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Market Insight: We bought a Jeep – and a Fiat

Grand plans: The Jeep Grand Cherokee outsold Toyota’s Prado in January as Fiat-Chrysler Group topped 3000 sales for the sixth consecutive month.

Fiat-Chrysler Group drives Jeep, Fiat and Alfa into the Australian auto big time

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Market Insight logo7 Feb 2014

FIAT-CHRYSLER Group has emerged as a top-10 player in the Australian automotive market in little more than 18 months, using its direct factory clout to propel Jeep into the SUV mainstream while re-launching struggling Italian brands Fiat and Alfa Romeo.

Sharper pricing, expanded model line-ups and canny marketing have all played a role in the sales growth of the company’s collective five nameplates – Alfa, Fiat, Chrysler, Jeep and Dodge.

The mix of Italian and American brands came together under one management structure in May 2012 when the newly married global Fiat-Chrysler group – a merger triggered by the global financial crisis when Chrysler went bust – bought back the Australian distribution rights for Fiat and Alfa Romeo from independent importer Ateco Automotive and bundled them in with the existing Chrysler business in Australia.

At the time, Fiat’s representation in Australia was down to just one passenger car model – the 500 bambino – and two commercial vehicles, the Ducato and Scudo. Alfa had just two vehicles – the MiTo and Giulietta – which were reduced to double figures in monthly sales towards the end of the Ateco reign.

At the same time, Chrysler was extracting itself from a previous tie with Daimler and an ill-fated dalliance with venture capital company Cerberus, with Chrysler Australia moving out from its quarters in Mercedes-Benz Australia’s Mulgrave head office in Melbourne to stand on its own two feet.

Prices cuts, fresh models and an injection of high-profile marketing re-energised the various brands. Last year, the Fiat-Chrysler group posted a 47.8 per cent jump in sales volume, from 22,820 in 2012 to 33,734 in 2013.

This placed the company ahead of Kia (29,778) and Mercedes-Benz (27,547), and apparently closing on others such as Honda (39,258) and Subaru (40,200).

Last month, the group’s combined sales tally was 3113 vehicles, surpassing the January totals of Honda (2471) and Subaru (3051), and clocking up its sixth successive month of 3000-plus sales.

What’s more, its top-selling Jeep Grand Cherokee outsold Toyota’s dominant Prado to top the January large SUV segment, 1359 to 1024.

So far, Jeep has led the charge for the group, thanks at least in part to the memorable “I bought a Jeep” advertising campaign. It now sells more SUVs than Ford, and is not too far behind Holden.

Jeep accounts for two thirds of Fiat-Chrysler Group sales in Australia, with the flagship Grand Cherokee – a product developed alongside the Mercedes-Benz M-Class under the now-defunct alliance with Daimler – accounts for about two-thirds of Jeep sales.

Jeep sales have exceeded 2000 units every month since August last year, peaking at a record 2211 units in December. Not since 30,000 American Army GIs rolled off troop ships into Australia in World War 2 has Jeep had such an impact on local motoring.

Chrysler has had less of an impact, having been reduced to just two models in the local market – the 300 large sedan and aging Voyager people-mover.

The company relaunched the 300 in July 2012 with a refreshed range and price cuts of up to $10,000, helping Chrysler sales to a monthly peak of 361 units in September last year.

The Voyage is all but invisible, achieving just single-figure sales lately.

Chrysler’s sister brand Dodge – a one-car brand with its Journey – is also just bumping along, with sales dropping from more than 200 a month to about 140-180.

Fiat-Chrysler has better news out of its Fiat division, with sales soaring from zero in May 2012 to 852 in December.

Under Ateco, Fiat’s best month in the past decade was 279 units in May 2009.

The Fiat 500 remains the mainstay of the brand, with cheap prices starting at just $14,000 (plus on-road costs), but the new Fiat Freemont – a rebadged Dodge Journey – has added handy volume since its introduction last year.

Alfa Romeo is also rediscovering its mojo, achieving a peak of 371 sales in August last year and now settling around 250 units a month – similar to it sales rate in the early 2000s.

However, prices have been slashed relatively to those days, with the cheapest Giulietta now available at $24,55 (plus on-road costs), compared with $36,990 in March 2012.

The entry price of the MiTo also has been reduced from $29,990 to $25,200.

Alfa is looking forward to adding the slick 4C sports coupe to its range this year, billing it as a compact supercar.

Last year, Alfa sales jumped 161 per cent from its low of 906 units in 2012, while Fiat sales soared six fold, from a mere 513 units in 2012 to 3854 in 2013.

The Alfa and Fiat figures had been dragged down by the disruption caused by the distribution changeover in mid 2012, but both Italian brands are still selling at least double the rate of 2011.

After the January sales results came out, Fiat-Chrysler Group Australia president and CEO Veronica Johns praised the company’s dealers for the bright start to the year.

“Our challenge this year is to improve on the very impressive results of 2013, but already the signs are very positive,” she said.

“We are pleased to see in particular very promising growth across all our brands so early in the year, which comes from the great work of our dealers across the country.”

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