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Chrysler to quit UK market, what’s next for FCA?

Chrysler-auto-sales-statistics-EuropeIt really didn’t come as a surprise when Fiat-Chrysler Automobiles announced that it would withdraw the Chrysler brand from the UK market this week. Right-hand drive American MPVs, large sedans and rebadged Italian hatchbacks just didn’t vibe with the British car buying public. With the Jeep brand currently red-hot all over Europe thanks to the successful launches of the new midsized SUV Cherokee and even more so of the small crossover Renegade, the company has decided to dedicate its resources in the UK to its SUV brand.

Chrysler-Jeep-UK_Sales_ChartChrysler’s UK sales have dwindled to less than 2.000 units last year, but haven’t been above 3.400 in the last 6 years, which is approximately the number of Fiat 500 minicars the company sells every month in the UK market. Production and sales of the Delta compact had already been suspended last year, and the slow-selling RHD 300C large sedan (88 units in 2014, just 2 in January 2015) and Voyager MPV (2014: 565 units, January 2015: 5) will be discontinued as we speak, while the Ypsilon minicar (1.411 units in the UK last year) will be sold on customer’s request until the end of 2017.

Rumors of the withdrawal of the Lancia brand from all markets outside of Italy have been surfacing for a while now, but this is the first step the company has officially taken to execute this strategy.  Sergio Marchionne has saved the Fiat Group and miraculously turned it around and brilliantly acquired Chrysler (and the crown jewels Jeep) in the process, but he has also shown that he is in the business of making money and has got no compassion for nostalgia.

Sergio-Marchionne-Chrysler-FiatWas Marchionne right to let Lancia bleed to death without investment in new products for years? Or should he have kept throwing money at it, money that he didn’t have, knowing that it would be water to the sea? He envisioned that the brand was too small and too weak to stand a chance in the hard-fought European luxury market, where there’s only room for the German Big-3 and a single Swedish challenger. All others can only fight for the crumbs and can only be profitable if they have a sizeable market outside of Europe to support them. It’s an all-or-nothing market, and for FCA’s other wannabe-premium brand Alfa Romeo to be able to join the party requires not only the investment of billions of Euros into new products and marketing, but also an enormous load of patience as this won’t happen overnight, especially since the brand has first been neglected for years.

Typically, Marchionne has demonstrated many times his striking lack of patience when success takes longer than expected with the firing of executives who didn’t deliver satisfactory results quickly enough. I can already warn him that for Alfa Romeo to become a first-tier premium brand in Europe Alfa-Romeo-4c-auto-sales-statistics-Europe(and in the US for that matter) will take much more time and money than he can imagine. It’s taken Audi 20 years in Europe and in the US it’s still not quite there yet. If the plan eventually succeeds, it’ll all have been worth it and the company can make a healthy profit on its investments.

I hope he has the patience with Alfa Romeo, but I’m afraid one day I’ll find a press release in by Inbox with the headline: “Alfa Romeo withdraws from European and US markets as FCA focuses on Jeep brand”.