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Automotive News & Views Chrysler Allies With Fiat
412 messages, Last post on Nov 09, 2009 at 7:02 PM
You are in the Automotive News & Views Forum. Your Hosts are steve_ & claires
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This is an interesting and exciting development, but it will also be controversial, as two less-than-major players with less-than-stellar reputations must prove that, together, they can compete in this tough market. The following is from today's Detroit Free Press... "Fiat and Chrysler sign alliance plan ROME 1/20/2009 4:48:11 AM By ARIEL DAVID Fiat and Chrysler said Tuesday they have signed a nonbinding agreement for a strategic alliance that would give the Italian auto empire a 35-percent stake in the troubled U.S. carmaker. The two companies said in a joint statement they would share technologies and vehicle platforms. Under the proposed alliance, Fiat would not invest cash in Chrysler but would provide access to its successful small-car platforms, as well as to its more environmentally friendly and fuel-efficient engines. The statement said Fiat would take an 'initial' 35-percent stake, suggesting the deal may be broadened. It stressed that under the agreement the company is not committing to funding Chrysler in the future. For Chrysler, based in Auburn Hills, Michigan, the deal would mean breaking out of the North American market and gaining access to more competitive products. 'A Chrysler-Fiat partnership is a great fit as it creates the potential for a powerful, new global competitor, offering Chrysler a number of strategic benefits, including access to products that complement our current portfolio (and) a distribution network outside North America,' said Bob Nardelli, Chairman and CEO of Chrysler LLC. Fiat Group SpA, which makes Fiat, Lancia and Alfa Romeo vehicles, is trying to re-enter the United States market. The company has expressed interest in bringing its Fiat 500 compact car and the Alfa Romeo brand to the U.S. The alliance is subject to a review of company finances and regulatory approvals, including by the U.S. Treasury Department, which last week announced an emergency bridge loan for Chrysler, which analysts say will have difficulty surviving as an independent company. 'This initiative represents a key milestone in the rapidly changing landscape of the automotive sector,' said Fiat CEO Sergio Marchionne. 'The agreement will offer both companies opportunities to gain access to most relevant automotive markets with innovative and environmentally friendly product offering, a field in which Fiat is a recognized world leader, while benefiting from additional cost synergies,' he said. Chrysler, which is 80.1 percent owned by Cerberus Capital Management LLP, has been hurt by its reliance upon slow-selling trucks and sport utility vehicles and analysts have said it may not survive the year as an independent company despite receiving the $4 billion government loan. The Treasury Department said Friday it will provide a $1.5 billion loan to Chrysler's financing arm, Chrysler Financial, and the automaker plans to offer zero-percent financing on several models and expand lending to car buyers with less than ideal credit. Nardelli said the partnership would provide a return for taxpayers on the loan, 'securing long-term viability of Chrysler brands,' boosting consumer confidence and "preserving American jobs.' " |
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I think this is a very significant development for the auto industry, and that this alliance has a decent chance of succeeding. Most would agree that Chrysler could not turn around on its own. Fiat's CEO Sergio Marchionne has proven himself to be a very capable manager, as evidenced by Fiat's (still-in-progress) turnaround. I think this alliance will benefit American motorists by providing new fuel and space efficient, yet fun-to-drive choices. I also think this deal make more business sense than a GM-Chrysler merger.
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Replying to: hpmctorque (Jan 20, 2009 6:33 am) Here's some more links from Edmunds. It's Official: Chrysler gets hitched to Fiat Chrysler, Fiat Sign Global Strategic Alliance Deal There's no news yet as to possible management changes at the companies.
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Replying to: steve_ (Jan 20, 2009 8:13 am)
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Replying to: berri (Jan 20, 2009 9:12 am)
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about using Fiat's network in Europe to increase Chrysler's global sales, but I am raising my BS flag on that one. As for domestic Chrysler sales, Chrysler will get several smaller and more fuel-efficient models out of the deal. Will they be called Chryslers or will they be Fiats sold at Chrysler dealers? Or some new brand name? This will ultimately prove to be very similar to the Daimler deal for Chrysler, in only worsening its future prospects I'm sure. But I'm not totally against it if it provides Fiat with a means of getting back into the American market, at least with Alfa. |
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There's a market for certain Jeep models in Europe, especially when equipped with diesel engines. Fiat is recognized in Europe for having excellent diesel technology. This could benefit Chrysler. I could also envision a diesel version of the Chrysler 300 for the European and U.S. market. |
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The Chrysler-Fiat (or Fiat-Chrysler?) alliance isn't quite a done deal, since it's not binding yet. However, it makes strategic sense for both companies, Chrysler dealers, and American workers. There's little product overlap, Chrysler would get much needed new product, while Fiat would gain a ready made distribution network that would be grateful for the opportunity to remain alive. Additionally, Chrysler would get expanded distribution for its Jeep models, minivans, and rear wheel Drive cars in Europe. Further, as mentioned in my previous message, Fiat's diesel engines and technology could be very useful to Chrysler. A good strategic fit is hardly a guarantee that Chrysler will survive, or Fiat, for that matter. However, this deal offers a "YES, WE CAN!" type of hope just when Chrysler was given up for dead by many, and at a time when hope is scarce in the auto industry. Another consideration is that this alliance, if it comes to pass and works well, could eventually be expanded to include one or more other automakers. I'm sure Peugeot-Citroen, just to name one possibility, is taking note of this deal.
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This whole story would be better set in "news of the weird". There doesn't seem to be much of an upside for Chrysler except access to a small car platform. Does anyone remember the Strada? I hope Fiats have come a long way since then!
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Replying to: hpmctorque (Jan 21, 2009 2:17 am) |
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