Fiat PR Chief Talks About the Future: Bikes Broker and Volkswagen Coverage Quote on VW

Fiat PR Chief Talks About the Future

For all of you who think that the Fiat and Chrysler alliance makes no sense, here’s an alternative view. I was talking in Turin, Italy, with Richard Gadeselli, Fiat’s PR chief, and he had a number of interesting thoughts about the car industry that you don’t hear if you are only focused on the U.S. market.

If you look at the future growth in the car industry, he said that most every company agrees that it will come courtesy of the so-called BRIC emerging markets - Brazil/Latin America, Russia/Eastern Europe, India, and China. And when you look at these emerging markets, two things are clear.

First, customers in these markets will buy domestically made products at the low end, whether they’re built by local automakers or by foreign brands that have been established in those areas for some time. Some companies, Gadeselli points out, have been in these markets for many years - VW in Latin America, Eastern Europe (with Е koda), and China, for instance. Fiat has done the same in Brazil and Eastern Europe and has a joint venture with Tata in India. Of the American automakers, GM has easily done the best job injecting itself into foreign markets.

Second, at the top end, customers will buy established luxury brands. Just look at the worldwide popularity of Louis Vuitton, Rolex, Chanel, or HermГЁs. Nothing says you’ve made it quite as well as buying old, established European brands. Newly monied Indians and Chinese will buy Ferraris and BMWs and Land Rovers, not tarted-up Tatas and SAICs. For the auto companies, there are big margins available in such markets, especially if they can fit their luxury vehicles with components from mass-market vehicles as VW does with Audi and Fiat with Alfa Romeo.

For Fiat, Gadeselli says that Chrysler represents a huge opportunity. There are the economies of scale of using Fiat components in Chrysler products (and vice versa). It would mean that Fiat could build its own cars - like the 500 and Alfas - cheaply in North America. And the acquisition of Jeep expands its portfolio of luxury brands (Ferrari, Maserati, and Alfa), believe it or not, since the Jeep brand carries plenty of cachet around the world, Gadeselli says. But Fiat would have to get the products right.

Things may well not work out for Fiat, but the auto industry has to act globally. One of the smartest things GM did was partner with Daewoo, because that enabled them to produce cheap cars that could be built cost-effectively for all markets. The Aveo, for instance, is a Daewoo, as are the Chevrolets that are sold in Europe.

Taking this further, I think the ongoing retreat into North America being undertaken by GM and Ford is a huge mistake. Although the mainstream media has swallowed the Ford Kool-Aid, it strikes me that the Blue Oval could be in trouble, long term. Ford is weak in the BRIC markets and doesn’t have premium brands with worldwide appeal since divesting itself of Jaguar, Land Rover, and Aston Martin; no one outside of North America knows what a Lincoln is, and the cynical among us don’t think Ford itself really knows either.

Alan Mulally may have saved Ford in the short term, but over the long haul, he may not look as sharp by concentrating on the home market and Western Europe. GM’s loss of Saab and GM Europe may come back to bite that company, too, because it will lose economies of scale and one of its two globally recognized luxury brands, the other being Cadillac.  (Sure, Buick is big in China, but the rest of the planet has never heard of the brand.)

Related posts:

1. Chrysler and Fiat Alliance: Future Product Speculation – car News
2. Chrysler Outlines Future Product Plans Resulting From Fiat Agreement – car News
3. Future Product Plans for the Big Three – car News
4. Driving Miss Fiat: We Sample Engines Likely to Come to the U.S.
5. Some Hints About Fiat’s Plans for Chrysler

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