• Mar 6, 2009
General Motors and Chrysler have been in meetings with the U.S. Treasury this week to discuss how and when the Detroit automakers can again become viable. Both companies are asking for additional billions to fund their perspective turnarounds, but Chrysler is also defending a proposed partnership with Fiat. Fiat's pending 35% ownership stake would provide Chrysler with small and mid-size cars and more fuel efficient powertrains, but no cash.
Some in Congress have questioned whether or not to give money to a company that would have such a large foreign ownership stake. Fiat CEO Sergio Marchionne gave the government task force a great reason to welcome the Italian automaker's stake: Fiat can help Chrysler repay loans. Does that mean Fiat will use its own cash on hand to help Chrysler keep the lights on? We don't know, but a Fiat partnership could give Chrysler far more than a sugar daddy in the Mediterranean. Giving Chrysler small and medium platforms that the company doesn't already have and likely can't afford to develop on its own will save billions of dollars in development costs, which will ultimately help Chrysler become more competitive on the cheap. Without high quality, fuel-efficient vehicles, Chrysler doesn't have much of a chance of ever repaying the U.S. government.

[Source: Detroit Free Press]


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  • 29 Comments
      • 5 Years Ago
      This seems like a win-win to me. I can recall the fluxuating ownership percentages that used to exist between Chrysler and Mitsubishi, so I don't see that part as that much different. Besides if it means taking away stake from an investment firm that still has questionable motives, how bad of an idea is it to have the company staked by an actual car company (and one that seems to be gaining market share at that).

      The fact that Fiat has almost no presence in this country and many Americans are aware of them says they are doing something right. They may not be putting up cash, but there is skin in the game. I would think they are doing this to help get a foothold in this country. Fiat would have instant access to a dealership and service network that was shrinking. Perhaps many Chrysler dealerships could switch brands rather than closing their doors (thus saving or even creating jobs).

      The debate at large seems to be whether or not to be giving money to companies that have been so poorly managed and the way that they have been expected to atone for there sins is by cost savings. That usually means huge layoffs. Of course the whole idea was to keep Americans employed. This at least is a "future based" business case that could slow the blood-letting and give Chrysler some needed products and allow them to expand their market share. Chrysler isn't failing because of what happens when they are on the brink of bankruptcy, they seem to fail because of what they do when they are riding high.

      I am for anything that gets the Mito one step closer to this country.
      • 5 Years Ago
      It wasn't that long ago that GM paid Fiat off rather than buy the company...
        • 5 Years Ago
        Fiat have been back in the black now for almost five years.
        • 5 Years Ago
        In retrospect, not one of GM's better decisions.
      • 5 Years Ago
      The 500 is not the point here. This is a very niche car. The Grande Punto (not the same platform as the 500 by the way) and the Bravo are both larger platforms more attuned to requirements of the American market, and both these platforms already have stretched versions for larger models (Linea and Lancia Delta) which are still small by US standards.

      Any deal would need to give Fiat sufficient sales outlets, and possibly a large platform. Another point is that Fiat will soon introduce new technology which will give it some of the most economical engines and auto-gearboxes in the world. This technology will be used across all engines. Fiat is also working on a modular V6, so Chrysler's may not be so important to them.

      Fiat is doing relatively well, and will do better next year as it rolls out new technology, but the company will not want to take on any huge debt as a route into America. It could after all just buy the Saturn dealerships when the company goes bust and re-badge them Fiat/ Alfa Romeo. This would be a cheapish option.

      And although Fiat isn't doing too badly, the market is still terrible, and nobody will want to waste any money unnecessarily.
      • 5 Years Ago
      This could really be highly beneficial to chrysler (and i'm not even talking about helping them financially)

      I hope they share more that just complete vehicles. Like the article stated, they could save up to billions of dollars in platform sharing

      "Giving Chrysler small and medium platforms that the company doesn't already have and likely can't afford to develop on its own will save billions of dollars in development costs, which will ultimately help Chrysler become more competitive on the cheap. " - autoblog.com

      The fiat punto platform is a great platform. Used for the fiat punto (duh), fiat 500 and the mito. I also hope they share some engines. A 1.4L with 155 bhp could be a great thing for chrysler. And then there is the alfa GTA engine: 1.7L (106ci) with 240 bhp... This could put chrysler right on top with high performance, low emission, low consumption engines.

      And it wouldn't have to be 'cheap' as in 'cheap looking' or 'low market' budget cars. In fact, the MiTo is one of the less expensive hatchbacks in Europe, but is very well finished with great interior, good sound proofing, leather seats, etc...

      You should step away from the notion that appearantly 'small' always equals 'cheap' in some way. Very strange prejudices. (maybe because small detroit cars have a habit of being even cheaper looking than the fullsize sedans, but that's no general rule!!)

      • 5 Years Ago
      Fiats cars Chrysler would get could be a great way to bring Plymouth back.

      Since Plymouth has been gone for a while I think Fiat would fit a brand without identity to save development cost verses tooling the Fiat to fit the Dodge image.

      Undoing Diamler would be one of the best things Chrysler can do.

      I miss the Chrysler of 1998.

      Diamler did to Chrysler what George W. did to America.

      Obama undoing Bush will be good for America too.
      • 5 Years Ago
      to think that GM PAID BILLIONS to get rid of Fiat. And Moody's, the same guys that had Lehman Brothers at AAA the day before the crash, currently value Fiat stock as "junk".

      Do many american companies have this keen sense of businness?
      • 5 Years Ago
      If you do the slightest bit of digging on this story, you'll find out that despite the PR spin which is blatently designed to make people think that things are just peachy at Chrysler, in fact the Chrysler-Fiat deal is far from a done deal. They haven't even finished reviewing each other's books yet - something that was supposed to be completed by February 17, Chrysler's homework due date - and Fiat isn't exactly in top financial shape either. European analysts aren't particularly enthused about the perception that Fiat's CEO is taking his eye off Fiat's recovery in order to dabble with Chrysler. That's not a good perception to give when Fiat is fishing for a 5 billion euro line of credit after announcing losses for last year that were triple what was expected.
      • 5 Years Ago
      That's statement is awfully short on details in light of the Fiat CEO's statement characterizing their Chrysler venture as a "lottery ticket". Considering how shallow Fiat's investment is - $0 plus an instruction manual on how to build a Fiat 500 in exchange for 35% of Chrysler - there's nothing to inspire confidence that Fiat is in this for the long haul. Especially with Saturn floating around, begging to become some niche-y foreign brand's dealer network.
        • 5 Years Ago
        The 300 isn't better than the Quattrope, but it sure is cheaper to use for an future Alfa. The Quattrope platform and its V8 will be WAY too expensive to use to make a 5 series competitor, no?
        • 5 Years Ago
        The curious thing about that argument is that Nissan was offered the same deal as Fiat and didn't take it. Carlos Ghosn isn't stupid, and the fact he wouldn't take Chrysler for free speaks volumes.

        As for what Chrysler has to offer - Trucks? SUVs? Minivans? The next time gas goes up to $5 or more a gallon - and it *absolutely* will - those three markets will tank. For that matter, they're tanking now. Fiat/Alfa has 3.0+ litre V6s, so I'm not sure why Fiat has to have a Phoenix 4.0 V6. Fiat has a dual-clutch transmission, so Chrysler doesn't bring any transmission technology. As for large car platforms, Fiat owns Maserati, so it's incomprehensible to me that the Chrysler 300 is a better large car platform than a Quattroporte.
        • 5 Years Ago
        I think Chrylser offers FIAT much the same it offered Nissan. Truck, minivan, SUV, large car platforms and an advance V6 nearing production. Plus a dealer network that is much larger than Saturn. All FIAT has to do is share platforms with Chrysler. If FIAT wanted Saturn they would have to buy them and finance them. I don't think they are ready to take that risk. And they would get 400-500 dealer ships instead of a potential 3000.
      • 5 Years Ago
      I'm just afraid that Chrysler would take the Fiat 500, which would sell like hotcakes for a while, and then let it whither on the vine for way too long like they did with the PT Cruiser.
        • 5 Years Ago
        You can thank Daimler for that, though. They did that with damn near everything Chrysler had.
        • 5 Years Ago
        That wouldn't be up to Chrysler though. Fiat would still be developing it, while Chrysler did the selling and maybe the production (assuming Fiat gets access to Chrysler's US plant capacity).
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