Fiat boss warns car builders

Seis­mic shift com­ing in how cars are pow­ered and owned

The Witness - Wheels - - INDUSTRY - TOMASSO EBHARDT and CRAIG TRUDELL

SER­GIO Mar­chionne, one of the long­est-serv­ing CEOs in the au­to­mo­tive in­dus­try, has a blunt warn­ing: Car­mak­ers have less than a decade to rein­vent them­selves or risk be­ing com­modi­tised amid a seis­mic shift in how ve­hi­cles are pow­ered, driven and pur­chased.

De­vel­op­ing tech­nolo­gies like elec­tri­fi­ca­tion, self-driv­ing soft­ware and ride-shar­ing will al­ter con­sumers’ car-buy­ing de­ci­sions within six or seven years, the Fiat Chrysler Au­to­mo­biles NV chief ex­ec­u­tive of­fi­cer said in an in­ter­view in De­troit, ahead of this week’s North Amer­i­can In­ter­na­tional Auto Show.

The in­dus­try will di­vide into seg­ments, with pre­mium brands man­ag­ing to hold onto their ca­chet while mere peo­ple-trans­porters strug­gle to cope with the on­slaught from dis­rup­tors like Tesla and Google’s Waymo.

“Auto com­pa­nies need to quickly sep­a­rate the stuff that will be swal­lowed by com­mod­ity from the brand stuff,” Mar­chionne said.

Mar­chionne has wit­nessed ma­jor changes al­ready lead­ing Fiat for al­most 14 years, oversee­ing the com­bi­na­tion with Chrysler in 2014 and the 2016 spinoff of Fer­rari NV.

The 65-year-old ex­ec­u­tive, who stud­ied phi­los­o­phy and law be­fore find­ing his way into the auto busi­ness, is known as an icon­o­clast, try­ing to force merg­ers and back­ing away from mass-mar­ket sedans to fo­cus on SUVs —a shift oth­ers are now em­u­lat­ing.

Out­side forces at work

While the car in­dus­try has al­ways been tough — Chrysler and GM both went bank­rupt dur­ing the fi­nan­cial cri­sis — in the past the mis­takes were self­in­d­uced, Mar­chionne said.

Now the tu­mult is be­ing driven by out­side forces, and it’s com­ing faster than peo­ple ex­pect, he said — a sur­pris­ing view, given that Fiat is per­ceived to be be­hind some com­peti­tors in adapt­ing.

He said the com­pany is po­si­tioned well, and rather than pour money into com­pet­ing with Sil­i­con Val­ley, the in­dus­try should try to iden­tify the best so­lu­tions com­ing from tech com­pa­nies and re­duce its ex­po­sure to prod­ucts that aren’t go­ing to be eas­ily de­fended. “This busi­ness has never been for the faint­hearted,” Mar­chionne said. “The tech­nol­ogy changes that are com­ing are go­ing to make it prob­a­bly more chal­leng­ing than it’s ever been.”

Mar­chionne reck­ons, for ex­am­ple, that by 2025, fewer than half the cars sold will be be fully com­bus­tion-pow­ered, as petrol and diesel give way to hy­brid, elec­tric and fuel cell driv­e­trains.

Still a place for mus­cle cars

Mar­chionne said there are op­por­tu­ni­ties to be had.

Fiat, for ex­am­ple, could even­tu­ally op­er­ate a ride-shar­ing ser­vice that makes use of its dealer net­work, he said.

Be­fore he leaves, Mar­chionne said he’ll con­tinue the brand-build­ing push at Jeep, aim­ing to more than dou­ble the num­ber of ve­hi­cles pro­duced un­der the of­froad name­plate each year.

Fiat is also on track to elim­i­nate its debt this year, he said.

At Dodge, the fo­cus has nar­rowed to mus­cle cars like the Charger and the Chal­lenger, while more run-of-the-mill mod­els were dropped.

He is also ex­pand­ing Fer­rari’s lineup with SUVs to boost profit. (While Fer­rari is in­de­pen­dent, its big­gest owner re­mains the Agnelli fam­ily who founded Fiat and re­tain the big­gest stake.)

The brand he over­sees that’s most vul­ner­a­ble to com­modi­ti­sa­tion is Fiat it­self, Mar­chionne said. He will fo­cus on the sporty 500 fam­ily, while bread and but­ter sedans that com­pete with PSA Group’s Opel and Peu­geot brands face a harder road in the long run.

The Jeep plans in par­tic­u­lar have helped to boost in­vestor con­fi­dence in Fiat.

Mar­chionne said Fiat has also made more progress to­ward the new era than the mar­ket­place ap­pre­ci­ates.

He cited the re­cent al­liance with BMW AG, In­tel Corp. and oth­ers, which will yield a com­mon plat­form for selfdriving cars.

Fiat also plans to of­fer a hy­brid ver­sion of the Jeep Wran­gler in 2020, which he called part of “nor­mal de­vel­op­ment” that didn’t re­quire a prom­i­nent procla­ma­tion.

The next five-year plan, due to be re­leased on June 1, his 14year an­niver­sary at the Fiat helm, will cover these mat­ters.

It will be up to the next CEO to carry out the plan, he said — who will be one the in­ter­nal can­di­dates who are now work­ing on it, as he plans to step down by then.

‘Auto com­pa­nies need to quickly sep­a­rate the stuff that will be swal­lowed by com­mod­ity from the brand stuff.’

PHOTO: MIKE READE

Af­ter Wit­ness Wheels proved the lit­tle Fiat Panda Cross can do farm tracks as well as any dou­ble­cab, our pen­sioner cor­re­spon­dent Dr Rob Rathge­ber took it to the beach with the KwaZulu-Natal Sharks Board to help in­spect the nets, and found the quirky Ital­ian job does soft sand with equal aplomb. Sell­ing for just un­der R250k, this lit­tle all-wheeldrive prom­ises to gets its owner to places in com­fort and en route its 66kW, 145 Nm mill will wring some 16 km from ev­ery litre of petrol.

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