U.S. auto dealers selling Chrysler, Dodge, Fiat and other brands under the recently formed auto-making giant Stellantis STLA 2.67% NV have a message
U.S. auto dealers selling Chrysler, Dodge, Fiat and other brands under the recently formed auto-making giant Stellantis STLA 2.67% NV have a message for the new leadership: Help us fix the ailing parts of the lineup or consider cutting back.
For years, Fiat Chrysler Automobiles NV, the car company that recently merged with Peugeot-maker PSA Group to create Stellantis, has operated seven vehicle brands in the U.S.—more than many of its closest rivals. While some marques like Jeep and Ram have thrived, others have withered in recent years, dinged by a lack of new investment, aging models and sluggish sales, analysts and dealers say.
The question of how to revive Fiat Chrysler’s weaker brands has lingered for years, and it now falls to Stellantis Chief Executive Carlos Tavares to answer it. Mr. Taveres has said he doesn’t plan to cut any brands, and a Stellantis spokesman added that the company values its diverse lineup of brands, ranging from off-roaders at Jeep to family-haulers at Chrysler.
Chrysler, a nearly 100-year-old badge that once was the company’s namesake, now sells three models—two minivans and a large sedan—about half the number of nameplates it sold in showrooms a decade ago. Its U.S. sales have steadily slid: last year it sold roughly 110,500 vehicles, about one-third its volume in 2015, according to company figures.
Fiat, a maker of small cars reintroduced to the U.S. in 2011, has also struggled with a limited lineup, quality woes and a sharp drop-off in sales.
“I don’t think anyone would cry if Fiat left the U.S. marketplace,” said David Kelleher, a Chrysler, Dodge, Jeep and Ram dealer in Pennsylvania who also chairs the auto maker’s U.S. dealer council. But there are still some dealers who have sunk money into stand-alone Fiat-brand stores, and would like to see a return on that investment, he said.
Dodge has some popular muscle cars, but many models haven’t been redesigned in years. Meanwhile, attempts to reboot Alfa Romeo and Maserati in the U.S. remain a work in progress. While Alfa Romeo has had some recent sales success, the two premium Italian brands together still accounted for less than 2% of the U.S.’s total luxury market in 2020, according to J.D. Power.
Mr. Kelleher said he hopes Mr. Tavares will prioritize the better-known U.S. brands, such as Chrysler and Dodge, that have heritage but need more models and fresher offerings.
“I don’t want to see them die on the vine, but right now, they are limited,” he said.
The brand challenge Stellantis faces in the U.S. mirrors one that Mr. Tavares will confront globally: In merging the two car companies, he will have to figure out how to manage a massive collection of 14 automotive brands—some of them in need of repair, industry analysts say.
The auto maker, now the world’s third-largest by sales, is also competing against rivals that have over time culled their brand lineups, in part because they were too capital-intensive to sustain.
Ford Motor Co. began selling off brands during the financial crisis, a move that helped it avoid bankruptcy. General Motors Co. halved the number of brands it sold during its government-led restructuring in 2009.
Former CEO Sergio Marchionne, who took control of Chrysler from bankruptcy in 2009, had a different tack. He reintroduced Fiat and Alfa Romeo to the U.S., hoping to expand global sales of those to brands and fill factories in Italy that were being underused. He also splintered off Ram from the Dodge lineup in 2009, making it into its own separate truck-focused brand. Mr. Marchionne died in the summer of 2018.
Still, supporting a large number of brands can be taxing on company resources, said Jessica Caldwell, an analyst at car-shopping website Edmunds.com. It isn’t just the expense of engineering new models but also other operating costs, such as marketing and advertising, that are needed to sell them to consumers.
“Something like 14 brands is just not sustainable at a time when your competitors are trying to conserve and consolidate,” Ms. Caldwell said.
Mr. Tavares, speaking to reporters last month following the merger’s completion, said he wants to refocus investment on low-priority marques and use the group’s engineering heft to quickly redesign models and freshen stale lineups.
“You will see some of those brands rebound based on the clarification of the vision,” he said. Mr. Tavares had considered reviving Peugeot in the U.S. but said recently it isn’t in the immediate plans.
Several dealers said they are open to dropping a brand or model if it means spending more on profit generators like Jeep and Ram that also have nameplates in need of updates.
The Jeep Grand Cherokee was last redesigned in 2014. While it is getting a major overhaul for the 2022 model year, Massachusetts dealer John Morrill said the current model is so old, he has lost loyal Jeep customers to rivals with newer-looking SUVs.
The company, he said, seemed to be “diverting money from the golden goose.”
Jeremy Beaver, president of California dealership chain Del Grande Dealer Group, said he isn’t sure all the brands will survive in the U.S.—and that is OK with him. At one point, he was one of the largest Fiat dealers in the U.S., but he dropped the brand a few years ago, saying it was no longer popular and sales were too slow.
“You don’t want to try to be masters of all,” Mr. Beaver said. “We have to think about what cars fit in our market.”
While dealers wait for more direction from Mr. Tavares, some say they are in a holding pattern.
Nebraska-based dealer Mickey Anderson said he is reluctant to invest in one of his Chrysler-Dodge-Jeep-Ram dealerships, even though it needs renovations. “I would hate to redo the building, and then there’s suddenly a change to one of the brands,” Mr. Anderson said.
Write to Nora Naughton at [email protected]
Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8