Paul Barker grabs a cuppa and a chat with one of fleet’s most influential figures – Arnaud Leclerc, Chief Executive, FCA Group.
Arnaud Leclerc left Groupe PSA at the start of 2018 to lead FCA’s UK operation, which means heading up the Abarth, Alfa Romeo, Fiat, Fiat Professional and Jeep brands. He talks through his plans and how he expects the group to grow in 2020.
QNext year, you make the first moves into electrification. How important is that for FCA?
We have not been first, we will admit that, but the market is only 6-7%, so there is still 93% of the market that are not driving a hybrid or an EV. That is an important point. Saying that, we do need to enter the sector and it is a strategy point for next year. We have several launches; we will start with the 500 and Panda [mild] hybrid, with the Battery Starter Generator, then there will be the Jeep Renegade PHEV, planned for the beginning of Q3. And we have more by the end of the year with the Ducato BEV, the full electric van.
On the Fiat side, as well as the 500 and Panda [mild] hybrid, there will also be the full electric 500. There will be a big announcement at the Geneva motor show in March. So on Jeep, Fiat and Fiat Professional, we are going enter massively into this strategy.
FCA BOSS LAYS BARE GROWTH PLANS
FCA’s UK boss Arnaud Leclerc is targeting moving from a 2% market share to 3%, with a wealth of new product helping propel the various brands within the group.
“In terms of product, on the Fiat 500 we have two bits of news between the 500 [mild hybrid] and the battery electric vehicle later on. On the 500X we are continuing to take growth, particularly on the new Sport version, and we have the Panda also coming with the hybrid version,” he tells Company Car Today. “We have the Tipo facelift in late 2020, we have the Alfa model year 2020 on the Giulia and the Stelvio which are big improvements in terms of what the customers wanted us to change in the car.
“Then on Jeep, we have had 40% growth on Compass, on the Renegade we have decreased slightly but we will come back with the support of the PHEV, which we will launch next summer,” Leclerc continues “Even on van, the major launch will be the Ducato BEV but we also have some smaller news, such as the Ducato nine-speed auto.
“All this will help prepare for the new products coming in totally new segments, such as the B-SUV for Jeep and later on the B-SUV and C-SUV for Alfa Romeo.”
QAnd how important will these vehicles be in cutting CO2 and hitting targets?
Even the 500 hybrid has a benefit in terms of consumption of around 20%, although that is still to be confirmed. So there is definitely a first big benefit, and we are going to carry on by changing the rest of the 500 range, followed by the Panda.
And then we are going to prepare the launch of the new Fiat 500 BEV, which, as you can imagine, will be a massive event for us. Which is great, it’s exciting. Next year in terms of products and how we build our strategy there is definitely exciting movement for all the brands in FCA.
QHow important is the company car sector to FCA and how does that shift between the brands?
With this new product that we have, such as the Jeep Renegade PHEV, we can really offer new things for the company car driver, which gives them a huge benefit in terms of cost of ownership. Are we taking our share today? I’m not sure. Will we have the products in the future to do so? Yes, I definitely think so.
What we need to be careful of is that we must look towards long-term fleet success, and so shouldn’t focus too much on short-term wins. The fact that we are 50:50 fleet:retail is definitely something that we need to maintain for sure. It’s probably because some of our cars today, such as the Fiat 500, have been really focused on retail. The 500X, for instance, is performing very well but is too focused on retail, with 70-75% of the volume still going to the retail side of the business.
We are lucky, and it’s part of our overall strengths in FCA, that we have the ability to propose one of the widest ranges on the market, from the A-segment car to the 710hp Grand Cherokee Trailhawk, including vans. We have this fantastic possibility, so let’s make sure each of the products are taking their share, both in retail and where some of them definitely have the opportunity to increase in fleet.
QWhat other examples are there of vehicles not currently at the level in fleet you feel they should be?
There is probably more opportunity with Tipo; today we are less than 20% fleet of our overall volume. The reason behind it is also our current position in terms of residual value, which is to do with how we have set about our channel mix in the past with Tipo. So we have stopped accepting lower-margin business. We need to move forward, the stronger opportunity will come when the Tipo is facelifted by the end of next year.
QAnd that will effectively relaunch that car into the corporate market?
Exactly. What we are doing with Tipo is the right thing to do. We have this corporate partnership with BT where we have some Tipo volume, so we are satisfying customers on that side. We have also cut the short-term channel on Tipo to underpin the residual value.
QWhat have you done to try and improve the residual value position across your brands?
When we looked at the product plan coming and incorporated what we wanted to do in terms of residual values, we decided to take strong action at the beginning of 2018 about the RV improvement we needed, especially as we are a challenger in the market. So in 2018 we strongly reduced our volume of short-term channel. Down from around 15,000 units in 2017 to less than 4000 units in 2018, and we are going to finish this year at around 2200 maximum units into short-term rental.
QSo if you’ve dropped the best part of 13,000 units of rental volume, where have you made that up to be maintaining market share?
It’s mainly retail and it’s mainly fleet-by-dealer. We have seen some growth where we expected the growth, some of the products have slightly decreased in terms of volume and definitely we also need some evolution on product for next year. For instance, we have relaunched the 500X, which is a success story that we need to continue. We have increased our 500X volume by 40%, but I still think we have opportunities. The SUV segment is still growing, as well as becoming more and more competitive, so with 40% we can still build on this, and we have a new version coming out on 500X, the 500X Sport, which gives us an opportunity to continue to grow.
QWhat do you expect from the market next year, given that it is not the easiest thing to predict at present?
At the moment we expect a slight decrease, around 7%, which is more linked to what is happening the past few months. But what will happen if there is some sort of hard Brexit, it’s still too early to speak about this. Who knows with customs etc. Is it going to pollute the long-term volume? I’m not sure. Is it going to pollute the short-term industry? Yes, probably. And there is also some assumption from the SMMT and from others of 20-25% disruption in the case of a hard Brexit; yes it could happen. But for the moment we are expecting a slight decrease, which will still be around 2.3m passenger cars and 300,000 on vans.
QHow important are the forthcoming revisions to the Giulia and Stelvio from a company car perspective? Where are you making improvements?
There is quite an improvement. Not in terms of external design because this was definitely not something that concerned buyers. What we have tried to address is to take the remarks we have had from consumers in terms of look and feel of the interior, in terms of the infotainment compared to the market and the competition. That’s where we have focused our energy and the modifications. So the two main things are the change of the design of the interior, especially the central control, and parts of the dashboard, including the infotainment. Which is a big step and a big improvement over what we had before.
QThe news of a potential merger with PSA Groupe broke recently. As someone with a lengthy period working for that company, what did you think?
PSA and FCA have announced that they are working on a proposition of a 50:50 merger, which obviously I think is great, it’s positive. I spent 17 years in PSA so I know both companies. There are strategy discussions so let’s see what the outcome will be; it’s still not confirmed. Knowing both sides I would say I definitely think the company has huge potential by working together. It would help in facing the challenge that we all have in front of us in terms of electrification, autonomous vehicles, new technology, infotainment and so on. And then the changes with the evolution of the market, tax systems, difficult things that mean having this proposition of a merger is really good.
In our own mystery shopping into the reason people are not buying Alfa, we have to admit there is probably this idea sometimes that the quality and the reliability is not at the level of the Germans. The fact is that’s not the truth, but for sure we have to act to address this and show to potential customers that Alfa Romeo products are in line with or better than the market.