October 28, 2009

Auto Crucible: Will Americans Drive Chrysler’s New Brands?

Fiats and Alfa Romeos will cruise America’s streets again.  But just how many is up to the American consumer.

According to the New York Times, Chrysler will unveil a new product line next week, cutting several poorly performing models – like the Chrysler Sebring – to make room for joint Chrysler-Fiat CEO Sergio Marchionne’s foreign high-performers, like the Fiat 500. 

And in splitting the Dodge brand into separate “Dodge Car” and “Ram Truck” divisions, Mr. Marchionne will have expanded the Chrysler company into six unique brands – this, while General Motors is scaling back its number of brands to four. 

This is all part of an aggressive strategy by Mr. Marchionne to regain Chrysler’s dwindling market cap, and make new strides with two somewhat familiar but mainly exotic (and “environmentally smart”) brands, Fiat and Alfa Romeo.

Given this refreshed approach, bolstered by new brands and a dynamic, consumer oriented leadership under Mr. Marchionne, could we be on the verge of a consumer return to Chrysler?

As one New York Times source said, “I’m sure Americans love Italian suits. Whether they love Italian cars is yet to be seen.”

From a business leadership standpoint I applaud Mr. Marchionne’s confidence and ambition during this American automobile crisis.  He is eliminating sources of waste, i.e. poor performing cars, and introducing new vehicles and technology that are likely to appeal to today’s car buyer who is seeking lower costs and higher efficiency. 

However, the main unknown in this equation is whether or not the American consumer is ready to put their trust back in what is now a tainted Chrysler brand.  The financial crisis not only rocked the automobile industry, it shook consumer confidence in American cars, and Chrysler is no stranger to this trend having seen sales drop 42% in September.

American cars have been outperformed by foreign competitors for years, but its yet to be seen whether this infusion of Italian innovation is enough to bring Chrysler back to market relevancy.