The new Fiat / Mazda alliance, what will be their challenges?

Last month Fiat and Mazda announced to have formed an alliance to codevelop the next Mazda MX5 aka Miata. This same model will be the base for Alfa Romeo’s (a Fiat brand) next roadster. Looking into the announcements the value proposition is not completely clear. As the codevelopment is focussed on a specific car model one might expect the value proposition to be announced in terms of what each of the partners specifically will bring to the alliance that will benefit the result of the alliance and hence would express the customers benefits too. Interesting enough the publications dive into why each partner needs the other from a company perspective rather than a value proposition perspective.

The Fiat group needs to have a volume of 6 million cars a year in order to be a real player in the automobile industry. Asia currently appears to be their weakest geography. Since Ford sold its stake in the company Mazda is in need of a strong financial player in order to grow and survive. The alliance with Fiat will bring Mazda the possibility to lower development cost and production investment while maintaining employment.

From this perspective it seems to make sense for these two companies to team up, they could each be bringing what the other needs. That is from a corporate perspective, from a specific value proposition perspective it is yet unclear from the announcements what each will bring to the table that will benefit the customer.

If the two partners have not worked out the value proposition in the development phase of the partnership it will be something they better do at first or unclarity will lead to challenges during execution.

Another element of importance to manage for in the alliance is culture. It may be obvious that the Japanese and Italian cultures are different and most likely the company cultures will be different too. An earlier example of an alliance between Toyota and General Motors in NUMMI showed that cultures can prohibit access to real values and learnings from an alliance. An essential element that will require constant attention and management in the Fiat – Mazda alliance.

These are just two of the possible challenges Fiat and Mazda may face, are there other challenges or benefits you see?