FCA comes under fire for nine-brand strategy

Fiat Chrysler Automobiles’ ambitious five-year strategy is drawing criticism from market watchers, who contend that the company should pare down its nine-brand portfolio and concentrate resources on marques that are in the strongest position for growth.

The five-year plan calls for FCA to boost annual sales by 60 percent to 7 million units by 2018, and also to improve profits by about 11% during the same timeframe.

FCA believes it can only achieve those targets with the help of all of its nine brands, which include Chrysler, Dodge, Ram, Jeep, Fiat, Fiat Professional (a commercial vehicle builder), Maserati, Alfa Romeo and Ferrari. Major volume increases are expected from Jeep, and FCA is also investing 5 billion euros into revitalizing perennially loss-making Alfa Romeo.

But some analysts argue that FCA’s plan is unrealistic, with many of its brands requiring too much expensive rebuilding to reach their aggressive sales goals.

“The problem is PowerPoint presentations are a lot easier than real life,” Harald Hendrikse, a London-based analyst with Nomura Holdings, told Automotive News. “These brands need a huge amount of work to get where they need to be. The world changes very slowly and you have brands at the bottom of the pile in many regions. It’s not going to happen overnight.”

Instead of fixating on over-aggressive targets, certain commentators assert that FCA should consider shuttering weaker brands while re-doubling its efforts with promising offerings.

“If it was not for Brazil, where it is the No. 1 brand, [FCA CEO] Marchionne should simply kill the Fiat brand,” said Philippe Houchois, an auto analyst at UBS. Arndt Ellinghorst of consultancy International Strategy & Investment in London commented: “I still think it could be Dodge or Chrysler, but not Dodge and Chrysler.”

Queried last month about the viability and sustainability of FCA’s large brand portfolio, Marchionne pointed out that the company has already axed Lancia and downgraded SRT to a sub-brand, stating that “we now have brands in the marketplace that are not butting heads.”