During the first round of Motown bailout begging, professional wordsmiths made the connection between Detroit’s $17.4b “bridge loan” request and Alaska’s “bridge to nowhere.” Thus “bridge loan to nowhere.” In fact, the Granvina Island Bridge project would have opened-up the Alaskan archipelago to real estate and tourist development. Boondoggle yes, but one with a long historical precedent and a reasonable expectation of some sort of commercial (i.e. taxpayer) return. In contrast, Chrysler’s supposed tie-up with Fiat is a genuine scam. The idea that Chrysler can become a viable automaker by re-engineering Fiat automobiles for the hugely competitive U.S. market is patently ridiculous. But not for Congress, the entity that offers the ailing American automaker its only hope for survival (cash). At least that’s the plan. And the man with the plan is ChryCo 300 designer Ralph Gilles. Speaking at The Automotive News World Congress [sub], Ralph told the world that he loves him some Italian. Well he would, wouldn’t he? But the details have to be seen to be believed. Or not, as the case may be.
“When you look at our portfolio, it is somewhat truck heavy, very practical vehicles, SUVs, four-wheel-drive,” Ralphy admitted. “Great for this climate, but maybe not the overall solution that we need. So they [Fiat] come in and complement us.”
Somewhat truck heavy? Is he really saying that America’s SUV fascination was a meteorological phenomena? And wouldn’t it be better for all concerned if Fiat came in and complimented Chrysler, instead of complementing it? Or maybe just hitting reset? Anyway, what pray tell are the Italians bringing to the bailout buffet, albeit in a couple of years hence, when Chrysler doesn’t exist?
“Gilles said Fiat is very strong in the small-car segments known as the A, B and C segments in Europe, so vehicles that size ‘make sense for Chrysler.’ Fiat’s Ferrari, Alfa Romeo, Lancia and Maserati brands will not be part of the alliance.
“There may be situations where we can bring their vehicles in as is and there will be great opportunities to do products based on the Fiat DNA.”
I know many American members of our Best and Brightest long for small cars with European flair. And God knows our federal legislators have the hots for high mileage econoboxes. But there’s no evidence whatsoever that A) Americans actually want small cars (excluding the MINI’s fashionista niche) and B) that an Italian car could be federalized and imported here at a profit.
But Gilles knows that his boss wants him to sell the sizzle. (If he doesn’t, that’s sad.) So sell he does.
“‘The Fiat 500 has taken Europe by storm. They can’t make it fast enough.’ Gilles said he and his wife drove the 500. ‘It is such a fun package. I think Americans, given the chance, will fall in love with this thing.'”
I guess love is both blind and stupid. Even so, you just know our Congress critters are going to buy it. (The idea, not the 500, obviously.) In fact, I’ve got a bridge in Alaska I’d like to sell them.
Fiats are small and weak…exactly what Nancy Pelosi and Barney Frank like. I was hoping for a Sebring on a Ferrari chassis.
This may be an empty p.r. exercise, but it would be cool to see the Fiat 500 in the US. Just not branded as a Chrysler or Dodge. If this alliance isn’t vaporware I would anticipate Fiat doing something vaguely similar to Renault with AMC — replace the American brand names of passenger cars with their own. So Dodge and Chrysler cars are phased out in favor of a line of federalized Fiats and Alfas. Dodge trucks and Jeep SUVs would be kept as long as they held out the promise of profitability.
I’m guessing that to be anywhere near profitable, a US-spec 500 would have to retail for over $30k. I don’t see many takers at that price. Witness the failure of the R32. And, while you can go wild with the options and get a MINI that expensive, I bet most buyers top out at a little over $20k.
It would be cool, though- it’s got more style than the MINI. And Chrysler’s dealer network is much more workable than having Maserati dealers sell and service them.
I wouldn’t know what to think of a Brera with a Dodge badge on it, though.
GM has the volt lie and now Chrysler has the Fiat lie. It is important to keep the perception that something is actually being done.
And, while you can go wild with the options and get a MINI that expensive, I bet most buyers top out at a little over $20k.
I thought the same thing, but most MINIs I see are heavily optioned.
As for FIAT, they actually make some very nice, competitive cars in the A, B, and C segemtns. The Panda is fantastic (and the 4×4 Panda will out-outroad all but the most hardcore SUVs), and the grande Punto is really good. Fantastic driving dynamics and sexy exterior, let down only by bad interiors.
While I think most of us would like to see the Cinquecento stateside, I would think that some iterations of the Bravo, Linea, Punto, etc. would be more likely should anything actually come out of this nascent partnership. Think along the lines of the new Neon.
The Panda, as good as it is, won’t be rebadged as a Jeep. Unless we get lucky.
RF, I think you are being a little harsh here. You bash the big3 for not having small cars and when they do, you say they are not wanted?
I’ll give you the future of Chrysler looks slim to none.
I’ll give you Americans don’t want small cars.
But I am sure most larger (still small by American standards) FIAT’s would meet (or be close to meeting) the US standards since they meet EURO standards.
I doubt supermini or micro class vehicles would pass the crash tests since America doesn’t have this class of vehicle…yet.
Of course, since Uncle Sugar is footing the bill, they can change the rules as they go, Re: the Yugo.
Let’s recap some relatively recent automotive “history.”
– When Renault bought AMC, we ended up with American-made versions of Renaults. It wasn’t just their econoboxes the Alliance and Encore, but it was also what you found at your “Eagle” dealer. And how did those sell? They didn’t. American car dealers are completely incapable of selling “captive” imports. Chrysler dealers couldn’t sell Alfas. Buick dealers couldn’t sell Opels or Isuzus. Lincoln Mercury couldn’t sell Capris and Panteras. Chrysler couldn’t sell Crickets. Plymouth couldn’t sell Mitsubishis. Nash couldn’t sell Metropolitans. Need I go on?
Even if Chrysler lives long enough to make badge-engineered Fiats built in the US, Canada, Mexico or China, they won’t be able to sell them unless Toyota runs out of Camrys and Corollas, and Honda runs out of CRVs, Civics and Accords. How a bunch of car enthusiasts respond to the whispers of Fiat 500s and Alfas is no way representative of what it will take to keep Chrysler alive.
It’s not a Ponzi scheme, is a plain old swindle. You’ve got a couple of clever companies taking money from an un-sophisticated mark – Congress. I know it’s fashionable these days to smack the “ponzi” label on anything evil, but Ponzis require WAY more work than the automakers are willing to do!
It’s funny we are saying on one hand that this mash-p is patently fraudulent, but then spending lots of time debating its merits, or lack of.
It could never work because both brands are damaged. Chrysler has a reputation for making crappy cars, Fiat has a reputation (in the US) for making crappy cars. There’s no up side to this team, no leverage, no coat-tails, etc.
The ONLY way Fiat will get back in to the US successfully is a long term, carefully staged leveraging of its halo brands – Ferrari and Maserati. Alfa needs a couple of years as an ultra-low-volume niche brand trading on Maserati and Ferrari mystique. If that is done right, Fiat can then, and only then, be brought in under Alfa’s “halo”. Dumping Fiats into the market at VW prices will not work. A ground-up, MINI style brand “creation” could work, built around the 500, but will also take YEARS. Fiat would have to place it in Maserati/Ferrari dealers as BMW did with MINI. But selling and servicing a $25k MINI in a shop with $35k 3-Series is one thing, but putting a Fiat 500 in the same service bay as a $350k Ferrari is something different.
None if this helps Chrysler, and Chrysler actually HURTS the odds of this working for Fiat if they are involved. Fiat is just scamming $$$, or else they are dumber than Congress if they think this works.
MrDot :
“I’m guessing that to be anywhere near profitable, a US-spec 500 would have to retail for over $30k.”
Why?
I’ve been perusing the UK pricing on both the MINI and the Fiat 500 and model for model, the 500 is cheaper by over £2000. They wouldn’t have to sell at anywhere near $30k to be profitable. I’m sure that with a heavy foot on the options pedal you could stretch the price to $30k if you really tried, but that would be an outlier price, not average transaction price.
The lowest priced MINI in the UK is the MINI One (a low end model we don’t even get in the US) at which lists for £12,245.00. The MINI Cooper that we get in the US list for £13,315.00 on the UK site. By your reckoning, the US list for that should be well over $30k to be profitable.
A Fiat 500 Sport model (one of the higher trim levels) is £10900.
I love the MINI, but the Fiat 500 is a really nice car. They nailed the styling and the interior is much more in tune with the retro theme as well. If they brought it here and priced it relative to the MINI (as shown between pricing on the UK MINI and Fiat sites) I think it would be a big hit. Sure, some regions would likely not care for it, but isn’t that the same for the MINI?
Chrysler has to go to these lengths to get one decent small car? Its not like they need 5 small cars??
Rod Panhard-In the 70’s there were a lot of Capris and Opel 1900/Mantas on the road.
But in general you are correct, this rarely works out.
Bunter
It would be kind of cool to have the panda and 500 as options in our market, but I also don’t see how they’ll move enough volume to help a company as large as Chrysler (better bet to let the 500 compete directly with mini, as a prestige small volume, non-chrysler related product). Maybe if they donated the small car engineering and let Chrysler do their own styling and manufacturing that would help, but certainly not in 18 months.
I just wish they’d sell Jeep, preferably to an Asian company with deep pockets, poor customers and an existing product line that contains manual transmission small diesel powerplants. The rest of Chrysler can burn.
If this ever works…
You guys really think the cars we’ll come to you via Europe? Think again, there’s a huge plant down here just ready to get into you market through the free trade agreement with Mexico. Not to mention Argentina’s idled plant. That way you keep costs down and (laugh all you want) quality up.
The 500 is an exception. It’ll be a niche thing. “Halo car” if you like. Likely north of 25 thousan due to exchange rate. (Alfa too of course).
Just saw an item that Fiat may be interested in a link with PSA also.
Frankly, if the three noggined pooch is going to give them a dealer network for free I don’t blame them for saying ‘Yes”.
Whether this mess produces anything or not I will state this…
We will see some major consolidation of the golbal players in the next few years. Bet on it.
Who emerges as number one, who survives and who dies may be as much the result of politics and deal making as it is product before this is over.
Bunter
I don’t see Cerebus allowing FIAT to get one penny of the Bailout money. I’m sure that was the point behind giving up 35% and 2 seats on the board to FIAT. FIAT hinges the deal on the bailout to keep Chrysler a viable reseller of their product.
If you are going to ramp up production for a new market, you want to ensure your partner is still going to be there to sell your product when you deliver the goods. FIAT believes Cerbus can continue to suckle until they can pay for the product.
It’s funny to me that the cars people are clamoring after (Panda and the 500 especially) are probably the cars FIAT will not bring over. I would expect the Croma, Albia, Linea, Bravo, Grand Punto, and Stilo.
Also rumors of the 500 coming here for…
Yes! 2010.
What a year that will be kids. ;^D
Bunter
Bancho- If they make them in Europe and export them here, the exchange rate is going to keep prices high. Then again, maybe the dollar will improve. Who knows.
Fiat only sell well in Italy and Poland (where the 500 is made). They’re a minor player in all other markets, and Lancia is virtually unheard of outside the above 2 countires.
Fiat still have a question mark over their quality (probably undeserved these days, but we all no how hard it is to change a lousy rep).
For Chrysler, Fiat was probably the only choice in town, and it was a take it or leave it offer. For Fiat, if they don’t get any of Chrysler’s liabilities, then it’s no loose for them. A cheap plant (just retooling), established dealer and financial network – this is probably the fastest way to get Fiat into N America – and there’s a possibility to get some of bailout money too, who knows?
Mini is selling what? 5000 cars per month? Not quite, but lets round up. So that’s 60,000 cars per year.
OK, so Fiat brings over the 500 (which isn’t likely to begin with) and competes for much the same market. Americans don’t respect Fiat like they do BMW. No way are enough 500s going to be sold to save Chrysler.
There is also the little matter of Fiat’s $7.7 B debt.
So if a partnership with Fiat is not going to help, what do you think Chrysler should do instead, Mr. Farago? I think it would be wonderful if we could buy some of the current crop of Fiats, Lancias, and Alfa Romeos instead of the horrible crap that Chrysler makes. What is the alternative? Updated Sebrings and Calibers?
If the Astra cannot be profitable in the US, then certainly no Euro-built Fiat can. Possible exception: the 500 because of its styling; but you cannot built anything around a one time retro hit like that.
I christen the new company GFM.
Government Fiat Motors.
Bunter
Chrysler + FIAT = TC by Maserati?
http://en.wikipedia.org/wiki/Chrysler_TC_by_Maserati
Giles is going for the Steve Job’s look. All he needs is a turtle neck shirt and he is there.
I think a lot of the commenters’ assertions about the American car market are a bit off.
If Fiat brings over the 500 and prices it below the Mini, it will sell. There is enough of a fashionista 20- and 30-something segment in urban centers that favors small cars that it will not tank. I know that hip city dwellers around these parts would salivate over the 500 Abarth.
Look at the Smart car, after all. It’s an awful drive, it’s priced too high, and its fuel economy doesn’t trump hybrids. But there are plenty of grinning idiots still buying them. Fiat’s 500 is a better car, it’s (slightly) more practical, and it can sell on the same price point. So the Astra didn’t sell well, but then it was also downright forgettable.
People claim that Fiat does not have Mini’s (or BMW’s) “respect” in the US market. Does anyone in the projected 500 buyer segment know about Fiat? They fizzled out of existence in the US market in the early eighties selling tarted up X 1/9s. I’m 23, and I’m sure no one I know has any idea of what Fiat is or has heard of how crappy it was to own a 124 Spider. People I know will be buying them. Fiftysomethings with a grudge against the Fix It Again Tony Auto Co. won’t be.
The more likely it becomes that Chrysler could survive, the louder the objections from some.
How truly sad.
One would think they would want to see their loan repaid. I, for one, would like to see Chrysler succeed. And yes, Fiat too.
BTW, Ralph is a really smart, good guy. A fine designer, too.
I suspect he will not last long at Chrysler; there is a fair amount of mobility in the designer ranks, and Ralph (note to Farago: Please call him Ralph, not Ralphy. After all, this is not “A Christmas Story.” :-) ) may indeed go to the highest bidder.
If he does go, he will be lauded as one of the Best and Brightest in his field, and many will sing his praises.
Many of those who will sing his praises, I suspect, are those now dismissing him because he works for Chrysler. It’s happened with other designers, and yes, they all know the risks.
You heard it here first.