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Friday
Jul032015

Fiat Chrysler Needs Clear Thinking, Not a Merger

By Christopher A. Sawyer

Alfa Romeo’s new Giulia sedan could lead to a new start for Chrysler, Dodge, Fiat

Alfa Romeo's new Giulia sedan has had many false starts, but could lead to a new dawn for Chrysler.After years of false starts, promises and delays, Alfa Romeo finally introduced its new small sedan to the world. Known internally as the 159, the menacingly aggressive red sedan rolled onto the stage at the Alfa Romeo Museum on the 105th anniversary of the founding of A.L.F.A. (Anonima Lombarda Fabbrica Automobili) as Andrea Bocelli sang an aria from Turandot. Low key this introduction was not. Then again, how could it be? The 159 project has moved in fits and starts, shifted from a transverse front-drive platform to a (sort of) Maserati Ghibli-derived rear-drive architecture, and was developed in secret by a group of about 600 engineers working in a nondescript building in Modena located between Ferrari and Maserati.

During its gestation, Fiat Chrysler Automobiles CEO Sergio Marchionne said he sent the car back to be restyled as the proposed design didn’t live up to what he expected from the Alfa Romeo brand. What he forgot to impart was that this was because that version of the Giulia was built off the Dodge Dart’s platform. A wider and longer version of the Alfa Giulietta’s architecture, the CUSW (Compact US Wide) platform features a transverse front-drive powertrain, and can easily be adapted to all-wheel drive — as proven by the Jeep Cherokee. However, as the program moved forward, it became apparent that a front-drive Giulia was not strong enough to help push Alfa Romeo from today’s 80,000 global sales to 400,000 by 2018.

Currently front-drive and related to the Dodge Dart, the next-generation Chrysler 200 may borrow a decontented version of the Giulia's platform.As ambitious (and this is too mild a word for Alfa’s sales plans) as those numbers may seem, following Honda’s playbook for Acura wasn’t going to stir many souls; certainly not 400,000 of them. It was at this point, according to FCA insiders, that the entire plan for Alfa Romeo was scrapped. Except for the smallest models, a rear-drive platform would be used, with the option of all-wheel drive in all markets. Modifying Chrysler’s Pentastar V6 and mating it with a new Alfa-designed inline four-cylinder engine was jettisoned in favor of a 2.0-liter four in three states of tune (reportedly 178, 247 and +300 hp), a 2.2-liter four and 3.0-liter V6 diesel, and a Ferrari-developed turbocharged 3.0-liter V6 with more than 500 horsepower.

This change in direction forced profound change on the Giulia, as well as on the replacement for the Giulietta; changes that could have important repercussions for Chrysler and Dodge. In addition to the Giulia sedan, the new rear-drive platform will support a coupe, a larger sedan, and a smaller hatchback and sedan to replace the current front-drive Giulietta.

Chrysler and Dodge, depending on who you talk to, may either share the Alfa Romeo platform or be forced into an all-front-drive strategy. In the latter option, the Chrysler 300 and Charger would be replaced by large front-drive sedans reminiscent of the LH sedans of the 1990s. This would allow Alfa to keep its premium status, and rationalize Chrysler’s lineup around a modular front-drive architecture it would share with Fiat. The second shares a revised version of the Giulia platform with Chrysler for the next-generation Chrysler 200, and uses a smaller, rear-drive platform planned for the next-generation Giulietta for the Chrysler 100 sedan, thus eliminating the need for a Fiat Agea Project-based version.

As the Giulia spawns a larger 5 Series competitor, so would the 200 create a base for the Chrsler 300, Dodge Charger (shown) and Challenger.The all-front-drive strategy is a non-starter, and would put Chrysler right back where it was before Daimler took over with a lineup that is no different than the competition’s. Its only advantage would be that it would make it easier for Chrysler to meet upcoming Corporate Average Fuel Economy standards with efficiently sized cars that easily support hybridization. However, it also would squander the investment made in the modular Ghibli/Giulia platform. FCA needs to build enough vehicles to not only amortize the costs associated with this rear-drive design, but to lower production and development costs. Further, a front-drive strategy for Chrysler and Fiat would demand that FCA embark on a program to create a new modular architecture at the same time it is attempting to relaunch Alfa with a $5.7 billion product development program. It does not have that kind of money.

On the other hand, sharing the Giulia’s basic architecture with Chrysler has some major positives. The cost of developing Alfa’s larger BMW 5 Series competitor could be spread among Alfa and Chrysler, and would replace the 200 with a platform that uses less exotic materials than the Giulia. Unique in the mid-size market, a rear-drive 200 would solidify Chrysler as an entry luxury brand, distance it from domestic competitors, and attract Acura and Infiniti buyers, among others. Stretching and widening this platform would allow FCA to do five things: 1) Cost-effectively build rear-drive/all-wheel drive replacements for the Chrysler 300, Dodge Charger and Dodge Challenger while creating a 5 Series competitor for Alfa, 2) Share engineering and development, component and systems costs across more vehicles, 3) Protect Alfa's and Maserati’s brand images by not making the 300, Charger and Challenger lower cost, badge-engineered clones of their vehicles, 4) Give Chrysler its own version of the proposed Alfa and Maserati sporting crossovers due to be built off this platform, and 5) Provide FCA with a North American production facility capable of building any and all of these vehicles. Should the Alfa or Maserati crossovers prove popular, some of them could be built in FCA’s Brampton, Ontario plant in Canada alongside their Chrysler and Dodge counterparts, and sold in the U.S. or exported overseas.

Meanwhile the Dart would grow slightly to accommodate a smaller sedan and hatchback, and support the replacement for the Dodge Journey, as well as a new Fiat crossover.Such a plan would force FCA to shuffle a number of programs. The Fiat Agea Project would still replace the Fiat Linea sedan and Bravo hatchback and wagon, but could be used to provide Dodge with a sub-Dart front-drive sedan and hatchback. Built on Fiat’s small wide platform, it would share costs and components with the Jeep Renegade, Fiat 500X and 500L, and give Dodge a competitor for vehicles like the Ford Fiesta, Nissan Versa, Toyota Yaris, Honda Fit, etc. It also would relieve pricing pressure on the Dart, whcih would grow slightly, thus filling the chasm that currently exists between the Dart and Charger without adding another car line. Plus, the Agea Project gives FCA another high-mileage vehicle as fuel economy standards tighten. With a production site in the NAFTA region, Dodge could also build a small MPV with optional all-wheel drive that would be distinct from the Jeep Renegade, and open up new markets with young buyers. To make up for the production volume lost with the move of the Chrysler 200 to the rear-drive Giulietta platform, Dodge could move the Journey to the Dart’s CUSW architecture alongside the Jeep Cherokee, and build a version for Fiat in its Sterling Heights, MI assembly plant. This would go a long way to mollifying those dealers who sunk millions into building standalone Fiat dealerships, but only have variants of the 500 to sell.

The 2016 Alfa Romeo Giulia opens up a lot of possibilities for Fiat Chrysler. However, the $5.7 billion being sunk into resurrecting Alfa leaves little left over for the rest of the company, and supports rumors that Chrysler’s vehicle cupboard is bare after 2018. Sergio Marchionne’s calls for a merger between Fiat Chrysler and GM — or FCA and just about anybody with deep pockets — smacks of desperation, and leads many in the industry to question the company’s long-term health. Marchionne sees a merger as a way to spread costs over more vehicles, reduce development and engineering time, eliminate duplication, and spread the burden of strict new safety, emission and fuel economy regulations. What he doesn’t see, apparently, is that he has the opportunity to do that within his own automotive empire with the tools he currently possesses.

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