Posts tagged ‘business strategy’


Have you driven a Ford 
 lately? Probably not

13.09.2021


Ford’s Brazilian line-up, 2021. Once upon a time, there were locally developed Corcels and Mavericks; even the EcoSport was a Brazilian development. Today, it’s Mustang, a couple of trucks, and a rebadged Chinese crossover.

We heard a lot about the demise of Holden as GM retreats from continents at a time, seemingly in a quest to be a Sino-American player rather than a global one. We’ve heard less about Ford shrinking as well, though the phenomenon is similar.
   Ford’s Brazilian range is now the Mustang, Ranger, Territory (which is fundamentally a badge-engineered Yusheng S330 from China with a Fordized interior), and Bronco. It’s beating a retreat from Brazil, at the cost of tens of thousands of jobs (its own, plus associated industries’) in a country that already has 15 per cent unemployment.
   Their reasoning is that electrification and technological change are driving restructuring, which seems plausible, till you realize that in other markets, including Thailand where there’s still a plant making Fords, the company is fielding essentially trucks, the truck-based Everest, and the Mustang.
   Ford warned us that this would be its course of action a few years ago, but now it’s happening, it makes even less sense.
   Say it’s all about (eventual) electrification. You’d want vehicles in your portfolio now that lend themselves to energy efficiency, so that people begin associating your brand with it. Trucks and pony cars don’t fit with this long-term. And I still believe that at some point, even before trucks commonly have electric powertrains, someone is going to say, ‘These tall bodies with massive frontal areas are using up way more of the juice I’m paying for. We don’t need something this big.’
   Let’s say Ford quickly pivots. It sticks a conventional saloon body on the Mustang Mach-E platform (which, let’s be honest, started off as a Focus crossover—the product code, CX727, tells us as much) in record time. Would anyone buy it? Probably not before they see what the Asians, who don’t abandon segments because they can’t be bothered working hard, have in their showrooms. Toyota, Honda, Hyundai, Mazda, and countless Chinese marques, have been building their goodwill in the meantime.
   It’s why two decades ago, I warned against DaimlerChrysler killing off its price-leading brand, Plymouth. You never know when recessionary times come and you want an entry-level brand. Before the decade was out, that time came, and Chrysler didn’t have much it could use without diluting its existing brands’ market perceptions to have some price leaders.
   Ford retreating from B- and C-segment family cars, even CD- and E-segment ones, means it’ll find it difficult to get back into those markets later on. A good example would be the French, who don’t find much success in the large saloon market generally, and would find it very hard to re-enter in a lot of places.
   I realize the action isn’t in regular passenger cars these days, but the fact that Fiat, Chevrolet and Volkswagen still manage to field broad lines in Brazil suggests that the market still exists and they can still eke out some money from their sales.
   It’s as though the US car firms are giving up, ceding territory. And on this note, Ford has form.
   In the 1990s, Ford’s US arm under-marketed the Contour and Mystique Stateside, cars based on the original European Mondeo. I saw precious little advertising for them in US motoring press. As far as I can tell, they wanted to bury it because they didn’t like the fact it wasn’t developed by them, but by Ford’s German-based team in Köln. ‘See, told you those Europeans wouldn’t know how to engineer a CD-segment car for the US.’ The fiefdom in Dearborn got its own way and later developed the Mazda-based Fusion, while the Europeans did two more generations of Mondeo.
   In the 2000s, it decided to flush the goodwill of the Taurus name down the toilet, before then-new CEO Alan Mulally saw what was happening and hurriedly renamed the Five Hundred to Taurus.
   It under-marketed the last generation of Falcon—you seldom saw them on forecourts—and that looked like a pretext for closing the Australian plant (‘See, no one wants big cars’) even though by this point the Falcon was smaller than the Mondeo in most measures other than overall length, and plenty of people were buying similarly sized rear-wheel-drive saloons over at BMW and Mercedes-Benz.
   The Mondeo hybrid has been another model that you barely hear of, even though the Fusion Hybrid, the American version of the car, had been on sale years before.
   Think about what they gave up. Here, Ford once owned the taxi market. It doesn’t any more as cabbies ultimately wound up in Priuses and Camrys. Had Ford fielded a big hybrid saloon earlier, Toyota might not have made inroads into the taxi market to the same extent. Ford almost seems apologetic for being in segments where others come to, and when challenging the market leaders, doesn’t put much effort in any more.
   Objectively, I would rather have a Mondeo Hybrid than a Camry, but good luck seeing one in a Ford showroom.
   Maybe Ford’s smart to be putting all its resources into growth areas like trucks and crossovers. Puma and Escape have appeal in the B- and C-segment crossover markets in places like New Zealand. They’re fairly car-like now, too. But to me that’s putting all your eggs into one basket. In countries like Brazil and Thailand, where Ford doesn’t sell well resolved crossovers in these segments, it’s treading a fine line. I look at the market leadership it once had in cars, in so many places, and in 2021 that looks like a thing of the past. More’s the pity.


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How will things play out at Fiat?

02.04.2016


Above: The current Fiat 500. A year shy of its 10th anniversary, is it still cool in 2016?

The Detroit News reports that Fiat has been having trouble Stateside, with dealers now permitted to sell the cars alongside Chrysler, Jeep, Dodge and Ram instead of at stand-alone showrooms.
   It’s been worrying seeing Fiat’s plans unfold since it decided to take control of Chrysler, a firm that was once the darling of the US car industry, with its industry-leading R&D times, to one that was starved of investment in the 2000s.
   Those initial plans, sold as a long-term strategy, turned out to be a short-term Band-Aid. With hindsight, maybe it wasn’t too much of a surprise, since Fiat was still grappling with understanding just what it was taking on.
   Fiat needed to do something given that things at home weren’t looking too good, with a model range that wasn’t very cohesive, and with its entries into the Chinese market having faltered a few times. To the casual observer, Fiat saved Chrysler, but there’s some truth in saying that having the company that controls the Jeep brand was a lifeline to Fiat itself.
   What we’ve seen since those days was the failure of the strategy of twinning Chrysler and Lancia. While this was a marriage of convenience, I could see this having some long-term gains with Lancia focusing on smaller cars and Chrysler on larger ones, but the result in 2016 is that Lancia has been reduced to an Italy-only marque, the equivalent of what Autobianchi was a few decades ago. Once the Ypsilon is deleted, then Lancia is consigned to the history books.
   The winner has been Alfa Romeo. It has only just returned to the junior executive segment with the new Giulia, after an absence of several years, and its 4C is a cracking sports car. Things are looking up, and rumours that Alfa and Dodge would be paired up in the same way Lancia and Chrysler were mercifully haven’t come true. The Giulia platform could be used for future models. Jeep has benefited from Fiat platforms, and Ram has gained some Fiat vans.
   But the parent brand, Fiat, has looked very uncertain for a while.
   For a start, there’s little uniformity globally. Fiat has the opportunity to offer the Viaggio and Ottimo in more places than China, slotting above the Ægea, for example. While having unique models for South America makes some sense, because of Fiat’s strength there, there’s an opportunity to globalize, with the Toro pick-up truck looking very appealing.
   Without having more of its self-developed products, the Fiat range in Europe doesn’t inspire too much confidence. While most manufacturers have one or two joint-venture models, Fiat’s range is almost exclusively made up of vehicles that have shared tech. The famous 500 and Panda are on a Fiat platform which has Chrysler input (before the takeover), and is shared with Ford for its B420 Ka. The Punto, 500X and 500L are on another platform shared with GM. The DoblĂČ is also offered to GM. The Qubo is the product of a joint venture with Peugeot. The Freemont is a rebadged Dodge Journey from MĂ©xico, which Fiat gained after the takeover. The 124 Spider is based on the Mazda MX-5, and built in Japan by that firm. The Fullback pick-up is a Mitsubishi Triton twin and made in Thailand by that Japanese firm.
   Fiat, in other words, is holding down more relationships than Casanova.
   As a casual observer, there’s an opportunity for a massive streamlining of platforms, and offer more in-house models. That may well be happening, and let’s hope its current strategy is more long-term than its last.
   Secondly, as mentioned earlier, Fiat hasn’t had a great reputation of being able to carry out long-term sales’ strategies in many of its markets. Take New Zealand, for example, where Fiat was offering its (Grande) Punto and Bravo models, before it decided to pull everything and offer only the 500.
   The Punto has returned after a hiatus, this time as a budget model, along with the Tipo 139 Panda, but those who bought Puntos in the 2000s might think twice about returning to a company that abandoned them and offered no direct replacement for their car when it came to trading up.
   That lack of continuity could have some buyers worried, and Fiat needs to regain their trust in a big way.
   Being the Five Hundred Car Company, which Fiat certainly was in the US, cannot help, if buyers expect Fiat to offer more. We’ve seen it fail here, and Fiat’s had to back-track. Even in Hong Kong, where Fiat had also been reduced to flogging only the 500, it has had to add the Freemont.
   Fiat will argue that as it had been absent from North America for so long, it could re-enter the market-place with a single, fashionable model: after all, Mini and Smart have done.
   The trouble is that Fiat isn’t known as a niche brand: there was enough in the US media to indicate that this was an Italian giant, and the perception of such a large company didn’t gel with it offering a niche range anywhere. It lacked the cachet of a brand that was created to be fashionable and funky from the outset. You just can’t do it when that’s the name of the owner (think: can you sell “cool” cars with GM as the brand—that had been tried in New Zealand and failed dismally; or, going back a generation, Leyland? Volkswagen surely is the sole exception with its Beetle), and FCA, which the parent company is called, isn’t a consumer-facing brand. It’s just a company name with no brand equity.
   In the same vein, average punters might not know of BMW’s connection with Mini, or Daimler AG’s connection with Smart. They stand alone with plenty of brand equity, helped by identifiable products, and, in Mini’s case, even helped by its image outside North America.
   I also question whether the 500X and 500L are cute cars in the same vein as the original 500. Getting Ben Stiller’s Derek Zoolander character to advertise the 500X seemed good in theory—till it dawned on the public that the new Zoolander film was a bit naff, cashing in on last-decade nostalgia. I’m not a fan of retro design, either, and I would have hoped that Fiat would have renewed its 500 by now, since we’re on to newer versions of the Beetle, Mini, and Smart. It’s no surprise that Fiat sales are down 14·6 per cent so far this year.
   If Toyota could not sustain Scion with all its muscle, then Fiat retail really should be integrated into dealerships selling Chrysler, Dodge, Jeep and Ram Stateside. And I’d argue that Scion couldn’t remain because the brand had lost its coolness among the college kids who bought the XB in the first place. Buyers in this consumerist game, and at the fashion end it is more a game than in any other, are notoriously fickle.
   I don’t know how it’s going to play out. Fiat’s a brand I’ve grown up with, and I’ve been visiting their dealerships since I was two years old. Back in the 1970s the showroom in Homantin, Kowloon had everything from 127s to 130s. Fiat was doing a brisk trade on 124s. I came close to buying various Fiat Group cars over the years, including a Tipo and a Lancia Delta, and more recently I had considered Alfa Romeo Mitos and Giuliettas. I briefly toyed with importing a Tipo 844 Lancia Delta from the UK badged as a Chrysler, but decided having a $75 1:43-scale one was enough.
   To see Lancia decimated and now on life support as Fiat concentrated on making Chrysler and Dodge work, to see the home brand filled with other people’s products in the interim, and to receive news that US buyers weren’t flocking to its showrooms in the same numbers any more, all make me concerned. Go to Italy and the taxi ranks no longer are dominated by Fiat Group cars: the cabbies have gone French and German. It’s all very well Maserati and Ferrari doing well but the former’s volumes won’t have a huge impact, while the latter has been separated and now has a different parent. The only continent where I think Fiat is making a decent bash of things is South America. I don’t want to paint a doom-and-gloom picture, not least because I have fondness for all the brands that now fall under the Fiat umbrella. But the weaknesses, at least to an outsider looking in, outnumber the strengths. My gut says Fiat will work through it all, but will it do it in a fast enough fashion, or is there more pain to come?


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