Marchionne: Struggling in Europe, 'comfortable' with Chrysler
AUTOMOTIVE NEWS: Volkswagen wants to buy Alfa Romeo, but you say it is not for sale. Does Alfa have a strategic role within Fiat, or is it simply pride?
SERGIO MARCHIONNE: It is simply because there are some things that are not available for sale. If you went to [VW's] Ferdinand Piech and asked him to sell you Audi, he would tell you it's not for sale. He wouldn't be willing even to discuss price. So my argument is similar. I have zero interest in selling Alfa. Period.
Editor's note: Corrects fuel economy reference to Fiat 500.
TURIN, Italy -- For Chrysler-Fiat CEO Sergio Marchionne, these are the best of times and the worst of times.
While Fiat is being hammered by the economic turmoil in Europe, Chrysler continues to pile up profits and rack up market share gains in the United States.
Dealing with the problems in Europe is a priority these days.
"We need to get this issue under control," Marchionne said.
As for the United States, he said: "I feel a lot more comfortable with the Chrysler of today than I did two years ago."
Meanwhile, several key new products are in the works. The redesigned Chrysler 200 enters the crucial mid-sized sedan segment next year, and plans for a Chrysler 100 compact are close to being approved.
Chrysler's main problem is lack of capacity, Marchionne said.
Marchionne, 60, was interviewed by Automotive News Europe Editor-in-Chief Luca Ciferri.
Q: Europe is in a deep recession. Do you fear that it will spread across the globe next year?
A: No. I think there's a vested interest from global economies to make sure that does not happen. If you look at the level of interface between the other economic powers and the European Union over the last two years, you realize that this issue is being looked at in a very proactive manner.
As chairman of the European automaker association, you called on the European Union to coordinate efforts to reduce capacity. That did not work, and now every country and every automaker will go on its own. What are the risks?
That you're going to see state intervention to protect national entities, which will not necessarily benefit the notion of a single European market. The fundamental underpinning of the European Union is the creation of a single market. If you allow state intervention to effectively bias competition by providing subventions, then you've got a big issue.
Is your plan to merge Fiat and Chrysler into a single legal entity by 2014 still on track?
It's on track. It's an inevitable move.
Does the priority now go to relaunching Europe?
By far. It's the biggest drain on our resources both in terms of earnings and in terms of commitment going forward. So we need to get this issue under control. It cannot stay the way it is. It's unthinkable.
This year you expect to sell about 4.2 million units, up from 4 million last year. What will the split be between Fiat and Chrysler?
Chrysler right now is going to be 2.4 million; the rest is Fiat.
We should be slightly north of 4.3 million, with 2.6 million from Chrysler. This is still a rough guess. It depends a lot on what will happen to the European market.
Chrysler has almost reached full capacity. How much can you expand it without increasing fixed costs?
If you look at the Harbour index, the 2.4 million units we plan on building this year represent about 107 percent utilization from 92 percent last year. If you look at it technically -- three shifts for 265 days -- we've got capacity left in the system. We are at 73 percent technical from 60 percent last year. The problem is that technical capacity is not evenly distributed, as there are some plants not running flat out and some other already running flat out.
What do you have in mind for the 2013 Super Bowl commercial? Can you outdo the 2011 and 2012 spots that received so much attention?
We're going to do something, but to forecast the quality of that advertising today it's an impossible task.
With the new Chrysler 200 debuting at the Detroit auto show in January, the brand will have a state-of-the-art product in the largest passenger-car segment in the United States. What do you expect?
Success. I just want a piece of the largest passenger-car segment, biggest in retail by far. The size of this piece should be in line with our market share and what we've been getting out of the U.S.
What can you say about the Chrysler 100?
The 100 is a great idea to provide dealers in the U.S. with two options in the compact segment [besides the Dodge Dart sedan]. We've been encouraged by what I've seen happen with the Ford Focus. I think we're debunking a lot of the myth about hatchbacks not being sellable in the U.S. And the great thing about hatches is that they have applications outside the U.S.
So the Chrysler 100 could come to Europe as the new Lancia Delta?
If it gets produced, the answer is yes.
Has the 100 been signed off for production?
It's pretty well done, but it's not signed off yet.
All Chryslers rebadged as Lancias in Europe -- the 300/Thema, 200/Flavia and Town & Country/Voyager -- have sold poorly. Why?
Unless you're really premium, selling a large sedan in this market is tough, especially in Italy. With the economic conditions that we're facing, this is a small market not only for us, but for everybody. Having said that, the Thema -- regardless of how well it has performed -- for value-for-money is unbeatable in that segment.
You were expecting a six-digit annual sales figure for the Dodge Dart. Where do you stand?
We launched the car with a manual transmission. The automatic -- sourced overseas -- came in the third quarter, so the car effectively started rolling out at the end of the third quarter. We installed a dual dry clutch with the 1.4-liter engine. So let's get the full complement of engines and transmissions out there, and then we'll see. The car is a viable product for sure and the target is unchanged.
Do you plan to offer sliding doors for the Chrysler Town & Country minivan replacement and traditional doors on a crossover to replace the Dodge Grand Caravan?
This is how I view it, but forget about my preference. Those are big issues, and we need to find out in the marketplace what works. We are having customer clinics right now.
After a ruling from the clinics, how long before you put them into production?
If the products we have right now were well-received in the clinics, we could be in production within 21 months because the new architecture is done.
As a fuel-sipping minicar, the Fiat 500 did not take off in the United States. After adding an Abarth sporty range and a powerful turbo engine also on the standard model, the 500 became a hot seller. What really happened?
We put the right people in charge of the brand. The car was there, all the elements for success in the U.S. were there. We have people that are managing the brand in a different way now.
So it was more a people issue than a brand or product issue?
Oh, by far, yes. The credibility of the 500 was established in 1957. We revived it in 2007. The car has always been a viable brand within a brand.
Jeep has become Chrysler Group's No. 1 brand this year and is growing faster than the expectation, which was to surpass 800,000 sales by 2014. Can Jeep go over a million?
It needs to, but it requires a longer time frame. I don't even have that capacity right now, but the brand is capable.
Will you build the Maserati Levante in Mirafiori, Italy, in order to free more capacity at the Jefferson North plant in Detroit for the Jeep Grand Wagoneer arrival?
Correct. But a lot of the shared underpinnings will come from the U.S.
Do you plan to build some Jeep models in China for local consumption?
That's basically the story -- localized Jeeps that I would not otherwise be able to produce out of the U.S.
That means basically the compact and mid-sized Jeeps, with Wrangler and Grand Cherokee remaining in the United States?
Yes, those are U.S. installations that will never go anywhere. We can do CKD units, but all the components are coming out of one place.
You can reach Luca Ciferri at firstname.lastname@example.org.