The New, New, New Chrysler: Half Time In A Dutch-based UK Tax Domicile

Go ahead... make my tax year.

Go ahead… make my tax year.

Immediately after the US government funded and brokered marriage of Fiat and Chrysler, the company’s advertising took an unmistakable turn towards themes of national identity and patriotism. From the over-saturated sincerity of Chrysler’s “Imported From Detroit” ads, Ram’s “So God Made A Farmer” sermon and Jeep’s  “The Things We Make Make Us” manifesto, to the dripping irony of Dodge’s “Freedom” spot, every brand in the new “Chrysler LLC” played up its American-ness in a different way. And when Fiat’s 500 was introduced to the US market it was marketed almost exclusively in ways that highlighted its Italian-ness, despite the fact that the car has never actually been built outside Poland and Mexico. Clearly Fiat-Chrysler’s Canadian-born CEO Fiat Marchionne and French-born marketing boss Olivier Francois believe quite strongly in the power of national identity as a marketing tool.

This was already a provocative choice, given that these US-based brands had come under the control of an Italian firm, at some cost to the US taxpayer. But with news breaking that the new Fiat Chrysler Automobiles (FCA henceforth) will be based in The Netherlands with a UK tax domicile and listed on the New York Stock Exchange, this patriotic marketing strategy becomes even more of a liability. FCA would love to have its cake and eat it too: benefit from national bailouts and nationalist marketing while enjoying every tax and banking advantage of new transnational corporate structures. The question is: can it?

The obvious response to this is yes, consumers don’t think about the corporate structure of the companies they buy cars from. I would tend to agree with this; as I argued several years ago, the things we buy, not the things we make, make us. But then, this is more of an argument against relying on nationalist and regional tropes in branding and advertising than a justification of transnational corporate structure. Doing both creates a real risk of completely unmooring marketing from corporate reality, unleashing a spiraling cynicism that can only be self-destructive. Taking this risk with brands recently rescued in a national bailout is even riskier, as any appeal to nationalism is likely to be associated with the national sacrifice undertaken on the brand or company’s behalf. Chrysler’s own history offers several examples of how sensitive Americans can be to cynical patriotism from bailed-out firms.

Moreover, a new dynamic in the auto industry does put renewed emphasis on some form of corporate identity. As any “car guy” industry journalist will tell you, decades of competitive benchmarking has had a profoundly homogenizing effect on mass market cars. Though MPG, interior space and safety ratings may vary between models and companies, true competitive advantage among mass market cars is rare. As a result, styling is becoming an ever-more important factor in being able to “move the needle” with consumers. This shift towards aesthetic rather than value-based competition will put increased pressure on companies to seek marketing advantages in their corporate identity. If all midsized sedans are more or less similar in practical terms, for example, consumers will gravitate towards the one made by the company they prefer to associate themselves with.

This trend is already well-represented in consumer goods like food and fashion, where locality and supply-chain transparency are rapidly becoming a minimum for building new brand identities. For the auto industry, with its global scale, byzantine supply chains and lingering nationalist associations, the dynamic represents a wholly new challenge. With fewer opportunities to win consumers over by simply outclassing the competition, automakers must transcend cynical surface-level brand-polishing and strive to add real depth to the image they present to the public. If a brand depends on association with a national identity, that connection must be authentically reflected in every aspect of its business, not just advertising. Corporate news, both good and bad, can dramatically drive consumer action, and should be increasingly considered as a factor in brand management.

This obviously creates challenges for a company with headquarters in Holland, tax domicile in the UK and a New York listing, and FCA radiates its utter lack of identity from one of the most bland corporate logos in memory. FCA seems to be an attempt to escape the balancing act between its Italian and American political relationships, but it does not make the firm’s fundamental political problems disappear. In both crucial markets, FCA must deal with consumers who are not entirely disinterested in the status of companies which were once considered national icons. Companies like Tata have avoided similar problems with their Jaguar and Land Rover brands so far, and Geely’s stewardship of Volvo hasn’t yet met with serious disaster yet, but neither faces the lurking backlash of a public discovering it has funded a national bailout of a transnational corporation. Glossing over that reality with more patriotic appeals seems like a step into dangerous waters, and I recommend Messrs. Marchionne and Francois look elsewhere for future marketing campaigns.