By Peter M. De Lorenzo
Detroit. Two disparate issues this week, but two things that point to the ongoing chaos running rampant in the auto business. First up, it’s no secret that I have been Sergio Marchionne’s most relentless critic ever since the espresso-swilling, sweater-wearing mercenary set foot in Auburn Hills as Chrysler’s alleged “savior.”
I am not going to regurgitate the long list of grievances, obfuscations, calculated misrepresentations and flat-out lies that Marchionne has unleashed on the people of the company formerly known as Chrysler, the media and the consumer public here, but suffice to say his glorified self-image as the “G.O.A.T” has been completely destroyed by the sad reality of the chaos and havoc that he has left in his wake.
(If you would like to review some of Peter’s greatest hits on the “G.O.A.T” click on the links below. –WG)
THE FOOLS ON THE HILL. 4/20/16
GOOGLE IN FINAL NEGOTIATIONS WITH FIAT CHRYSLER ON AN ADVANCED TECHNICAL PARTNERSHIP. 4/26/16
TWO EMPERORS. NO CLOTHES. 5/11/16
MASTERS OF THEIR IMAGINARY UNIVERSE. 7/6/16
A MIDSUMMER NIGHTMARE. 7/13/16
KING CHAOS REIGNS IN AUBURN HILLS. 7/20/16
Not long after he was “gifted” all of Chrysler by the Obama administration seven tumultuous years ago, Marchionne assembled the press for that now-infamous, seven-hour press conference/death march that will go down in industry lore as The Longest Day. When Marchionne used that tedious session to lecture and cajole the media and investment types, making promises that he didn’t have a chance in hell of keeping, I knew then that we weren’t in the presence of greatness, but rather in the presence of one of the greatest scam artists this business has ever known.
Launching a new brand into this market is a massive undertaking, but launching a brand like Fiat with its historical legacy of mediocrity was pure folly from the get-go. But that didn’t stop Marchionne from promising dealers the sun, the moon and the stars if they’d only give in to spending a minimum of a million dollars for brick and mortar on stand-alone Fiat stores. And if they actually did sign up for Sergio’s Folly and commit to building stores, he promised dealers who were loyal to the clown prince of the fading Fiat Empire that they would be swimming in profits from selling the revived Alfa Romeo brand, which was next on the great man’s agenda. Alfa would be “the next Audi” according to Marchionne, and he promised that by 2016 FCA would be selling 70,000 Alfas annually, and the dealers would be hoisting Sergio in a golden chair and parading him around the room.
Needless to say, we all know how it worked out. Fiat was the “hot” brand but only in Sergio’s minions’ minds and only for a nanosecond, and Alfa Romeo remains the pipe dream that still never was.
And now, the final outrage.
The geniuses at FCA are cutting Fiat sticker prices for 2017 by 20 percent and even more (some models will be cut by a whopping $5,000), according to documents obtained by Automotive News. If you’ve ever wondered what the white flag of futility looks like in this business, well, this is it. Despite all of Olivier “I’m a genius, just ask me” Francois’s marketing moon shots, and despite all of Marchionne’s promises of impending greatness, the resurrection of the Fiat brand in the U.S. never took place. In fact, the brand is dead in the water, and this latest pricing move smacks of desperation, and nothing more.
Do you have any idea what this will do to the residual values for Fiats? Now, admittedly the idea of “residual value” for Fiats is a fictional notion, at best, but you have consumers out there who were sucked in by Marchionne’s faux fabulosity who are now sitting on the rolling equivalent of a tear-down house. This move by FCA will not only destroy any lingering notions of residual value for these buyers, but they will never get “right” with their automotive decisions. So the purchased Fiats will have to be run into the ground or put into use as hand-me-down wheels, while the off-lease Fiats will have to be shipped to another part of the world where they might find succor as colorful lawn ornaments.
As for Fiat dealers, they are being forced – pretty much at gunpoint – to move 2016 Fiat models out of their showrooms to make way for the newly priced 2017 models. Good luck with that, and by the way, just how much more condescension and humiliation can these dealers endure? We are talking about a group of businesspeople who have been bamboozled by Sergio Marchionne from the moment he first bombarded them with visions of endless riches and glory, with none of it turning out to be true.
With this plan Fiat will instantly become the bottom-feeder in the U.S. market in 2017, an Italian-flavored afterthought and the brand that time forgot. But the consumers who bought into Fiat and got well and truly hosed won’t forget; and the dealers who are kicking themselves right about now for acquiescing to Sergio’s bad “dream” won’t soon forget either.
I am certain of one thing: We are watching an automotive disaster of significant proportion unfolding right before our eyes, in real time. You can stick a fork in Fiat, it is finished in the U.S. market.
Lost in the sea of endless (and obnoxious) discussions about the bliss that will soon be upon us from ride sharing and our alleged shiny happy autonomous future, there is another concept you should be aware of, because the manufacturers’ irrational exuberance for it is an actual thing, with hundreds of millions of dollars being thrown at it.
I’m talking about the concept of digital intimacy. It is the idea that the manufacturers’ collection of information about you through various digital sign-ons and sign-ups will lead them to the Marketing Promised Land, because their acquired knowledge of every nuanced proclivity in your life will allow them to pinpoint your most intimate wants, needs and desires when it comes to your transportation choices. They will then in turn use that information to design products that cater to the whims and wishes of customers in surprising and delightful ways, with the ultimate goal being greater sales success.
The idea, however, that borderline invasive information gathering so that customers can be “served” better is flat-out unmitigated bullshit. Why? You can't force a relationship, digital or otherwise, on consumers. They will only accept digital relationships if and when the content is valuable. And since the manufacturers are generally incapable of creating valuable content it's a classic nonstarter. This notion is especially rampant in the luxury segment, where entire rooms full of people track intenders and customers in order to create a digital connection that will propel one luxury brand ahead of another.
First of all, the idea that consumers can have an “intimate” relationship with their vehicle manufacturer is ridiculous. Yes, there are hardcore enthusiasts out there who revel in connections with their brand – faux or otherwise – but largely this idea is a fool’s errand lost in an arena of monthly payments and tedious household financial realities.
This entire notion of digital intimacy is the semi-logical culmination of the customer-focused approach pioneered by Toyota when they launched their Lexus luxury brand back in the day. The Lexus “way” of coddling customers was nothing less than revolutionary at the time, and every manufacturer has copied the Lexus approach in one fashion or another since.
The onslaught of digital invasiveness and calculated immediacy has taken that concept into new, and for the most part, uncharted – and unwelcome - territory. The luxury manufacturers in particular are ramping up their efforts to be your friend and to aim their coddling at your personal triggers, which is beyond offensive when you really start to think about it. It’s everything from birthday greetings and “a night out” on them, to a series of faux “we are your friends” intimacies - like sanctioned vacation trips - that make the blood run cold, or boil, depending on what it entails and how it hits you.
The manufacturers all view this ramping up of digital intimacy to be the pot of gold at the end of the rainbow. Unremarkably enough, most consumers don’t see it that way. They don’t want or desire an intimate connection with their vehicle manufacturer because they find it to be cloying and more than a little creepy, especially in this age of social media entities knowing entirely too much about them. So they prefer to draw the line and push back from it.
Will the manufacturers come to understand this and dial back their efforts to be your intimate friend? Are you kidding? Of course not. The manufacturers are convinced – as is their wont - that they’re right as rain, until that inevitable tornado hits and blows their precious overthinking processes to smithereens.
Only then will they return to that old chestnut of designing, engineering and building cars and trucks that are dead reliable, while offering excellent, responsive service when you need it. After all of the digitized hand-wringing going on, this remains the minimum price of entry and consumer acceptability in today’s market.
The only “luxury” that the luxury automakers can provide is the new-ish service that relieves you of having to go to the dealer at all, which, for most people is the true meaning of luxury.
And that’s the High-Octane Truth for this week.
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