Proposition for FIAT merger with Chrysler

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This presentation offers a high-level strategy to allow FIAT to successfully market small, efficient cars to North American consumers.

It is not complete as such, but intended to stimulate dialogue and additional ideas.

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Proposition for FIAT merger with Chrysler

  1. 1. FIAT Business Concept Strategy to allow the FIAT-Chrysler merger to succeed during and after the economic slowdown
  2. 2. Background • The US automobile industry has suffered severely in the economic downturn • Part of the reason for this is that the auto makers failed to innovate and provide more efficient cars to the American market • BUT many trend-watchers state Americans may not want to own the kind of small cars that FIAT specialises in – Overall, people are buying less cars in general ©Mauro Forcolin 2009 Page 2
  3. 3. Opportunity • FIAT will take an initial 20% stake in the American automobile maker Chrysler • It is hoped that FIAT’s expertise in small, efficient cars will allow Chrysler to become competitive in the American auto market • FIAT will use Chrysler's existing plants and workers to build these cars ©Mauro Forcolin 2009 Page 3
  4. 4. Proposition • Rather than selling cars, FIAT should provide “personal transport service” to it’s customers • Customers would not have to buy and “own” cars, to make use of the car “service” and other related services • Customer will have control of a car, but not necessarily the identical one over time. – Cars will be interchanged to optimise efficiency across the entire fleet ©Mauro Forcolin 2009 Page 4
  5. 5. Current State • There are many options to have ascess to a car service without ownership – Leasing – Greenwheels – Carsharing.net – Etc. • BUT the car is always manufactured as an item to be owned and then replaced for a new one – Efficiency is geared towards individual cars, not across the designmanufactureservice process – Devaluation is still a hurdle to investment ©Mauro Forcolin 2009 Page 5
  6. 6. Business Change • Cars no longer have to built and maintained as individual items • Rather than repair, they can be replaced – Component parts are reused where most needed – Efficiency strategy across entire fleet rather than single car • “New” loses its meaning; cars can be “built” from parts taken from those brought in for servicing • Auto-makers become “auto-assemblers” – Jobs will remain in both assembling and disassembling cars ©Mauro Forcolin 2009 Page 6
  7. 7. Design Factors 1 • Focus on inter-changeability and processes to optimise assembly and disassembly – “assembly” & “disassembly” lines working together in factories – No need for entirely new models as changes can be introduced gradually across the field • Engineers can accurately determine the lifetime of particular parts – Cars can be assembled so that chance of failure across all car is consistent – Lowers risk/cost of performing repairs when 1 thing fail while the rest works fine ©Mauro Forcolin 2009 Page 7
  8. 8. Design Factors 2 • Particular cars/parts can be phased out prior to their failing – Once the statistical chance of failure is high enough, they can be removed from the fleet • Knowing extent of component use and in which environment are necessary to create an efficient system – Accurate and robust lifecycle of components must be maintained ©Mauro Forcolin 2009 Page 8
  9. 9. Design Factors 3 • Make as few things as possible distinguishable between “new” & “used” – Interiors: as that is where users interact with the car & leave their personal marks – Exterior paint/colour schemes – especially for government orgs & companies • Keep “feels like new” sensation across all cars – Customers will not be attached to an “individual” car, so as long as key features seem new, the rest won’t matter ©Mauro Forcolin 2009 Page 9
  10. 10. Key Technology - RFID • RFID tags on each component allow it to be tracked and it’s history viewed – Can be used to recombine parts of equal age/wear – Keep track of parts needed vs. available in all cars in fleet – Determine if certain environments abuse cars by the level of damage over time • Customers can see the various configurations their car has been in before they had it – A source to build communities & sense of continuity – For a premium, customers can request specific configurations • Integration with services using same technology ©Mauro Forcolin 2009 Page 10
  11. 11. Process Evolution 1. All components are 1. Most components new come from fleet • Manufacturing becomes interconnected ©Mauro Forcolin 2009 Page 11
  12. 12. Key Markets • Local, State & Federal Governments – Have a requirement to reduce carbon footprint yet still need large number of vehicles – No interest in maintaining fleets themselves • Environmentally-conscious consumers – Interested in the service quality & renewability rather than ownership • Rental & car-share schemes – Can focus providing service rather than fleet maintenance ©Mauro Forcolin 2009 Page 12
  13. 13. Business Model • Subscription payments which change depending on extras – customisation: pay to keep exact interior or request a particular car part (i.e. engine that belonged to a celebrity) • Leverage RFID technology imbedded in cars – Buy services in bulk to resell to customers • Parking, road tolls/reserved lanes, theft tracking, car insurance, etc. – Collect & sell customer habits for targeted advertising & services • Benefits & subsidies by reduced CO2 fleet & using “green” manufacturing methods – Reduce number of “new” replacement parts that have to be made ©Mauro Forcolin 2009 Page 13
  14. 14. Branding • A car that is constantly re-invented from it’s previous existences – Symbolic of cyclical renewal & sustainability • Yet each incarnation can be special – Driven by a particular person or was part of a specific event can add value/desire – Removable “car bling” you can take with you • More than just a car; rich services provide for all those hassles associated to car driving – Focus is NOT on making having a car pleasurable, but on forgetting one has a car at all ©Mauro Forcolin 2009 Page 14
  15. 15. The End Or the beginning… if these ideas are put into practice

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