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COMMENT by John Mellor

FIAT Chrysler Automobiles’ bold plan to join forces with Renault will create the largest ever family of brands in the world and give the combined company a massive footprint across the globe.

Not since the Ford Motor Company went on a brand spree in the 1990s has there been such an attempt to put so many brands under the one umbrella and with a foot in so many diverse market segments in so many global markets.

In the 1990s, Ford Motor Company included Ford, Lincoln, Mercury, Mazda, Jaguar, Land Rover, Volvo and Aston Martin.

These days, having unwound the strategy, there are only Ford and Lincoln (Mercury was closed) as well as the Brazilian off-road vehicle maker, Troller. Jaguar and Land Rover are in the hands of Tata, Volvo is owned by Chinese car maker Geely and Mazda and Aston Martin are independent.

Ironically, the move from FCA comes at a time when global giant General Motors is moving in the opposite direction by cutting brands from its line-up (most recently Opel and Vauxhall) and is withdrawing from developing markets around the world to concentrate on the Americas and China.

The proposed FCA-Renault merger with associated alliance partners Nissan and Mitsubishi would have a staggering 23 brands.

Fiat Chrysler Automobiles currently produces vehicles under 12 brands:

Ferrari: The jewel in the crown

Maserati: Italian heartthrob on the march

Abarth: Fiat’s performance brand

Fiat: The group’s Italian car engine room

Fiat Professional: Fiats for businesses

Lancia: Blast from the past

Alfa Romeo: Steadily rebuilding on past glory

Chrysler and Dodge: 20th century middle America

Ram Trucks: US cash cow

Jeep: Iconic

SRT: US performance group

Renault has five brands:

Renault: French

Alpine: Performance division dating back to mid-1950s

Renault-Samsung: Mid-1990s foray into the Korean market with modest sales

Dacia: Romanian maker of budget cars for developing markets

Lada: Russian maker of budget cars

Nissan has four brands:

Nissan: Japanese jewel in the crown

Infiniti: Trying to be Lexus

Nismo: Performance car division

Datsun: Budget cars for developing markets

Mitsubishi brings the fewest brands to the table:

Mitsubishi: Middle of the road car-maker; always the bridesmaid at corporate weddings

Ralliart: Off-road racing and rally division

Combined sales of FCA and Renault would be around nine million units a year but if you add in the alliance partners, Nissan and Mitsubishi, then the whole entity would become the biggest auto group in the world with sales at around 15 million.

In Australia, such a merger, including the alliance partners, would have the entity leapfrogging all and sundry to take second place but still well behind Toyota.

Based on sales for the year 2018, the merged corporation would have sales of 166,215 units in Australia compared with Toyota’s 2018 total of 217,061 units. Mazda would be in third place with 111,280.

The appeal is clearly scale both in terms of existing platforms and drivelines with huge potential to share the same technology and designs underpinning electric vehicles across all the brands. It’s all new so who is going to know or care?

In terms of existing designs and components, the job of consolidation is harder because of reshaping the engineering across a vast array of different existing platforms and drivelines, with all the politics that will accompany those efforts but when they add it up they will be shocked at the massive level of duplicated parts they make to do the same job.

I remember when Nissan did this some years ago it found it made more than 100 different steering wheels for its passenger cars and Ford once found that the Escort made in Europe and the Escort made in the US shared just one common bolt. So if they are serious there are billions of dollars of savings to be found in this merger.

The conglomerate would have a manufacturing presence in pretty much every important automotive region in the world.

FCA operates 102 plants around the world, with Chrysler operating 17 plants in the US, five in Mexico, three in Canada and one in Venezuela.

Fiat picks up the balance of plants with a strong presence in Europe, Eastern Europe, China, Russia, Turkey, Egypt, Brazil and Argentina. It is very strong in India.

Renault operates plants in Spain, Belgium, Portugal, Romania, Slovenia, Russia, China, India, Brazil, Argentina, Chile, Columbia, South Africa, Algeria, Morocco, Tangier and Iran.

Nissan is a world manufacturing powerhouse with 14 plants in Japan, five in China, three in the US, two in Mexico, Malaysia, Brazil and Spain and a plant in Britain, Russia, India, Vietnam, Indonesia, the Philippines, Thailand, Taiwan, Argentina, Morocco, Egypt, Kenya, South Africa and Australia (casting plant).

Mitsubishi has five manufacturing plants in Japan, two plants in China, and plants in Thailand, Indonesia, the Philippines, Brazil and Russia.

The big question would be: is there anyone within the combined group (or outside it) capable of running such a diverse conglomerate?

The one man who comes to mind is Carlos Ghosn but he is in home detention awaiting trial in Japan and clearly won’t be available for a while.

Whoever takes such a role will spend his or her life keeping the plates spinning under the various brands. So the successful candidate will need to have extraordinary vision for the group with the leadership qualities of Napoleon in his early brilliant years of running his vast French empire.

The salutary lesson is that Napoleon over-reached and progressively lost touch with his people. One by one the plates stopped spinning and dropped. And he wound up in home detention on an island in the middle of the Atlantic.

COMMENT by John Mellor

Manheim
MotorOne
Schmick