Fiat Group Automobiles Japan
If ever a working example of the term “globalisation” were needed, it could be found at Fiat Group Automobiles Japan, where a Swedish-born CEO runs the Japanese operations of an Italian automobile company that recently took control of a major US carmaker.
Fiat Group Automobiles Japan has had “a consistent solid presence in Japan for 20-plus years,” says president and CEO Pontus Häggström, who is responsible for the Alfa Romeo, Abarth and Fiat brands in Japan. Among these, it is the Fiat 500, launched in 2008 and affectionately referred to as the Cinquecento, that has emerged as the game-changer.
“The Fiat 500 changed the brand perception for Fiat,” Häggström says. “Some companies will build a brand, and fill the brand with product, but we had a product that enabled us to revitalise the brand and make the brand more relevant.”
There are parallels between the Fiat 500 and the IKEA business model, in that the popular car is made to be accessible and affordable in much the same way as IKEA furniture, Häggström says.
Japanese consumers have purchased over 10,000 to date, and Häggström says that car lovers relate to “the organic shape, and cute interior”.
Last March, Fiat introduced a Fiat 500 with a new two-cylinder engine called TwinAir, described by the Fiat Japan CEO as “a revolutionary engine, based on revolutionary technology”. The TwinAir reduces exhaust emissions and gives the Fiat 500 a fuel economy of 21.5km/l, the lowest for any four-seat foreign car in Japan. Moreover, the TwinAir Fiat 500 has been designed to maintain very strong torque, so that drivers get a powerful response when they hit the accelerator.
“Torque is really a measure of how ‘fun’ the car is to drive,” Häggström says. “With the TwinAir Fiat 500, the driver can have even more fun, while emitting less from the tailpipe and consuming less fuel.” On the market for less than a year, the new car already accounts for more than half of all Fiat 500 sales in Japan.
“We thought it would take us a couple of years to build up awareness for this engine,” Häggström says. “But we achieved our goal in nine months, so it clearly works and is appreciated by the consumer.”
Globally, Fiat Group has seen a major turnaround thanks to the leadership of CEO Sergio Marchionne. In June 2009, Marchionne refloated Chrysler, and Fiat now holds a controlling 58.5% stake in one of the Big-3 US carmakers. Management is being integrated, and in 2011 Fiat and Chrysler combined to rank seventh among car producers worldwide with sales of more than 4m units. Marchionne is aiming for 6m cars over the short term.
In Japan, some back-office functions have been integrated, and a start has been made on simplifying supplier sourcing. Synergies will be found “where it makes sense,” Häggström says, but the companies are likely to maintain separate distribution systems to avoid confusing customers.
Fiat Japan also has extremely high hopes for the new Alfa Romeo Guilietta, a medium-sized family/sports car scheduled for launch on 4 February. The Guilietta name, used on a number of cars since the 1950s, is back on a completely new package, “with a very sporty yet environment-friendly engine,” according to Häggström. “I’m sure we have a winner on our hands,” he says.
The Fiat Japan head is keen to keep deepening his ties with Japan. A fascination began as a child when his father returned from business trips to Japan with fantastic stories, giant grapes and traditional toys. Curiosity prompted young Häggström to visit Japan in 1989.
“When I came here, the excitement about Japan that I’d built up from these stories was validated, and I kept becoming more and more interested,” he says. “I came here intending to stay for three months, and now I am still here 23 years later, spending more than 50% of my time in Japan.”
While wishing he had spent more of his earlier days studying Japanese, Häggström feels it is more important for newcomers to develop the correct mindset.
“You can get annoyed by the differences in Japan or you can appreciate the differences,” he says. “You just need to have the right mindset, and see the differences not as problems, but as opportunities.”
Keeping a sense of curiosity alive is critical, he notes, adding: “The day you stop being fascinated or curious is the time to go back home.”