“[The Fiat 500] has real heritage and history, which Japanese customers really appreciate”

Smooth ride

Fiat Chrysler Automobiles’ unmatched success in the Japanese market

Text by Gavin Blair  /  Photos by Kageaki Smith

Despite the shrinking domestic automobile market in Japan — which is widely-perceived as having considerable import barriers for foreign cars, and particularly US vehicles — Fiat Chrysler Automobiles (FCA) has been posting remarkable growth for its portfolio of marques.

The group, formed through a merger of Fiat and Chrysler that was initiated in 2009 and was completed in 2015, represents three Italian brands — Alfa Romeo, Fiat, and Abarth — and two US brands — Chrysler and Jeep.

Similar mergers, which have brought most of the world’s carmakers into giant global groups, have not always been plain sailing. But FCA’s journey has been a relatively smooth one, according to Pontus Häggström, President and CEO of its Japan operations.

“Both Fiat and Chrysler have struggled at times, but since the merger, both parties have grown stronger and stronger as a result of it,” says Häggström. “On the product side, we’ve been able to speed up engineering and development: Fiat was good at diesel technology, which Chrysler didn’t have, being an American company, while Chrysler had off-road, four-wheel drive expertise from Jeep.”

The keys to success in such situations, according to Häggström, are humility to recognise the respective strengths of each side, as well as respecting the differences in corporate culture.

“I came up through Fiat, a very euro-centric company with European values and approaches, and had to work with colleagues with American values. Neither is right or wrong — they’re just different,” notes Häggström, who has spent most of his career in the automotive sector in Japan and other parts of Asia.

“We went through a journey locally as well,” he adds. “Part of being successful is throwing the cultures together, forcing people to work together. I purposely made everybody cross-functional across the brands, so there was no opportunity to just carry on a legacy culture.”

While back-office operations have been synergised, FCA utilises distinct marketing and sales channels for each of its five brands.

“I liken it to having five kids: you love them all, but they all need individual, special treatment,” says Häggström.

The approach appears to be working, with brands from both the Italian and American sides posting record sales in Japan since the merger.

The arrival of the compact Fiat 500 in Japan in 2008 revitalised the brand in the local market. The model, an homage to the original 500 launched in 1957 in Italy as cheap transportation for the masses, has carved out a solid niche in Japan.

“It has real heritage and history, which Japanese customers really appreciate,” Häggström explains. “Secondly, the sizing of the car fits Japan perfectly, with its narrow roads. It’s also affordable; you can have one for less than ¥2 million. Most people don’t know you can have an imported vehicle for that price.”

2016 is the ninth year the 500 has been on sale in Japan and it is on course to sell a record 4,000 units, making it one of the best-selling import models in the country.

“Most cars have a product lifetime and peak in the first or second full year of sales,” says Häggström. “Next year will be the 10th year and I’m pretty sure even now we’ll break the record again, which is completely unheard of in the industry.”

FCA’s US and Italian brands will each reach 20,000 units sold in Japan this year, up from 17,000 in 2015, and the first year the group will hit this mark.

Abarth is a storied racing brand, revived by Fiat in 2007 after having been mothballed for decades. Reintroduced to Japan in 2009, it sold 500 cars from just four dealerships. FCA has slowly built the brand in Japan, though it has never advertised in mainstream media, and that number has grown to 2,500 units this year, from almost 80 dealerships.

Along with dealerships rebranding in Japan as Fiat/Abarth, the sporty Abarth marque is set to be further boosted with the launch of its Abarth 124 spider. The spider is inspired by the original Abarth 124 spider, but was developed together with Mazda — based on its Mazda Roadster — and built at Mazda’s facilities in Hiroshima.

“It has a completely new powertrain and a unique design, but it shares some underpinning with the Roadster,” explains Häggström. “The Mazda Roadster won both the Japan and World Car of the Year award for 2015–2016, so I like to say we’ve taken the world’s best car and made it better.”

Meanwhile, Alfa Romeo has the longest history and strongest following of the FCA brands in Japan, according to Häggström. When the 8C — a 1,000-unit limited edition Ferrari-derivative that costs ¥25 million — was launched, Japan took about 30% of the models produced, making it by far the 8C’s biggest market globally.

Alfa Romeo will undergo an expansion and rejuvenation next year with the establishment of a dedicated dealer network and the introduction of more models, including the new Giulia, with SUVs and smaller cars to come.

“In the past, we may have been too focused on the flamboyancy and design, but now we’ll do that while also making sure the cars are loaded with the connectivity and safety features that people have come to expect, especially in the premium segment,” says Häggström.

FCA’s other big success story in Japan is Jeep.

“There is a perception that US brands don’t take this market seriously,” Häggström observes.

But FCA engineers all of its Jeep vehicles specifically for the Japanese market, and it doesn’t offer left-hand drive Jeeps here. The cars even come equipped with Japanese navigation systems.

“People also have the impression that US vehicles are gas-guzzlers, but that’s not true anymore,” he adds. “Most of our powertrains are four or six cylinders with idling-stop technology and we get very good fuel economy.”

The message has apparently been getting through.

“In 2009, when I started working with the brand, Jeep was selling 1,000 units; this year we’ll sell 10,000, a ten-fold increase in seven years,” says Häggström. “There is nothing that even comes close to that in the Japanese market place.” 

since the merger, both parties have grown stronger and stronger