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Originally Posted by mcrews
Im sorry to say, none of you seem to understand business.
Item A: is small and entry level. Parts have to be specially engineered and not out of the stock bin. Price point cant exceed $x.xx (let'd say 27k). Limited profit per item. Limited buyers
(btw, that's why the first gen small cars failed in the 70's. The couldn't afford to re-engineer so they were small cars built like big cars.)
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The Dart and 200 are both on the Fiat Compact platform; minimal re-engineering was required to get them to market, and parts are shared with European models and the Jeep Cherokee. Just about everything on them is "out of the stock bin."
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Item B: big and entry level to top of line. Wide range of options. Parts are normal size and can be swapped across the tool bin. Price point can exceed $XX.XX (let's say $60k) wide range of buyers.
So, in review, I'm I company and accountable to myself, my Stockholders, my employees and finally my customers.
A. in the back of my mind I have to remember that there is a FIXED cost per vehicle of wages and union benefits (driving my price point).
B. it's easier to commonly share internal parts that are a common size.
C. Trucks make up 1/2 (yes HALF) of all vehicles sold.
D. trucks have the largest profit margin outside of luxury brands top models.
I (as a company) don't care about whiney people who NEVER bought my new eco-cars when I made them. I care about staying in business and building what sells.
You can all the emotional and illogical comments you want.
But at the end of the day, BUSINESS is BUSINESS.
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We aren't being illogical. First, plenty of other auto companies (*cough*Ford*cough*) have well-reviewed and strong-selling small car lines in addition to being the largest volume manufacturer of light trucks in the country. Second, as fuel economy requirements rise in coming years, FCA will have a hard time meeting them without small and midsize cars in their portfolio; any businessperson worth their salt should be taking that into consideration when planning product cycles into the next decade, when those regulations take full effect. Third, while gas prices are low right now and driving more consumers into trucks and SUVs, this will not last indefinitely, as Marchionne believes--as soon as Saudi Arabia says uncle and turns off the taps, prices will go up, and given their budget deficits just a year into this strategy, that's likely to happen sooner rather than later, I think. The end result will be a replay of 2008: Chrysler, dependent on truck sales that fall in response to increased fuel prices, will teeter on the edge of bankruptcy, but this time there won't be anyone to save them. A plan that has a strong possibility of resulting in the failure of the company is not sound business. I'm certainly not investing anything in FCA.
For the record, I bought a new eco-car less than two years ago. Chrysler didn't make anything comparable then, and now they're only moving further away. Contrast their behavior with that of Toyota or Hyundai, who are introducing new or redesigned economy models--they will be well-positioned when gas prices go back up.