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.

Published in: Business, Automotive
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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 – – 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