Posted by: David Welch on June 10, 2009
Here’s a question to ponder as Fiat takes control of Chrysler. Will Americans buy cars engineered by Italians for Europeans? History says no. For years, General Motors brought over the occasional Opel and tried to sell it as a Saturn or a Cadillac or whatever. The Saturn L-series was an Opel Vectra. The Cadillac Catera, or Caterrible, was an Opel Omega. Both failed.
In each case they encountered the same problem. Thanks to higher fuel prices, Europeans pay more for passenger cars. So when U.S. carmakers brought their Eurocars here, they often stripped them down to reduce costs and still make a profit at the lower prices Americans would pay. GM’s imported Opels often got weaker suspensions or the interior appointments weren’t as nice. The cars were watered down. Ford had a similar problem with the Ford Contour and Mercury Mystique, nicknamed the mistake. Ford kept the nice features and gave the cars the same nimble handling as the European Mondeo. But Americans didn’t want to pay up for a car smaller than a Taurus. It flopped.
Even Volkswagen—with its pricey family sedans and compacts—has never gotten big sales numbers in the U.S. The cars are too expensive to penetrate the mainstream, quality lags the Japanese and American models and the euro-to-dollar exchange rate has been killing them. Then you have failure in the U.S. by Fiat and Renault. In other words, Europeans have not been able to break the interloper’s curse when it comes to mainstream cars. In luxury, it must be said, BMW and Mercedes are kingpins.
In fairness to Fiat, a lot of the examples mentioned here were simply bad automobiles or wretched management decisions. Fiat plans to build cars here in Chrysler plants, which means competitive labor costs, lower shipping rates and no currency exchange risk. The business case looks much better. Also, the Italians know styling. The Fiat 500, pictured above, and the Alfa Romeo cars are quite catchy.
But to succeed, Fiat will have to adjust those cars to meet American tastes. European passenger cars tend to be engineered smaller to fit in tight European parking spaces and city streets. Americans like roomy rides. Fiat’s quality is barely average in Europe. They will have to step that up to compete with the likes of Toyota, Honda, Ford and, yes, GM. And when they come here in about two years, there may be even more competition from India, China, another European player or whoever Roger Penske can contract to make new Saturn cars. Fiat also has to improve Chrysler’s home-grown models, none of which get a friendly nod from Consumer Reports despite the supposed overhaul that outgoing CEO Robert Nardelli gave them. Fiat CEO Sergio Marchionne is a fix-it man. But he has a lot of fixing to do. His Chrysler play has hope, but it’s far from over, folks.