The new Fiat 124 Spider is the embodiment, in miniature, of a research and development cost-sharing model favored by Fiat Chrysler Automobiles (FCAU) CEO Sergio Marchionne.
FCA developed the body and styling for the new two-seat convertible sports car and combined it with the mechanical architecture of the fourth-generation Miata, developed by Japan's Mazda (MZDAY) . FCA's newest model adds another Fiat to a franchise that has been fighting for a place in the crowded U.S. automobile market.
The 124 Spider soon will arrive at the 200 or so Fiat dealers in the U.S. A cute, fun-to-drive roadster with a starting price at about $25,000, it is destined to sell in relatively modest numbers, while underscoring the entire brand's Italian persona. Spider's 1.4-liter engine is built by Fiat in Italy and shipped to Hiroshima, Japan, where Mazda builds the car in the same factory as Miata.
Olivier Francois, global head of FCA's Fiat brand, called the new model "an iconic roadster that combines classic Italian styling with modern performance and technology." Through May, sales of Fiat-branded vehicles in the U.S. totaled 15,191, down 18.6% from the same period a year ago, giving the division a bare 0.2% of the market. The 500X has sold well for Fiat; the 500L and 500 have sold poorly.
Under Marchionne, FCA is pushing hard to increase vehicle sales for all its brands, especially in the U.S., with the goal of increasing profit, reducing debt and gaining global scale. Jeep has been a big hit, Fiat far less so. May represented the 74th straight month of higher year-over-year monthly FCA unit sales in the U.S.
Marchionne continues to advocate for shared projects among automakers that will improve returns on investment and even suggested a possible FCA merger with General Motors or other automakers.
"Marchionne is trying to keep up with larger, better-funded competitors, putting FCA at a considerable disadvantage in a market that is moving faster than ever. He knows this, and he's doing everything he can to maintain, and even grow, market share by leveraging the U.S. market's insatiable hunger for SUVs and trucks," said Karl Brauer, an analyst with Kbb.com. "The Fiat 124 will be a blip on FCA's sales radar, so the car isn't about improving the balance sheet. But in the spirit of building partnerships, something Marchionne sees as his only path to long-term competitiveness, the 124 represents his philosophy in action."
In early May, FCA and Alphabet's (GOOGL) Google unit agreed to collaborate on a project to manufacture 100 self-driving Chrysler Pacifica minivans for test purposes. Marchionne has said the pact could be the first step of many between the two companies.
The original Fiat 124 Spider, sold from 1966 to 1980, was created in its entirety by the Italian automaker, which merged with a bankrupt Chrysler in 2009 under supervision of the U.S. Treasury. The first generation Miata, inspired by the classic British sports cars built by Triumph, MG and Jaguar, debuted in 1989 and evolved into a signature vehicle for Mazda.
Last April, in a manifesto titled "Confessions of a Capital Junkie," Marchionne explained why full-scale consolidation of companies made sense, given what he argued were automakers' consistently poor record of returns on capital investment, compared to other industries. But he conceded that small-scale collaborative projects only helped a little, that bigger and more pervasive combinations were needed.
The Mazda-FCA project to create a niche model like the Spider 124 from the bones of Miata is a relatively small venture, one that won't move the needle much for either company. If, by contrast, an automaker like GM were willing to discuss collaborating with Marchionne and FCA on a core vehicle architecture like the one that underpins GM's new Chevrolet Cruze compact, the results might advance the CEO's gameplan.