I’ll admit this is quite the long shot. The two automakers have been bickering at each other for a few years when it comes to Alfa Romeo. (To be honest, I would like to see what Volkswagen could do with Alfa Romeo. They could actually get models out on time. But I digress. -WM) So why would Volkswagen want to enter a partnership with FCA? Well, they could use the money considering the amount of trouble they are in with diesel emissions. Also, the two did have a relationship with producing a version of the Chrysler Town & Country/Dodge Caravan for the German automaker - the Volkswagen Routan.

 

But Volkswagen is currently dealing with the fallout of the diesel emission scandal and doing a partnership with an another automaker isn’t at the top of their priority list. Also, would you really want to drive a Chrysler Passat? How about a Dodge Jetta?

 

PSA Peugeot Citroen: Chances of happening: 0 to 2%
This idea was put out there by Richard Truett of Automotive News. His argument for going with the French automakers is this: ‘The replacements must not be available here from any other manufacturer.’ This makes sense as it would solve one of the biggest problems with going with automaker already in the U.S. - Competing with itself. It would also give the PSA Peugeot Citroen a barometer of whether or not it should make a return to the market. There have been rumors here and there about the French automaker considering a return.

 

But there are a number of problems with this solution. If a deal was reached, getting the vehicles into the U.S. Market would take a fair amount of time and money - getting it certified, making changes, performing emission and crash tests. Also, PSA Peugeot Citroen is still in a recovery process after being very close to bankruptcy two years back. They announced a profit in the first half of 2015 and sales are starting to climb back. Considering something like this would be considered too risky for French automaker.

 

Chinese Automaker: Chances of happening: 1 to 10%
The last possibility for a possible partnership is going with one of the Chinese automakers. A number have expressed interest in selling vehicles in the U.S., and a few have come to the various auto shows to gauge interest. But no one has made the full commitment. If FCA was to somehow to make a partnership with a Chinese automaker, it could give them an idea of how their models could fare.

 

But there is a glaring issue with this - aside from the concerns about safety and quality. There is already a sentiment of people who don’t like the idea of automakers of importing vehicles built in China - the Volvo S60 Inscription and soon the Buick Envision. If FCA was to import Chinese vehicles wearing Chrysler and Dodge badges, this could end up a disaster in the court of public opinion.

 

So there is the list of possible contenders that FCA could partner with. We’ll have to sit and wait to see if FCA makes any decision on a possible partnership. But one thing is clear, there is a small group of automakers that would even entertain this.

View full article

[G. David Felt]

While these all make sense in their own way. I honestly doubt any of this will happen. I think FCA is worse off then anyone realizes and that the next couple years are going to prove this with the forced shutdown of models and even a brand.

[daves87rs]

While these all make sense in their own way. I honestly doubt any of this will happen. I think FCA is worse off then anyone realizes and that the next couple years are going to prove this with the forces shutdown of models and even a brand.

 

 

This. No one is dumb enough to partner with them at this point. When you drop two nearly new models, that throws a huge red flag. Neither model was that bad off where tweaks could have helped it. This is giving up on your product.....

[oldshurst442]

Count me in as one of those folks that is fearing the worst for FCA.

 

I was excited for FCA when they announced the Giulia and what are its expectations a year ago.

 

Since then though, all that is stuck in my head is this:

 

1. Viper being shut down because platform does not conform to new safety regs...

"new" generation Viper is only a couple of years old and already dated...not a good sign of things to come...even though Sergio says that a Viper could exist in the near future....

How is that possible when...

 

2. FCA announces that the Giulia is postponed due to the fact that it does not pass certain safety regs...

Vapor ware Giulia is truly Vapor ware...and 300/Charger/Challenger replacement I guess is postponed as well and its long overdo....and this only becomes even more long overdo.

 

3. New sedans in key segments that could make money for FCA that came right after FCA was formed are now killed off...so future entry to these key segments WILL mean MORE BILLIONS needed in the future...billions that FCA does not have now, nor will it ever have...

 

4.  FCA is counting on 1 brand...JEEP...to  raise cash for the entire kit and caboodle...1 brand...and that brand also needs billions in R&D to stave off massive competition from relatively the whole automobile universe as the whole bloody industry is focusing on CUVs and SUVs...

 

I fear for FCA...

I dont care really...

 

For Chrysler and Dodge I will weep massive tears.

JEEP WILL survive...they could survive on their own actually.

I may shed a tear and a half for Alfa Romeo...but that is it...