Chrysler's 'identity crisis' puts brand's future at risk

Born almost a century ago to produce premium vehicles, Chrysler now is the "people-mover" brand offering vehicles in shrinking segments.

A proposed merger between Fiat Chrysler Automobiles NV and French automaker Groupe PSA would give the combined entity 13 brands — more than any other global automaker. That does not bode well, experts say, for the survival of the American heritage marque reduced to producing minivans and full-size sedans.

"I very much want to see the brand survive," said Frank B. Rhodes Jr., the great-grandson of Walter P. Chrysler, who established the company in 1925 from the remains of Maxwell Motor Co. He is not affiliated with the automaker, but wants to ensure his great-grandfather's legacy is preserved.

"It deserves to survive," said the 61-year-old furniture maker in Chestertown, Maryland, who drives a green 2018 Chrysler 300. "Chrysler has done a lot for this country for almost 100 years. It needs to be preserved. It's heritage, it's pride, it’s part of Americana. We’re seeing more and more Americana go away. It's a shame."

Rhodes cares less about the name of the company itself. PSA CEO Carlos Tavares, who would lead the FCA-PSA combination, has said the new entity's name, which has not been announced, should convey its goal for a sustainable mobility future. Jeep and Ram are Fiat Chrysler's most popular brands, not Chrysler and Fiat, making them unlikely choices to name the combined entity. The brands, however, will live on — at least for now.

"If we're differentiated enough in the brands, it will be very synergistic," Tavares said in December. "Brands will continue in the combined company."

Chrysler-brand sales, however, fell 23% in 2019 compared to a 1% decline at the Italian American automaker overall. It delivered just under 30,000 Chrysler 300 sedans, a 37% decrease, and nearly 98,000 Pacifica minivans, a 17% decline.

"This is a division that doesn’t seem to represent a vibrant, healthy product line," said Karl Brauer, executive publisher at Cox Automotive Inc. "It doesn't seem to have a bright future. I think for most people under the age of 40, they don’t have much awareness or affinity for that brand."

The Pacifica did outsell vehicles in more popular segments such as the Dodge Durango SUV and the Jeep Renegade crossover. It also surpassed the Dodge Charger muscle car and Dodge Challenger sportscar, said Tim Kuniskis, Fiat Chrysler's head of passenger cars in North America.

"No one has ever asked if we're going to stop selling muscle cars," he said, noting fewer of them sell in the United States than minivans.

The automaker still is investing in the Chrysler brand, Kuniskis said. It reintroduced for the 2020 model year the Voyager name as a less-expensive option for the Pacifica. And at the CES trade show this month in Las Vegas, the Pacifica got a sleek upgrade on a concept "Airflow Vision" focused on customizable user experience.

'House of brands'

Under legendary CEO Lee Iacocca, Chrysler Corp. developed the U.S. minivan market starting in 1983 with the launch of the Dodge Caravan and Plymouth Voyager.  The segment totaled less than 400,000 vehicles in 2019 — a sliver of the 1.2 million vehicles sold in 2005, according to auto information website Edmunds.com Inc. Today, minivans represent a less-than-3% market share. The large car market is even smaller at 1.3% compared to the 4.9% it was in 2010.

Fiat Chrysler has a "house of brands" philosophy, where each is positioned to fulfill a different demand in the market. Despite the minivan's disappearing popularity, it still brings thousands of customers into showrooms — and with just Honda Motor Co., Kia Motors Corp. and Toyota Motor Corp. offering minivans in the U.S., there are fewer rivals than before.

"From a company standpoint, there are only four players," Kuniskis said. "It's a good place to be." In other segments, the company has to vie for customers against two dozen or more competitors with pricing as its strongest tool. With minivans, "you're competing on innovation and having the best product in the marketplace."

In that respect, Fiat Chrysler dominates: Pacifica and Dodge Caravan minivan sales totaled more than 220,000 in 2019 — greater than half of all the minivans sold in the United States. The Pacifica is the only minivan available as a plug-in hybrid, and it is leading the way as the platform for robotaxi services around the world from Google parent Alphabet Inc.'s Waymo LLC in Phoenix, Arizona, to AutoX in China.

"The best shape for moving people around is a big box," Cox's Brauer said. "It's not the coolest or sportiest, but it certainly is the most effective. We're on the cusp of the minivan becoming a far more viable design for human transportation — just not for the personal buyer model."

Fiat Chrysler's own actions are indicative of the shrinking segments to which Chrysler is limited. The company plans at the end of March to lay off roughly 1,500 people when it cuts the third shift at Windsor Assembly Plant, where it builds Chrysler and Dodge minivans. The plant is idling for two weeks this month, as well.

The company also puts more of its money toward other vehicles such as the Dodge Charger over the 300, said Bill Golling, who owns six dealerships, including Chrysler Dodge Jeep Ram locations in Bloomfield Hills, Chelsea and Roseville. And Pacifica buyers "come in knowing they want a Pacifica, a family-hauler," Golling said. "It's a great one," though some have moved onto a Jeep Grand Cherokee or other large SUV.

Fiat Chrysler led the way in cutting sedans from its lineup, including nixing the midsize Chrysler 200 in 2017. LMC Automotive forecasts Chrysler will discontinue the 300 within a year — leaving the one-time premium brand with only minivans that face a soccer-mom "stigma," said Jeff Schuster, LMC's president of global vehicle forecasting.

Cutting the 300 is "something they’ve been considering," he said. "They can’t get enough volume out of the large-car program. Part of it comes down to demand. There's interest in sporty vehicles like the Challenger and Charger that have done well ... But the volume still isn’t strong. It's shifted to the SUVs."

'Brand addict'

Rhodes, Chrysler's great-grandson, says he sent in November a brief letter to PSA's Tavares as well as the French president and financing minister imploring them for the assurance of the Chrysler brand's future. He has not received any responses. PSA spokesman Bertrand Blaise said Tavares' office had not received the letter.

In December, Tavares called himself a "brand addict." He said that the combined company's divisions would vary in their heritage, history and emotion, which is why each would remain headquartered in their country of origin following the merger.

As the head of PSA, Tavares grew its brand offerings, establishing the standalone premium DS Automobiles marque in 2015. Two years later, he acquired the German Opel and British Vauxhall brands from General Motors Co.

Last week, PSA said the CEOs for the Citroën and DS brands were moving into new roles to focus on brand positioning, differentiation and cost savings. PSA matches each of its brands with a competitor whose results it aims to beat, Blaise said.

"We have Citroën, which is the people-minded brand," he said. "Peugeot is the high-end mainstream brand. DS Automobiles is a premium brand with a French flair. Opel is the true German brand, and Vauxhall is a brand for the British. We want to maximize our brand positionings within the group portfolio. ... Carlos always says, 'Every brand has its own chance.'"

The merger also could open up more opportunities for Chrysler, experts say, such as selling Peugeot and Citroën vehicles under its division in the United States. PSA does not have retail sales in the United States, though Tavares established in 2016 a 10-year goal of reintroducing the Peugeot brand to the market.

Chrysler is "going through a bit of an identity crisis," LMC's Schuster said. "With the PSA merger, there's more possibility than there would have been without it to try to find what their identity is and what the brand's future is."

bnoble@detroitnews.com

Twitter: @BreanaCNoble