Fiat-Chrysler alliance could hold significant potential for Iveco
By: Oliver Dixon, Wednesday, January 21, 2009, AutomotiveWorld.com
Fiat's nascent relationship with Chrysler, details of which remain scant, bears close examination. There has already been – reasonably enough – much media analysis of car-related platform and component sharing and of course, in time, this is a distinct/realistic probability. There has also been a focus on Fiat leveraging its stake in Chrysler in order to roll out smaller cars across North America, and this too could make a lot of sense. Conversely, quite how the current Chrysler light vehicle product range would fare moving eastwards over the Atlantic in greater numbers remains to be seen; its performance to date has been patchy to say the least.
But commercial vehicles appear to have escaped this first round of scrutiny in the media, and yet, potentially, this is where promise and profit exist in equal measure. Iveco has long had designs on North America as a market for its Daily van, and, in truth, it appears a market and product match made in heaven. Daily boasts a chassis, rear-wheel drive and a ruggedness that should appeal to the North American van buyer, for whom the European panel van – exemplified by the Dodge Sprinter – is now an entirely palatable alternative to the offerings of the indigenous industry. VW looks set to launch its light commercial vehicle range across the NAFTA region at some point in the future, and Ford, which already markets the Transit in Mexico, looks set to follow its US launch of the Connect with that of the full-sized European model over the net few months.
If the Chrysler–Fiat alliance goes the distance, then Fiat, and, by extension, Iveco, could have been gifted a huge opportunity. It's pretty rare to get access to a significant global market at any cost; it's almost unheard of to get that same access at no cost, and yet Iveco may end up with over 3,000 outlets for its Daily product. The Sprinter arrived in the NAFTA region as a Freightliner product, and it failed to impress. When a Dodge badge went on the front, it started to fly off forecourts. Network coverage sells vans in North America. Iveco could have access to this, and have a product that is highly appropriate for a market that now accepts the legitimacy of a European design.
It's also worth remembering that Iveco – which has a not inconsiderable (though not often talked about) military operation – may, through Chrysler be able to get some access to US military procurement. These add up to potentially very significant revenue streams for Fiat.
But what of the Dodge Sprinter? If the Fiat-Chrysler alliance gains momentum, then what will happen to this, a link with the past that was DaimlerChrysler? It's difficult to imagine Fiat CEO Sergio Marchionne accepting a Daimler product on a forecourt over which Fiat holds sway, without being offered something very substantial in return.
Two years ago, Marchionne went to Detroit and walked away US$2bn to the good and no longer embroiled in a relationship with GM. In 2009, he appears to have gone to Detroit and, in all probability, walked away with a 35% piece of a very significant dealer network and at no cash cost. Surely an impressive few days' work by any definition? And depending on how things evolve from here, his latest efforts could lay the foundation stone for a further transformation in Iveco's fortunes.
Published on Wednesday, January 21, 2009
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