Now Fiat Chrysler Automobiles North America, the former Chrysler Group is third-largest homegrown US auto manufacturer. It is the parent for three distinctly American brands - Chrysler, Dodge and Jeep - and now also a growing collection of Fiat's European vehicles. The local business has undergone numerous upheavals in recent years, and several different owners. Having first narrowly avoided collapse at the end of the 1970s it was eventually acquired by Germany's Daimler in 1997 to form global giant DaimlerChrysler. Though presented at first as a merger of equals, that arrangement quickly turned into a takeover of the American business by its German partners. The experiment never really worked, and Daimler cut its ties after a decade, selling the business to private equity investors. By the end of 2008, the newly independent group was once again on the brink of catastrophe, saved from bankruptcy only by funding from the US and Canadian governments. After struggling for months to present the US government with a turnaround plan that would justify further investment, Chrysler finally agreed terms for a partnership with Italian carmaker Fiat, put into action in 2009. Performance has improved dramatically since then, and Fiat acquired management control of the business during 2011. After two years of further negotiations, it agreed a full merger of the two companies in early 2014.
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Adbrands Weekly Update 18th Jan 2017: Following their victory over Volkswagen Group, US regulators have now turned their attention to other manufacturers, with Fiat Chrysler first on their list of target. Late last week the Environmental Protection Agency accused FCA of violating emissions limits in more than 100,000 diesel-powered Dodge and Jeep vehicles sold in the US since 2014. According to the EPA, 3.0 litre models of both vehicles carry engine management software similar to Volkswagen's which can disguise emissions levels in certain conditions. The potential fine could be as high as $4.6bn, said the agency. Fiat Chrysler CEO Sergio Marchionne denied the company had deliberately tried to defeat the emissions testing process and has agreed to work with the EPA to resolve the situation. Fiat Chrysler's US share price plunged by as much as 18% following the EPA's accusation.
Adbrands Weekly Update 5th Jan 2017: Sales volumes for 2016 showed the US auto industry reaching a new record of 17.55m vehicles sold (up from 17.47m in 2015). That marks a strong recovery from the lows of the 2008 crisis, when sales dropped below 11m. However the banner figures mask troubles lying just below the surface. As Ford's announcement reflected, sales of small and midsize cars have slowed dramatically, despite surging demand for SUVs and pick-ups, leaving all manufacturers with sizeable quantities of unsold inventory. This is expected to impact significantly on profits in the year ahead. Another worry is that the growth was experienced mainly by smaller companies, rather that the big manufacturers, most of whom suffered small declines on the year. GM reported annual sales of 3.04m cars, down just over 1%, while Ford fell marginally to 2.60m. Fiat Chrysler was down by 0.4% at 2.24m, and despite a strong final month Toyota too was down 2% over the year as a whole to 2.45m. The single biggest decline was suffered by BMW, down by just under 10%, compared to a fall of just 3% for Volkswagen Group. The VW brand alone fell by almost 8%, offset by a 4% increase for Audi. The single biggest gain by any manufacturer was notched up by Tesla, with sales soaring by 69%, though total volumes were still tiny at under 40,000 vehicles. There was double-digit growth for Jaguar Land Rover and Volvo, and a mid-single-digit uplift for Nissan, Honda, Subaru and Kia.
Adbrands Weekly Update 22nd Dec 2016: Google parent Alphabet Inc unveiled an intriguing new commercial venture under the umbrella of its self-driving car division, recently spun out as an autonomous business unit under the brand Waymo. Although it already operates around 60 self-driving test minicars in a handful of US cities, the company recently indicated that it was leaning towards licensing deals with other manufacturers rather than the creation of its own automobile brand. The first such venture was announced this week, a partnership with Fiat Chrysler. Around 100 Chrysler Pacifica hybrid minivans have been fitted with self-driving technology, and will begin on-road testing in early 2017. Waymo is also reported to be in negotiations for a similar deal with Honda. Separately, Goodby Silverstein regained an automobile account for the first time since it lost Chevrolet in 2013. It was named as lead agency for the Chrysler car brand in the US, its biggest single account win for several years.
Adbrands Weekly Update 24th Nov 2016: Ads Of The Week: "Praise". Richards Group offers this clearly heartfelt paean to blue collar America for Fiat Chrysler's Ram Trucks brand, not just to mark Thanksgiving, but also recognising the struggles of the ordinary working man and woman, an issue which has once again risen to the top of the agenda in the wake of the election. It's not the first time Richards and Ram have delivered such a powerful celebration of hard work. This is a fitting successor to their similarly poetic Farmer spot from 2013. Fine work indeed. Happy Thanksgiving everyone!
Adbrands Weekly Update 26th May 2016: Omnicom's GSD&M agency scored its biggest account win in years, with the reported capture of Fiat Chrysler's Dodge business in the US, its biggest-spending brand by some margin. The business was previously managed by Wieden & Kennedy. As with all its brands, FCA doesn't appoint an official AOR, but US trade media say GSD&M has been picked for current lead.
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Free for all users | see full profile for current activities: Prior to its merger with Daimler-Benz, Chrysler had already spent 90 years on a bumpy ride of boom, bust and boom again. Walter P Chrysler was a successful manager at Chicago Great Western Railways when he bought his first car in 1908. Fascinated by the technology, he promptly took it apart and rebuilt it several times to understand how it worked. Four years later he joined Buick, already part of the General Motors combine, as production manager and rose through the ranks to become the division's president and general manager in 1917, then the first vice president of General Motors Corporation in charge of production. But Chrysler didn't get on with GM president William C Durant, and in 1920 he resigned. In his time with Buick, he'd built up a reputation as a keen businessman, and was immediately recruited to rescue two separate struggling engineering companies, Willys-Overland and the Maxwell Motor Company. As part of the deal he negotiated for himself the then unprecedented salary of $1m a year. He became chairman of Maxwell in 1921, and changed its name to Chrysler Corporation four years later.
In 1924, Willys-Overland launched its new model under the Chrysler name. The "Chrysler Six" caused a sensation at the time as one of the fastest cars on the road, with a top speed of 70mph. Chrysler sold 32,000 units in the first year, then the most successful US car launch ever. By the end of 1925, Chrysler was making annual profits of $4m. As other US car companies amalgamated or fell by the wayside, Chrysler strengthened his hold on the industry. In order to mirror the range of cars sold by GM, he set about established several different brands. Plymouth was launched as a popular low-end brand, with DeSoto as a mid-market family car. Their success allowed Chrysler to make a bid for his considerably bigger rival Dodge Brothers in 1929.
John and Horace Dodge had set up in business in Canada in the early 1900s, adapting their father's bicycle workshop to make components for the fast-expanding new auto industry. Their first contract was with Oldsmobile, but in 1903 Henry Ford offered them a share in his new auto manufacturing business in return for a steady supply of engines and other parts. For the next 12 years, virtually all Ford cars were made with Dodge parts, but the brothers dissolved the partnership with Ford in 1914 to set up on their own. Their first model, a rugged and durable design known as Old Betsy, set the tone for many of the vehicles that followed. During World War I, the company established a name for its motor trucks, but Dodge also produced attractive tourers and sedans. John Dodge died in 1920, followed by his brother five years later. Investment bankers Dillon Read & Co bought the company from their widows for $146m, at the time the biggest cash transaction in history. In 1928, they sold the business on (at a loss) to Walter Chrysler.
The purchase of Dodge established Chrysler as the country's third largest auto manufacturer behind Ford and GM. Walter Chrysler celebrated by commissioning the construction of a new building in New York. Completed in 1930, the Chrysler Building was briefly the world's tallest, with 77 floors, until overtaken by the Empire State a year later. By 1936, Chrysler was producing a million vehicles a year, a quarter of all cars in the USA and Canada, and had overtaken Ford to become the country's #2 carmaker. Chrysler died in 1940, aged 65.
The Second World War brought significant benefits to Willys-Overland, then still separate from the main Chrysler business. The company was commissioned to produce a "general purpose military vehicle", generally known as a GP and later abbreviated as "jeep". Several manufacturers produced their own jeeps, including Ford. After the war ended, Willys struggled to find a viable replacement for its military vehicles. In 1953, the business was acquired by Kaiser Industries. Meanwhile Chrysler too had begun to lose its way without Chrysler himself to call on. During the fierce competition of the post-war years, other manufacturers spent money on introducing new models every year, but Chrysler kept costs low by marketing the same designs year-in, year-out. As a result the company lost share, slipping back behind Ford in 1950.
This misjudgement of market sentiment increased during the 1960s. The group bought into French carmaker Simca in 1958, and began importing its models into the US. In 1964, Chrysler also took a stake in British carmaker Rootes, makers of a range of small marques including Hillman, Sunbeam-Talbot and Humber. Three years later US company took control of Rootes, yet struggled to turn a profit on its UK operation. The American market wasn't ready for these small cars either, preferring old-style gas guzzlers. Chrysler switched back to production of big cars, but too late, just as the oil crisis hit in the 1970s. And while the competition changed its model size to allow customers to spend less on gas, Chrysler kept turning out large cars. Despite a late deal to import Japanese Mitsubishis, Chrysler's financial problems spiralled. By 1978, the company was close to bankruptcy, only saved when US President Jimmy Carter authorised federal loans of $1.5bn. The same year, former Ford president Lee Iacocca was appointed president of Chrysler, and he set about turning the company round through a high profile marketing campaign, which featured him as its star.
Meanwhile Chrysler saved costs by selling off underperforming businesses, including all its European operations (to PSA Peugeot Citroen), as well as its defence business and marine division. By 1983, the company had returned to profitability, repaying its federal loans before schedule. The car business was revitalised by the launch of the first minivans in 1983. Built on a car chassis, the Dodge Caravan and Plymouth Voyager proved a huge success for Chrysler in the mid-1980s. The group also went shopping, acquiring jetmaker Gulfstream (sold 1990) and various finance businesses, as well as a stake in Italian manufacturer Maserati. In 1985 Chrysler and Mitsubishi set up the Diamond-Star Motors joint venture to build small cars in the US, and in 1987, Chrysler rescued American Motors Corporation, then the #4 carmaker, for $800m. Formed originally from the merger of the Nash and Hudson car marques in 1954, AMC had struggled to compete with Detroit's big three during the 1970s, and control was eventually acquired by Renault of France. The French company couldn't make AMC work either, and pulled out of the US altogether in 1987. Ironically, Chrysler's purchase of AMC brought the Jeep - now a brandname in its own right rather than merely a generic description - back into the fold. Willys-Overland had been acquired by AMC in 1970.
Chrysler Group also resumed business in Europe, first exporting a limited number of models, then setting up a manufacturing plant in Austria to build Voyagers and Cherokee Jeeps. Other acquisitions included the luxury Italian marque Lamborghini (sold 1993), and US car rental agencies Thrifty, Snappy, Dollar and General (also sold). By the late 1990s, Chrysler was very much back in business, with its highest market share in the US since before World War II. The group's last reported sales as an independent in 1997 were $59bn. A year later the company was acquired by Daimler-Benz.
The integration of the two companies seemed at first to have been achieved with remarkable speed and skill. However, press commentators quickly seized upon the departure of several high-ranking Chrysler executives to suggest that there was discord within the new group. American employees had begun to complain there was a bias towards native Germans among senior management (by May 1999, only one in five of the senior managers of DaimlerChrysler were from the US), while German employees complained about the overly-relaxed style of their US counterparts. By 2000, Chrysler was coming under increasing pressure as profitability slumped. The German company fired Chrysler's American CEO in November, replacing him with German-born Dieter Zetsche. Soon afterwards, group CEO Jurgen Schrempp suggested in a press interview that he regarded the US company as a "division", rather than a partner. Daimler was then sued by a group of US investors led by entrepreneur Kirk Kerkorian, who claimed they had been misled as to the German company's intentions. Meanwhile, in an attempt to restore performance at Chrysler, the group announced sweeping cuts in early 2001. The company shed 26,000 US jobs by 2003 and closed or cut production at six factories.
In late 2002 the group tied up a $14m three-year marketing arrangement with songstress Celine Dion to appear in and provide music for an advertising campaign to launch Chrysler's new Pacifica model. It was subsequently reported by Advertising Age that Chrysler's main agency BBDO had warned the client against selecting the singer, who generally appeals to an older market than Chrysler's target audience. But the company's marketing boss Jim Schroer was apparently insistent on using the singer. When BBDO declined the opportunity to handle the launch with Celine Dion, the campaign was assigned to Arnell Group, who produced a series of lavish commercials designed to shift the Chrysler image further upscale. But the ads got poor reviews (at best) and failed significantly to deliver results. Chrysler was reported to have targeted sales of 60,000 Pacifica models in their first year, but sold less than 5,000 in the first three months. Jim Schroer resigned from Chrysler, and Dion herself was subsequently dropped from the ads, although her songs continue to be featured.
Meanwhile CEO Dieter Zetsche continued to press ahead with his restructuring, and performance slowly improved. After a further repositioning during 2004, performance responded strongly and the group reported record sales for the year. However there were further sharp declines in 2005 and 2006. As a result, DaimlerChrysler began talks to sell part or all of the Chrysler business. One of the first firm bids came from investor Kirk Kerkorian, who had long been a fierce critic of Daimler's management of Chrysler. He offered to buy the business for $4.5bn in cash, subject to finalisation of a satisfactory long-term agreement with labour unions. However, DaimlerChrysler declined the opportunity to negotiate in detail with Kerkorian and instead reached a deal with private equity group Cerberus.
In May 2007, private equity group Cerberus Capital Management agreed to acquire just over 80% of Chrysler Group from DaimlerChrysler. (Daimler retained the remaining 20% until 2009). The German group was not paid for the shares, and instead itself contributed $650m towards restructuring of its former subsidiary. But Daimler was able to remove an estimated $18bn of Chrysler-related pension and healthcare liabilities from its balance sheet. Cerberus meanwhile refinanced the business with an additional capital contribution of $7.4bn. Bob Nardelli, formerly chairman & CEO of Home Depot, was appointed to the same role at Chrysler Group, and set about brokering a deal with the United Auto Workers union to reduce that healthcare benefits bill without resorting to Chapter 11 bankruptcy protection. Completion of the transfer to Cerberus was completed in August 2007. An agreement over labour terms was thrashed out in October 2007, under which the bulk of Chrysler's healthcare liabilities (which had risen to $19bn) were transferred to a separate company-funded but union-run trust. Shortly afterwards, Chrysler announced plans to make deep cuts of almost half its North American workforce by 2010, and to drop four of its existing models.
In 2008, Chrysler took the first tentative steps towards a partnership with Japanese manufacturer Nissan. Under that arrangement, Nissan was to supply a version of its Versa sedan to be sold by Chrysler in some South American markets from 2009. The following year, Nissan was set to begin manufacturing a new small car designed by Chrysler for sale in North America and Europe; in return Chrysler would commence production of a pickup truck for sale by Nissan in the US in 2011.
However, all of these plans were overtaken by the dramatic decline in first US and then worldwide auto sales during the course of the year. Attempts were made in October to broker a merger with General Motors, also close to collapse, but these were abandoned as the scale of both groups' problems mounted. By the end of the year, both Chrysler and GM were in desperate negotiations with the US government to receive financial assistance to avoid bankruptcy. A short-term loan of around $17bn was made available at the 11th hour. Both companies were given until the end of March 2009 to come up with a plan which would justify further investment.
In January 2009, the group unveiled the outlines of a tentative alliance with rejuvenated Italian manufacturer Fiat, which had been seeking ways of breaking back into the US market. Fiat offered to take a minority shareholding in Chrysler, provided the US government made further funding available to keep the business afloat. Fiat said it would not itself invest any cash, but would provide technology and vehicles for Chrysler to build and market in the US. After consideration, that plan was not considered by the government to be sufficient to justify further long-term investment because of Chrysler's other debts. Set a 30 day deadline to improve its plan, the company was able to strike a deal with the UAW union and some of its lenders to reduce its liabilities, and also agree the outline of a slightly improved partnership with Fiat. Some debtholders held out for a better deal, however. As a result, the group filed for bankruptcy in May to clear out its more obstructive liabilities, although the government agreed to provide further cash to fund that process and the company's future plans. After a brief stay in Chapter 11, Chrysler emerged from bankruptcy in June 2009, under Fiat control. The tentative OEM partnership with Nissan was cancelled in August.
Jim Press, originally recruited from Toyota North America in 2007, was promoted to the role of deputy CEO, with responsibility for the three main brand families of Dodge, Chrysler and Jeep mid 2009. However he announced his departure two months after the Fiat takeover and left at the end of the year. See full profile for current activities
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