You might never have heard of Stellantis, but it is a newly formed conglomerate resulting from the recent merger of Fiat Chrysler Automobiles (FCA) and the PSA Group. While some mergers of global automakers are largely invisible to American consumers — such as Nissan's association with Renault and Mitsubishi — the founding of Stellantis is likely to have effects that could profoundly change the landscape of the American car market. What if the Dodge brand disappeared, for example? Or if the Chrysler brand bit the dust?
Either or both could happen depending upon the outcome of a competition within the company authorized by Stellantis chief executive officer Carlos Tavares. (Tavares, by the way, was most recently CEO of PSA Group, after a long career at Renault and Nissan.)
Stellantis now has 14 brands it has inherited from FCA and PSA. Many industry experts believe that is just too many brands because each one requires product development, manufacturing, and marketing expenditures that are antithetical to economies of scale. While several of the brands, like Jeep, Peugeot, and Ram, for instance, are solid both in reputation and sales, others are seen by outsiders as possibly expendable.
So how will Stellantis choose which brands will live and which will go the way of Plymouth, Pontiac, and Oldsmobile? Tavares has decided that each of the 14 brands will get some time to make its case for survival. If that case can't be made, the ax will fall.
"We're giving each [brand] a chance, giving each a time window of 10 years and giving funding for 10 years to do a core model strategy – the CEOs need to be clear in brand promise, customers, targets and brand communications," Tavares was quoted as saying at the Financial Times' "Future of the Car" event.
Here in the United States, Stellantis markets seven brands: Alfa Romeo, Chrysler, Dodge, Fiat, Jeep, Maserati, and Ram. Luxury brand Maserati is a bit removed from the rest of the corporate umbrella.
What will each of these brands be well-advised to do to ensure its prospects? And what are each brand's prospects of survival past the 10-year window? Here is our analysis informed by JD Power voice of the customer data.
As the luxury market became more and more import-dominated, the Alfa Romeo brand seemed well-positioned to stake out a portion of the market here in the United States. But up to now, it hasn't happened.
First-quarter 2021 sales were up versus 2020, but at fewer than 5,000 vehicles sold in that timeframe, the brand might not offer the critical mass necessary to sustain a U.S. dealer network. Also problematic for the brand is the likelihood that U.S. luxury customers will increasingly shift their attention to electric vehicles, where Alfa has no presence.
Alfa Romeo is such a fringe player in the market that it didn't appear in the 2020 JD Power Automotive Performance, Execution and Layout (APEAL) Study that measures customers' enthusiasm for a brand and its products.
Chrysler has a proud name and strong heritage in the U.S. market but its image has slipped to the point that JD Power considers it a mass-market brand versus a luxury brand. It currently offers just three models in the U.S. — the Pacifica and Voyager minivans and 300 sedan. Thus its model mix doesn't present a cohesive image to the consumer.
In the most recent J.D.Power APEAL study, Chrysler ranked third from the bottom, indicating that reviving its fortunes might be difficult. Still, rumors are that the Chrysler brand is a "keeper."
In contrast to Chrysler, the Dodge brand is right at the top of the mass-market brands in the latest APEAL study. Owners of Dodge vehicles love them and the performance image they project. Dodge also has scored well in the 2020 JD Power Initial Quality Study (IQS).
All that is positive, but the question revolving around Dodge is this: Can its high-performance image based entirely on high-horsepower internal-combustion gasoline engines translate in a world that could see increasing electrification of vehicles?
Introducing high-performance battery-electric vehicles could help, but that is complicated by the fact that high-performance BEVs require expensive batteries, antithetical to Dodge's bargain price points.
Fiat is an important mass-market brand in Europe, but its product line has proven to be a difficult sell in America where conditions are quite different than in its homeland. The brand was reintroduced to America with much fanfare and plenty of marketing dollars, but right now in the U.S. Alfa Romeo is heartily outselling Fiat, which now offers a single small crossover SUV called the 500X. That is certainly not a good sign for its longevity in the United States.
Interestingly, Jeep is at the very bottom of the most recent APEAL Study, but Jeep vehicles sell in such numbers that the brand has become the bulwark of the former FCA brands in the United States. Further, it has a strong global presence and a very positive global image.
Jeep is helping its future with the recent introduction of the Wrangler 4xe, a plug-in hybrid electric vehicle (PHEV), and more electrification is on the way. Redesigned Grand Cherokee models will be on sale within months, and Jeep is about to launch the new full-size Wagoneer lineup.
Jeep is safe and will be around for the long haul.
Like Alfa Romeo, Maserati is a brand will a proud history that just hasn't gained much traction in the United States. While it has shown some life with the Levante SUV, a move to electrification might be necessary to save it from extinction.
Ram Trucks sell in high numbers and Ram also ranked second among mass-market brands in the most recent APEAL Study. So not only do their owners love them but there are also a lot of Ram owners. Ram could be threatened by the coming wave of battery-electric pickups, but it is virtually guaranteed a place at the Stellantis table for years to come.
A decade from now, there will almost certainly be a consolidation of Stellantis brands, and that will mean some of them will vanish from the United States. Most likely to disappear from the U.S. are Alfa Romeo, Fiat, and Maserati. Chrysler and Dodge also seem potentially vulnerable.
Still, all of the Stellantis brands have paths that could save them, and the reorganization plan does give them a decade to find them. The next 10 years will present a fascinating lesson in corporate Darwinism.
The opinions expressed in the article are those of the author and do not represent the official views of JD Power or its individual practices.
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