Chrysler values Fiat partnership at $10 billion
In an email to employees, Chrysler Corp. CEO Bob Nardelli has valued his company's potential partnership with Fiat at around $10 billion. That number is comprised of things like the cost of developing new vehicles that Chrysler would incur on its own, but should pocket in a tie-up with Fiat, which would provide the Auburn Hills-based automaker with ready made small cars to sell. Selling Chrysler-badged Fiats in the U.S. would not only save Chrysler money, it would also save years of development time and countless sales lost from not having a suitable small car to sell. Fiat would also likely utilize a portion of Chrysler's production capacity in North America to build its own cars for sale here, which would save a number of Pentastar employees' jobs and maybe even create some more. Nardelli told his employees that the value of partnering with Fiat is greater than the total amount of money that Chrysler has requested (so far) from the government, which stands at around $9 billion. Both, however, are related, as partnering with Fiat, which would involve the Italian company taking up to a 35% stake in Chrysler and getting access to production capacity and distribution networks in the U.S. in return for supplying vehicles and engines, requires the approval of the President's Auto Task Force. Fiat chief Sergio Marchionnne has already met with the Task Force, as has Chrysler, which has a lot of work to do getting concessions from the UAW and its bondholders before a March 31st deadline. Otherwise, the government may decide not to grant Chrysler its current request of $5 billion in loans, which could scare Fiat away. Chrysler claims it can survive even if the partnership with Fiat falls through, but for the automaker's sake, we hope it doesn't.
[Source: Washington Post | Photo by Brendan Hoffman/Getty]
Reader Comments (Page 1 of 2)
jc 11:55AM (3/17/2009)
Warning to FIAT;
Any kind of agreement You make with Chrysler should include an agreement with the powerful UAW that they will not try to export labor practices benefits and perks that FIAT's european socialist employees get.
I strongly suspect that's one reason why Daimler-B cut loose(The bloodsucking UAW saw deep pockets).
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Luis 11:59AM (3/17/2009)
The US Govt should provide healthcare benefits to all citizens first, and remove the healthcare burden from the shoulders of companies in the US. Healthcare is NOT part of the core business when making a car, yet GM, Ford, Chrysler must devote a lot of energy and focus on providing healthcare.
Luis 12:01PM (3/17/2009)
and...Chrysler's not in trouble because of the UAW. They're in trouble because they make $hitty products that no one really wants. That's not the UAW's fault, that's management's fault.
Aprime 12:11PM (3/17/2009)
Oh shut up.
I'm so tired of Government-everything.
You're basically asking for a healthcare[-related] bailout. WTF is up with America?
Socialized-anything FAILS.
It doesn't fail in Europe because governments are simply digging themselves into a gigadebt. It doesn't work in Canada because of the unevitable inefficiencies of a state monopoly. If they do something wrong they can either dig a never-ending debt hole or ask for more money from the taxpayer. It's been over a freaking decade that our healthcare system has been defficient yet they keep saying that 'if my party gets elected we'll take care of it! Yeah!' Newsflash: your system's flawed, the doctors you train at low costs go to the US because the wages you offer are uncompetitive, and it's not by dumping a money on the hyper-bureaucratized administrations that you're going to fix the problem.
It's the Detroit 3's problem if they gave healthcare and a bunch of advantages to their employees. They're responsible for their own uncompetitivity, and you're telling me government, using your money should be relieving companies of their mistakes and corrupt the private-publichealthcare hybrid even further? Business failure is part of the wheel, accept it.
Aprime 12:13PM (3/17/2009)
And Luis is right. Even with the healthcare/union burden, Ford, GM and Chrysler could all turn a profit not too long ago and I'm not even talking about the 90's here. The fault is on mismanagement.
Swede 12:50PM (3/17/2009)
Last I checked, the US healthcare system was the most expensive in the world (by miles), yet only the 37th best when it came to overall performance. Going by overall health, it was 72nd on the list.
And, last time I checked, the US was the country most in debt to other countries. It's particulary amusing I think, that the PRC (or Communist Dictatorship of China depening on your viewpoint) basically funds the US healthcare sector.
Frank 1:00PM (3/17/2009)
Any socialized healthcare installed in the US will NOT be as good as what the UAW enjoys now. They have "Cadillac" insurance. We will get "Kia" insurance. The UAW will simply opt out or make the auto makers pay over and above what the government offers in healthcare. So the very thing you think will make the auto makers cost compettive won't do anything but screw up our own coverage. Oh, the congress critters will probably vote themselvs "Mercedes" coverage. Oh, that's right, they already have fantastic benefits. No waiting in line for them!
Aprime 1:40PM (3/17/2009)
Swede, that's because government's got into it. Hospital fees aren't skyrocketting for any reason.
Aprime 1:54PM (3/17/2009)
Besides, the reason you're in this mess in the first place is because even though you're in no position to set examples or standards around the world, you do it anyway. Letting things go and making government take even more place in your daily lives, adding more fat and inefficiency to a system that does not work. Your economic policies made the base of your economy simply move out to developping countries because you demand cheap goods - America's perpetual inflation cycle doesn't permit this (and perpetual inflation is the result of government planning), therefore the solution is moving out to cut on labor costs. The problem with this is that your consumers run out of wealth to purchase your goods, which brings us to the situation we're presently in. That and the fact that Washington mendated home ownership. May I ask, what's wrong with living in an apartment or a condo? Oh yeah, you needed to create wealth in order to counter job losses. Well, sorry but it just doesn't work that way, as it creates a similar effect as bank runs in the end... So what does Washington so you guys don't look like a third world country? Well, they bailout the banks and the people that insured the loans, of course! You do realize that it's only gonna get better for a short period of time then we'll go back into the same hole and that hole will be 50ft. deeper than it was the first time, right? And what will we do to get out of that hole? Ask for MORE state help. This, is UNSUSTAINABLE.
Government involvement is cancerous, when you ask them to fix problems it's as if you were asking the pyro that set your house on fire to help you kill it. I ask again: whatever happened to America?
wally 2:27PM (3/17/2009)
UAW wasn't only bloodsuckers, Chrysler had billions of dollars when M-B took them over MB had many problems & they took all Chrysler's cash reserves & used it for MB!!! Chrysler has problems, but nothing that can't be fixed !!!!!!!!!!!!!!
Aprime 2:39PM (3/17/2009)
Oh yeah, I'd like to supplement all of this by saying that I was leaning towards socialism a couple of months ago (and have been for ages)... But then the recession made me realize how it has nothing to do with political parties or political characters, it's just got everything to do with state involvement in anything.
I'm not some kind of utopist either. I'm well aware that companies enjoy state involvement too, as it's like getting paid by a pusher to make him clothes and stuff and you can influence that pusher by giving him money to fill your district with your products. Corporate-world and government have some sort of love-hate relationship where they love it when they get government money but hate it when government gets involved in their industry because they didn't lobby for intervention. What I want is a government that doesn't give a damn about your company's problems or your financial issues, that doesn't try to impose morals or values and that sees everyone as citizens, regardless of their wealth and contribution to society. The only socialist role government has is offering services that are considered unprofitable by the corporate world... And the role of protecting us against [foreign] foes and criminals. We could get private policing but that would just be ridiculous and unconstitutional. Anyhow if you're not happy with the job the police is doing at enforcing laws you can get your own security. It's what shops and celebrities do after all, but that's because they need perpetual surveillance and gov. authorities aren't there to provide that.
Anyhow, I'm done with this. :V
Sure, your wages would go down consequently, but so would your costs of living. Not scared concerned about job security? Don't get yourself job insurance/private welfare. The list goes on really. You don't need nannies to tell you what to do and how to do it. I mean, you have free will don't you? So why don't you adhere to what you want to adhere to. It's like styles really. Would you like it if government told you to dress as an emo? Not necessarily, but it's practically what they're doing.
Get yourselves out of small politics.
Jake B 4:22PM (3/17/2009)
I agree with wally. I have sworn myself off of all future Mercedes products in response to the way they gutted Chrysler out. Chrysler had a pretty decent car lineup before the merge with successful models available in most to all categories. Mercedes basically neutered the whole joint into a glorified truck show room and gave them the Charger/300 as a small consolation prize. Dr. Z was probably wearing WWII 'antique' uniform when he ordered the production of Caliber/Avenger/Compass/Sebring.
BigWill 12:02PM (3/17/2009)
Considering Chrysler has virtually zero public accountability, Nardelli's spin releases have gotten really annoying. Case in point - that letter he send to employees showing how Chrysler is viable as a standalone entity. Here's one quote:
"Since 1992, we have lost only 2.4 percentage points of share in total, while each of our two domestic competitors has experienced a much larger share loss. In fact, each of our domestic counterparts recorded a 45 percent reduction in share during the same period."
Notice that for Chrysler he uses the actual percentage points of market share but for GM & Ford he uses relative percentages. Also notice he picked 1992 - an odd 17 years ago, and not 1996 when Chrysler's market share peaked.
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John 12:09PM (3/17/2009)
Fiat has not built cars for this market in years. I would hope they understand how difficult the regulatory requirements have become in the last 10 years (plus what's looming on the horizion in the next 5). Chrysler is going to have a lot of work on their hands getting them up to speed.
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dukeisduke 12:15PM (3/17/2009)
The regulatory requirements in the EU are as strict, or stricter, than the U.S., but that doesn't mean people would buy their cars. It's already a crowded market, and gaining market share would be an uphill battle. The only good thing is that most people in their target market are too young to remember the crap they imported the last go-round, like the 128, the 131, and the hideous Strada.
John 3:31PM (3/17/2009)
Sorry, but you don't know what your talking about.
FMVSS 208 alone has more crash testing requirements than all of the EC requirements put together. That's just the tip of the iceburg.
On the emissions side, Euro 4 is much easier to meet than ULEV or PZEV. There are also the new GHG requirements being pushed by CARB.
Then there is what NHTSA is pushing for the new CAFE requirements.
Europe doen't even come close in it's level of difficulity and expense compared to the NAFTA market.
dukeisduke 12:09PM (3/17/2009)
Fiat or no Fiat, I don't think Chrysler's going to survive anyway. Their best hope is to survive as Jeep Corporation. Concentrate on the Wrangler, the Liberty, and the Grand Cherokee, and dump the rest.
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Quuppa 2:14PM (3/17/2009)
market are too young to remember the crap they imported the last go-round, like the 128, the 131, and the hideous Strada.
you are hideous
txdesign 12:11PM (3/17/2009)
I hope those Chrysler badges come off easily. I don't want a Chrysler 500 Abarth.
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dustingwhale 12:21PM (3/17/2009)
This has bad idea written all over it: Car company makes bad cars, seeks the help of poorly made French cars to bring over small cars, which will compete with competent American cars designed by American companies which were bailed out with American dollars. Seems like we're just making it easier for foreign car companies to come over here and compete. Add to that the likely hood that if this goes through, they'll streamline the federalization of said foreign imports, thus beating American car makers to the punch.
Obama, don't do it. Its a trap!
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