FCA should be careful about its baby (SUV) fever
Jeep will allegedly spawn an all-new subcompact with off-road flair. While that’s perfectly in tune with the latest trends, won’t it do more harm than good to its existing portfolio?
Economy notions dictate that supply and demand will always converge to equilibrium, although not necessarily in ways that benefit suppliers or consumers. For instance, if your price is too high, there will be fewer people willing to buy your product. Conversely, offering too many products is a sure way to make people lose interest in them and have your prices forced downwards. However, it’s also true that economy notions are highly likely to face exceptions.
Crossover cars were created to combine the qualities of several body styles in a single one, yet the frenzy we see around them today only began once the industry figured out which exact characteristics people wanted in them. They became such a strong exception to those notions because the more models are offered, the more they’ve been selling — and the more expensive they’ve been getting. While this looks like a seller’s haven, one still needs to be careful with how to use it.
What’s the historical background?
Fiat entered this market segment long before the merger with Chrysler, but mostly using hybrid solutions: the Panda has been a supermini with off-road flair since its debut, in 1980, while the Palio Adventure emerged in 1999 as a version of the urban Palio Weekend with changes which eventually made it to several other Brazilian models. It would only offer regular crossovers years later, with the 500X and some of the latest Jeep models. While most of those sell very well, the company wants more.
The company which now goes for Fiat-Chrysler Automobiles (FCA) has been adjusting its portfolio in order to make it more lucrative. Some brands and car models became stronger while others went the other way and/or were phased out. After investing in midsize and large SUVs and pick-up trucks, the company now wants a piece of the action in the compact segment: Europeans and Latin-Americans have shown more interest than ever in pint-sized crossovers in the past few years.
And what about the current situation?
At this point, you’ve probably remembered that Fiat already offers the 500X and keeps the Panda (and its off-road flair) up-to-date, while Jeep is having a blast with the Renegade. In a few words, FCA’s latest idea is to spawn an even smaller Jeep from the Panda’s project. The motivation for that is reasonable: the former and the latter of those three models come from the same project and Fiat understands compact cars very well. Nevertheless, a deeper analysis renders this idea not so appealing.
As mentioned, Fiat is the expert at superminis. Fiat is the company which has worked with them for decades and in many regions. And Fiat is the company which has built its current image around them. When you hear “Jeep”, on the other hand, you think of SUVs which are either rugged, like the Wrangler, or somewhat fancy, like the Grand Cherokee. While that new crossover could actually turn out as profitable as FCA wishes, it also has potential to trigger an identity crisis in Jeep.
Whoa! How come?
The North-American brand has worked for years on building the dual image it enjoys today. Its current lineup is divided into followers of each of the two aforementioned models and both groups managed to be very well-received. Therefore, if things are finally going well, the sensible thing to do right now is to keep investing in those paths. That’s the case of Jeep’s other plans: a large SUV (Wagoneer, likely with a “Grand” version) and a Wrangler-based pick-up truck (probably named Scrambler).
On the compact, entry-level sector, customers are barely getting used to the Renegade. Any model designed to slot below it would be smaller and more tailored to urban use, so it would automatically go further from typical Jeep values. Besides that, its powertrain options would certainly be shared with Fiat models because the Chrysler division usually works with others of higher capacity. The “baby Jeep”, as it’s being called, would be an alien in the lineup and an insult to enthusiasts.
What could be done, then?
In my opinion? Change the design to comply with Fiat’s identity and make it the next-generation Panda. The nameplate is well-known and very successful in Europe, which is one of the target markets; the current iteration debuted in 2012 and hasn’t been facelifted yet, so its age is starting to show; and the one crossover Fiat currently sells, the 500X, isn’t offered in Latin America, which is a highly important market for the Italian brand. In fact, speaking of this region warrants a separate analysis.
Fiat could make the new Panda global rather easily. It could keep the current platform to cut costs or switch to the 500X’s in order to be produced in more countries (such as Brazil and China). Since it would become a crossover, no longer a hatchback, it would manage not to compete with the 500 or the Tipo in Europe and with the Uno or the Argo in Latin America. Not to mention it would comfortably sit below the 500X and the Renegade regarding size, equipment, performance, prices…
What can we conclude from that?
Crossovers have been profitable for surprisingly long, but that’s no reason for a company to blind itself because of greed. The analysis you’ve just read may be short, but it’s based on the observation of facts. A simple brand switch can avoid the risk of serious image-related problems to one of FCA’s brands and give another one a car model which could be truly helpful to its market performance. If you liked this post, make sure to share it with your friends and feel free to read my other ones!