Posted by: David Kiley on September 7, 2009
Chrysler is potentially headed for a brand problem that will rival the pickle that GM is trying to extricate itself from.
Here is the deal. Chrysler has three main brands at the moment: Chrysler, Dodge and Jeep. But it has made it clear to the ad agencies pitching its ad account that it is splitting off its pickup truck and commercial vehicle business off to a new brand—Ram.
That’s right. Going forward, and as soon as Chrysler has the idea to run with, the pickup it sells now won’t be sold as Dodge Ram, but rather….Ram. Other vehicles that will come from the Fiat-Chrysler tie up in the commercial segment will also be called Ram.
So, now we are up to four brands to support. Now, add the Fiat 500, which will be sold as a Fiat when it arrives in Chrysler showrooms in 2011. And, don’t forget Alfa Romeo, which Fiat will sell through Chrysler distribution in key markets that make sense for the Italian sport car maker.
This seems like a lot of brand differentiation to manage and support by a company that has been poor at both.
As I look at auto sales numbers through August, I see a 9.2% market share for Chrysler spread among the three brands it has. That share is inevitably going to go down as the company pares models. Indeed, Merrill Lynch projects that Chrysler loses a whopping five to six points of share in the next four years unless it comes up with some product surprises from the Fiat alliance.
If you consider it likely that Fiat and Alfa-Romeo combine for less than 1 point of share, then you have five brands potentially carving up something between 4 and 6 points of share, and that is if the company over-achieves. Also…four brands at a single showroom, while we wait to see how the company sort out the distribution real estate for Alfa at Chrysler dealerships.
This goes to brand/distribution/marketing efficiency. Toyota has 16.5% of the market spread across three brands. GM has 16.7% of the market with the four brands it plans to go forward with—Chevy, Cadillac, Buick, GMC.
If Chrysler isn’t clever beyonid all expectations, it is going to have a brand jumble that will make people look to GM as a benchmark of brand/marketing efficiency.