Fiat Chrysler CEO Sergio Marchionne reportedly is putting a dozen or more North American vehicle programs on hold as he sets out to find the partner he believes is critical for the long-term survival of his trans-Atlantic automaker.
The move appears to be the biggest change yet to the far-reaching product strategy that Marchionne and his team at FCA announced a little more than a year ago, and reverses earlier comments by the executive that the program was “on track.”
According to a report by the wire service Reuters citing inside Fiat Chrysler sources, Marchionne is “shuffling product plans even as he seeks a partner.”
Among the most critical models impacted are the Jeep Grand Cherokee and Jeep Wrangler SUV and Ram 1500 pickup. Indirectly, the delay would put on hold any effort to bring to market a pickup for Jeep. That brand’s chief, Michael Manley, recently said he favors such a program, which would likely be based off a next-gen Wrangler.
A spokesman for Chrysler suggested any five-year plan is, by nature “fluid.” And Marchionne in May acknowledged that FCA was re-examining the underlying architecture of the next Grand Cherokee, which will be shared with the even larger Grand Wagoneer Jeep is bringing back.
“I think that development needs to coincide with a complete re-look of the Grand Cherokee architecture,” Marchionne told reporters. “If there is a delay, it’s due to the joining of these two programs and it’s something that makes sense.”
(FCA’s Marchionne screams for industry consolidation. For more, Click Here.)
A source at FCA downplayed the Reuters story, insisting that while there are some product delays there are more likely due to specific program issues, as well as the natural “ebb-and-flow” of market demands, cash allocations and the like. That said, Marchionne has openly and repeatedly suggested Fiat Chrysler needs another partner to expand its economies of scale and to help share the increasing R&D costs automakers have to make to meet consumer and regulatory demands. He has said that, more broadly, the entire auto industry must go through a major consolidation phase.
The Canadian-educated executive went so far as to outline a possible alliance with General Motors, something GM CEO Mary Barra has rejected. There have been some indications Marchionne may also be discussing cooperative efforts with Silicon Valley high-tech firms Google and Apple.
The former is considered a leader in autonomous vehicle technology, which it hopes to put into production in the near-term, while Apple is reportedly developing a high-tech battery car of its own. Both are expected to want to find partners rather than actually tooling up their own plants.
(Click Here for details about Marchionne’s talks with Google and Apple.)
Delaying products is a risky business, as Chrysler clearly learned during the dark days of its collapsing marriage with Germany’s Daimler AG and subsequent sale to fund management firm Cerberus. Since being acquired by Fiat post-2009 bankruptcy, the combined firm had been rapidly ramping up product development – and generating an ongoing series of increasing monthly sales as a result.
But going ahead with models like the next Grand Cherokee could hinder potential alliances with partners who might want to integrate some of their own design concepts.
Alliances carry their own risks, however. Nissan originally planned to turn to Chrysler for a replacement for the slow-selling original Titan pickup truck. But that project fell apart after the Chrysler bankruptcy, forcing the Japanese maker to go back to the CAD-CAM screen to develop a new version of its own, just set to debut the upcoming model-year.
(To see more about U.S. sales exceeding expectations last month, Click Here.)
On the other hand, the alliance between Nissan, Renault and Daimler has reportedly saved the three makers billions of dollars, while helping each add a number of new products they couldn’t have afforded individually.