Author Archives: Felipe

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Learning about cars: the E-Segment

Lancia Thema. Photo by netcarshow.com

Cars get larger and wider. They become big and luxury and really popular in some important markets. The E-Segment is the land of Germans who created the segment so many years ago. Now other car makers have their own model as this kind of cars is the perfect solution for the rising executive class who looks for a luxury sedan with enough room in the back seat when they are moving around making business. It’s the main target of E-Segment cars along with high income families that choose Station Wagon body type. All its members have in common their length, between 4.8 and 5 m and luxurious interiors with high quality materials. For some car makers is their top offer, but there is also one larger segment to be analyzed in the coming days, the F or G-Segment.

Dodge Charger, second best selling car of the segment in America and Canada in 2011. Photo by netcarshow.com

In 2011 around 2 million units were sold worldwide, which represent 3.3% of world’s market. It may not sound a big number but in terms of money it is certainly attractive as most of these cars are not cheap at all. In Europe E-Segment cars start at $40.000 €. In America there are two categories, the mainstream brands and the luxury ones, starting at US$27.000 for the first ones and US$45.000 for the other ones. By markets the US market is clearly the largest one: 766.000 units were sold in 2011 (6% of total market). In China, where new executive class is rising, around 300.000 units were delivered (but only represent 2.4% of the market). Meanwhile in South Korea 200.000 E-segment cars were sold, 13.7% (mostly Hyundai and Kia), and Germany, the land of Mercedes, BMW and Audi, 184.000 vehicles were sold, or 5.8%. It is also important to mention Northern Europe where Volvo’s SW are really appreciated (Sweden, 12.4%, Finland, 7% and Norway, 5.5%).

Lancia Thema interior. Photo by netcarshow.com

Fiat-Chrysler position within the segment is in some how poor. They only offer two different models: the Dodge Charger for America and the Lancia Thema for Europe (in America the Chrysler 300 version is considered D-Segment, but in Europe the Lancia version is positionated as E-Segment because of its luxury features, engines, size and price). Although is an old product (launched in 2006) the Charger continues to be successful in USA and Canada, being the second best selling car of the segment in 2011 in both markets. The car offers a nice mix of big american sedan (5.08 m), big engines (up to 6.1 liters and 432 hp) and good prices (starts at US$25.595), but is the opposite to fuel efficiency and lightness. Thanks to this product F-C Group could reach segment’s market shares of 9.2% in USA and 9.3% in Canada, not bad numbers (in the Middle East the car allows the group to have an average market share of 6.4%). Eventhough the group must accelerate the arrival of new generation because fuel efficiency is becoming an important sales topic and the car is getting old, while the rivals are re borning with Ford and its beauty Taurus and Chevrolet and its all new Impala, the best selling one. In the other hand there is the Thema or rebadged Chrysler 300. It was introduced in late 2011 but has not had the sales performance expected by the brand. According to Europe’s sales figures in the first quarter, if the trend continues, the Thema will sell only 2.400 units in the whole year, really far from 10.000 units Lancia is expecting to sell. After some bad experiences with its Thesis and Kappa, Lancia decided to import the 300 from Canada and offer as high class sedan with powerfull American engines. But there are so many problems with this car: first, the economic situation of the continent does not allow everybody to buy the Lancia especially when they can buy for the same money a German D-Segment sedan. Then comes the problems with Italian new taxes for expensive cars. And finally the lack of awareness the brand has outside Italy. Nevertheless the car must be understood as temporary car waiting for next all new generation, that will arrive thinking on both markets, America and Europe.

Below, the list with all E-segment cars available in the world:

 

 

Click here to see ‘F-Passenger’ Segment

Click here to see ‘D-Passenger’ Segment

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Why so good in America and so bad in Italy? Opinion

Illustration by Automobile Magazine

On friday Fiat SpA released the Group’s results for May 2012 in Italy and USA. Unsurprisingly sales figures confirmed the recent trend: America’s rise up and Italian deep crisis. Those are frequent results since last year when the new Fiat-Chrysler Group began to see a shift in car registration growth from its native Italy to its new native America. 3 years ago, when Marchionne signed the deal with Obama’s government, was Fiat saving Chrysler from bankruptcy. Now is not that Chrysler is saving Fiat from disaster, but because of several facts to be explained in this article, Chrysler Group is now leading the match to make of the Group one of ‘big six’ of the world, while Fiat Group deals with big problems in Europe and tries to maintain its success in Brazil. To try to explain the reasons of this situation with only one fact would be unsuitable. Behind the uprising of Chrysler and the crisis of Fiat, there is a connected net of things that can explain why Chrysler, without any all-new model is having continuos sales growth while Fiat, with some new models, is looking deseperate for solutions to not to sink.

First of all there is the Economic crisis reason. The financial problems that took place in USA in late 2008 affected first American economy and then European one. But while America is more or less getting over it Europe add the debt crisis of some of its EU members like Greece, Ireland, Portugal, Spain and Italy. Althouhg developed countries are all facing the new scenario in which emerging markets are catching investment flows, the situation of America is much better than Europe’s. The worst has already passed in the US, but not in Europe where is expected a full year 2012 and 2013 with lot of difficulties in terms of unemployment, demand and social destabilization. Italy is part of both, the problem and the solution. Its debt problems are making Italian authorities to rise taxes, and therefore restrict consumption. And with no good perspectives in the short term, here comes the second reason of the gap between F-C sales in USA and Italy. Italians are pesimistic about their future, about getting a job and go ahead. Americans are still having problems but their mood is different as they see the light at the end of the tunnel. And mood is a factor that explains perfectly the situation. When people don’t believe in better things to come they don’t care about the future and rather think of their present as a survival exercise. In the other hand, when some of main economic indicators show that the worst of the crisis has just passed, then people start to change their habits and be more positive about coming days. The mood certainly affects car industry, as a car is a product that costs, and is part of people’s main assets.

Auburn Hills now shines. Photo by http://news.ottawadodgechryslerjeep.com

Actually the mood among citizens (or buyers) can be seen in other fields. If one watches any interview or statement of Sergio Marchionne, it will be evident the change of mood when he talks about Chrysler and America and when he mentions Fiat and Italy. His face changes. Yes, Fiat Italy is just giving him problems, but the good mood he projects when he is in Auburn Hills should be the same or better when he is in Mirafiori. People notice it and coming from him, has an impact on the organization, composed by powerful labor unions that every day communicate Italians their dissatisfaction with corporate decisions. It is not the intention to evaluate who is right in their demands, but this tense situation between board of directors and labor unions is generating a bad image of Fiat among Italian buyers. And that’s the other reason that can explain the gap between Chrysler’s sales in USA and Fiat’s in Italy. All car makers are having sales drops in Italy, but Fiat also worries because of the economic impact of its latest corporate decisions. Italians don’t like the idea of shifting production abroad (Poland, Serbia, USA, Mexico and now China), and they blame Fiat of being part of the unemployment problem there is now in Italy. If it is true or not, the reality is that ‘Fabbrica Italia’ plan has not been enough to project the idea that Fiat works for Italy. And that is probably the main problem now: Italians are tired of the status quo that has not brought the solution for their problems, and Fiat is part of the status quo.

Of course it is also a matter of offer. Although the new Panda was introduced in late 2011, and new Ypsilon or the rebadged Fiat Freemont are doing a good work since their launch in Geneva 2011, it has not been enough to change the trend. Fiat has decided to postpone the launch of new models waiting for better economic scenario arguing that most of European car makers are loosing money with their latest products. Fiat may not be loosing money but they are certainly loosing market share. The Punto, which was among Europe’s best selling cars, is now passing through its 7th year of lifecycle with remarkable sales drop Italy included, and there is no replacement model until 2014. Fiat Group’s model range in Italy is dramatically reducing: Fiat just offers 3 different small cars, Alfa has just 2 models at all, and Lancia survives thanks to its Ypsilon, that by the way is only successful in Italy. In this context, selling cars become a hard job. Fiat can not depend on economic cycles to develop its models. The models must be able to generate cash and support the production eventhough there is a big economic crisis, so a decision like the postponement of next Punto is going to increase the sales drop in a market that loves A and B-segment cars.

FIOM Labor Union protests. Photo by selvicenza.blogspot.it/

Finally, another fact that is playing against Italian Fiat’s sales is the role of government. Italian authorities continue to atack car industry through new taxes (super bollo, etc.) and making more expensive the price of gas. It has a direct impact on the demand in a moment in which people are struggling to keep their jobs and go on. The coming incentives for low emission and electric cars may be a good solution, but at the end an industry that depends on economic help is a none feasible industry. The role of government should be of generating good conditions for the whole industry and not creating new obstacles or distorting it with artificial and unsustainable incentives. Fiat made a good move with the gas promotion announced recently. All of these factor explain the increasing gap between the results in both sides of the Atlantic. What is next is to learn from what’s happening in America and anticipate it in Italy, but quickly, really quickly.

Italy’s figures include Fiat, Alfa and Lancia numbers only. Source: carsitaly.net, Chrysler Communications and Quattroruote.it

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New engines for the bottom and top of the line

Good news arrive from Fiat Powertrain Technologies (FPT) regarding two extremes of the model range of Fiat Group: the small and efficient Fiat engines and the powerful Ferrari ones. In the first case, FPT has announced than soon small Fiats (Panda, 500 and Punto) will be also offered with TwinAir Natural Power engine that allows the car to use either gas or methane without any inconvenient. This new engine will be available in 2 sizes, the basic one with 80 hp and the Turbo one, with 105 hp that might be also available in the coming Fiat 500L. Fiat guys say that Turbo version of the new B-segment minivan will have fuel efficiency of 4.7L/100 km with emissions of 112 g/km, not bad for a 4.15m length MPV. These engines will slowly replace the current 85hp and 105hp common gas ones as the fuel efficiency and emissions will be much better. An Hybrid version is also coming. The TwinAir Hybrid, which might be ready in one year, will be a very efficient small engine capable to use gas and Compressed Natural Gas (CNG) allowing an optimal consumption of 4.0L/100km and emissions from 80 g/km with gas up to 69 g/km with CNG. Did anyone hear about Italian incentives?

Fiat TwinAir engine. International Engine of the Year Award 2011

In the opposite side, FPT is also working on the replacement of the current 4 cylinders 1.750 cc Gasoline and 235 hp(used by the Alfa Romeo Giulietta Quadrifoglio Verde). The new version will arrive at the begining of 2013 and will be able to be installed on longitudinal or transversal engines offerinf 1.800 cc and up to 300 hp that will certainly add excellent performance to C and D-segment models in Europe and America. But it won’t be the only big engine to come. For the top of the line, Ferrari, Maserati and a big Alfa Romeo, Ferrari is investing $50 million Euro in the development of 2 engines: a V6 double turbo and up to 450 hp, and a V8. Both engines will have the task to move some awesome Ferarris, the next generation of Maserati Quattroporte (to be presented in Paris 2012), the Maserati Kubang and the future E-segment of Maserati and Alfa Romeo.

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Italy: Fiat-Chrysler falls 11% in a whole market that drops 14%

It seems that Fiat Panda will become Italy’s best selling car this year dethroning Fiat Punto, always #1 since 1993. Photo by netcarshow.com

Again bad news coming from Italy. In May the whole market falled 14.3% with sales of 147.102 units against 171.559 of May/11. Economic crisis and high prices of gas continue to affect negativelly Italian’s will of buying new cars. Nevertheless the overall fall May 2012 is the best performance in the whole year after even worse months in Jan-Apr/12. It does not mean that the trend is changing but it means it is more or less stabilizing. Of course Fiat-Chrysler Group is feeling the bad results. Unlike what happens in the USA, the group continues to see bad numbers and May was not the exception eventhough the total number of registrated cars falled less than the whole market allowing to have a better market share. In the last month the whole group quota rised to 31.6% more than the result obtained in 2011 when it was 30.57%. In other words Fiat is suffering the car industry crisis but not as much as its competitors (especially Ford). It is good news in a bad context.

The lack of new generation is affecting negativelly the performance of Fiat Punto, on market since 2005. Photo by netcarshow.com

The rise of F-C’s market share is explained by excellent performance of Fiat Panda during May/12. A total of 12.813 new Pandas were registrated, 27.5% of the 46.500 units sold by the whole group. The Panda has had the best market share (8.7%) since May 2009 when it reached 8.8%. It has been also the best month of the year for the small car and it grows 6.2% compared to May 2011. The rise on the whole group’s market share is also explained by the good results of Lancia Ypsilon, which was up 15.1% on an annual basis. Other models that did quite well were the Alfa Rome Giulietta, +3.1%, Fiat Freemont, up 239% (it was introduced one year ago) and Jeep Grand Cherokee, up 278% from 47 to 178 units. But all these good results were not enough to offset the bad performance of Fiat Punto (-26.4%), Fiat 500 (-19.5%), Lancia Delta (-36%), Lancia Musa (-40.5%), Alfa Romeo MiTo (-41.9%),  and others. Certainly the fall of Punto is dramatically affecting the group’s results. B-segment is Italy’s biggest one and Fiat seems to postpone and postpone the arrival of new generation making buyers to move to other brands such as Toyota or Peugeot (the new Yaris was up 31.4% and new 208 begins to like Italians). In the case of Fiat 500, total sales were down but it had its best month during the year and is still far away from its new feared rival, the VW Up! that seems to finally take off with 1.224 units delivered. It is also important to mention that Alfa Giulietta sold more units than its eternal rival, the VW Golf: 3.473 vs. 3.116. The lack of a Station Wagon for the C-segment Alfa does not allow to obtain much better numbers as this kind of body type is really appreciated in Italy (in May they had a market share of 8.4%). The VW Golf had a spectacular fall of 44.8%. All brands falled: Fiat was down 9.8%, Lancia (-10.1%), Alfa (-20.8%), Jeep (-13.6%). The luxury ones had the deepest fall, Maserati (-86.6%) and Ferrari (-58.6%), explained mostly by the superbollo tax that affects considerably expensive cars.

In May/12 the Alfa Romeo Giulietta sold more units than its eternal rival, the VW Golf. Photo by netcarshow.com

May 2012 leaves two main conclusions: Italian car market will not stop dropping for long and new models of the Group (Panda, Ypsilon, Giulietta, Freemont, Grand Cherokee) are doing their best to compensate the fatigue of old Punto, Bravo, Delta and MiTo. But this situation is unsustainable and if new generations are not coming, Fiat will see its home market share to drop dramatically.


Source: Unione Nazionale Rappresentanti Autoveicoli Esteri and bestsellingcarsblog.com

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May 2012, another great month for Fiat-Chrysler sales in USA

Thanks to Chrysler Communications Facebook site, global results of Chrysler Group in the US have been released. The good momentum continues during the fith month of 2012. The whole group (included Fiat brand) had sales growth of 30% over May 2011, selling a total of 150.041 cars, or 34.678 more cars than the ones delivered one year ago. Are really good numbers compared with total market growth and competitors performance. The main source tells that 7 models got more than 10.000 units sold volume, lead again by Ram Pickup, up 29%. By brands Dodge delivered 45.793 units (+14%), closely followed by Jeep with 44.198 (+24%), Chrysler up a massive 81% with 29.674, Ram with 26.373 (+23%). Finally Fiat had another record sales with its 500 delivering 4.003 units, up 128%. More analysis in the next days.

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Italy: buy a Fiat and get more than 3 years of gas at $1 Euro

Today Fiat announced its latest promotion. All the people in Italy who buy a Fiat (only Fiat brand) until July 31/12, will have gas price at $1 Euro/Liter until December 31 of 2015! The user will be able to buy the gas in any IP gas stations (3.700 in Italy) using a card that only works for his Fiat. The promotion varies depending the model: for example, with this price, the Fiat Panda will have available up to 1.200 liters during the period of time, while the Punto will have 1.700 liters and the Bravo up to 2.000 liters. It is certainly an interesting promotion especially if it takes into consideration that the price of $1 Euro/L will not change until December 31 of 2015. Fiat brand is facing a drop on sales in Italy since April 2010 because of European debt crisis that is affecting Italy and other European markets.

Fiat brand has not been able to have positive sales growth in Italy since April 2010

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The Mexican Fiat 500 grabs Latinamerica

Mexican Fiat 500 in Brazil starting at R$39.900 (US$19.700). Photo by carplace.virgula.uol.com.br

When Sergio Marchionne chose Chrysler factory in Toluca, Mexico, to produce the small 500 for the return of the brand to American market, he was not only thinking of labor costs. Certainly Mexico is a good place to produce small cars due to less expensive labor costs that allows car makers to have more profits per car produced (normally small cars have less profit). With less production costs then it would be easier to positionate the Cinquecento in the complicated American market, as the small Italian with interesting prices. Mexico is part of NAFTA, North America’s Free Trade Agreement, with the US and Canada, and therefore all products produced within these 3 countries can be exported to their partners without paying import taxes. But besides America and Canada, Marchionne’s mind was also heading to the south. Latinamerican market has become in one of world’s most dynamic, as it has not been affected by financial crisis of last 3 years, and sales continue to grow due to good economic moment and excellent perspectives for the coming years. Brazil, Argentina, Colombia, Chile and Peru are some good examples of amazing growth of car sales. In 2011 the whole region sold 6.466.328 units (included Mexico, Central America and the Caribbean), up 7% compared to 2010, which means that 12.3 new cars were sold per 1000 inhabitants, still far from developed countries (USA, 40.7 and EU, 36.2). Nevertheless all car makers are investing in the region for coming years as a big part of the population will buy its first car.

Fiat 500 production in Toluca, Mexico, from where it is exported to USA, Canada, Brazil, Argentina, Colombia and Chile, and soon China. Starting at MXN$199.900 (US$14.000)

Fiat-Chrysler has an important presence in this region. They have factories in Brazil, Argentina, Venezuela and Mexico and they sell everywhere. And Mexico has become an interesting production pole because of its economic agreements with other Latinamerican countries. It is while Chile and Peru the country with more free trade agreements signed. But unlike Chile and Peru, Mexico is a big car producer. In the region it has free trade agreements with MERCOSUR (Brazil, Argentina, Uruguay and Paraguay), Colombia and Chile, and it means they can export their cars paying zero taxes. It allows Fiat-Chrysler to export its Mexican cars to those countries with very competitive prices. One of the latest cars to make useful of this advantage is the Fiat 500. Marchionne was also thinking of this great opportunity because Mexico is the only country that can sell everywhere in the Americas with vert high quality standards and very competitive prices. That is why the Cinquecento is now grabing Brazil, Argentina and Colombia after the bad results that had the European version sold with vert high prices. Now Brazilians can buy it stating at US$19.700, while the car is available in Argentina starting at US$17.600, and US$20.000 in Colombia. In all markets is available with 1.4 8v 85hp or 1.4 16v 105hp. This good price can be seen in total sales. In the first 4 months of 2012, 6.764 units have been delivered to Brazil and 1.135 to Argentina. Eventhough are not big numbers as they are in Italy or in the US, the results of the small Fiat must be analyzed carefully from other point of view.

First of all, Latinamerican market is mostly composed of small and economic cars. The 500 is small but has never been a cheap car, not even in Europe. In Latinamerica this car is positionated as the cheaper competitor of Mini Cooper. It means it is sold as a mini exclusive car. This kind of clients are not really abundant. Secondly, Fiat’s image outside MERCOSUR countries is really bad. That is why selling a Fiat in Colombia, Chile or Peru can become a hard task to accomplish (in 2011 Fiat-Chrysler’s market share was 3.8% in Chile and 1% in Colombia, most of it thanks to Dodge models). And finally, the results obtained by the Mexican model must be compared to the Polish one. One year ago, the European version was not even in the top 100 best selling cars in Brazil, Argentina or Colombia. Year to date results show that Fiat 500 occupies place number 35 among best selling cars in Brazil (# 103 in 2011), and number 56 in Argetina (# 122 in 2011). In Colombia there is no official data but it has been known that the small Cinquino has been a success thanks to its low prices. Though there is not data for sales by model, the arrival of Cinquecento in Mexico has allowed Fiat brand to increase its sales up 112% in Jan-Apr/12. It all means that slowly the Fiat 500 is grabbing Latinamerican buyers as it has done in the other markets where it has been introduced.

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More aerodynamics in future Chryslers

Chrysler 200C EV Concept Car

Aerodynamics will become a key factor for the performance of coming models of Chrysler Group. This important field is becoming by far one of the topics from which future cars will be able to have better fuel efficiency. It means that design or a specific shape can affect the way the car moves and therefore the quantity of gas required to do so. This principle has been understood by all car makers using their wind tunnels to evaluate their car forms. But now Chrysler wants to go ahead and spend more time in this process according to Ralph Gilles, Chrysler’s design chief. “The wind is starting to sculpt these vehicles”, he said refering to Audi A7 or the redesigned Toyota Avalon in the US. He thinks mid sized sedans can have really aerodynamic shapes and not only sport cars. That’s why he says next Chrysler 200 and 300 will look much more sporty in that sense: “We’ll have no choice but to be some of the most wind-swept vehicles that you’ve ever seen”.

Future Chrysler 300 rendering by Alessandro Masera via autoblog.it

To achieve that requires more time evaluating the aerodynamics coefficient. Now designers are working together with engineers , somtehing that allows cooperation and enhances the ideas they can have. Normally, for a specific project, designers spend 100 hours in the wind tunnel. Gilles wants designers and engineers to spend 200-300 hours per project because he thinks there are lot of small parts in the outline of a car that can be improved in terms of aerodynamics. “It’s amazing the details, especially if you look at the back of a car,” Gilles said. “There are a lot of little flicks and bends that simulate aquatic animals almost.” Then it is just a matter of time to see next generation of Chrysler sedans to look more sporty and dynamic and see very small numbers of fuel consumption.

Source: Automotive News, Joseph Lichterman