Chrysler has a non-binding deal with Italian automaker Fiat, which has agreed to take a 35 percent stake in Chrysler in exchange for access to technology and overseas markets, and not a single dime.
But wait! It’s a miracle! Just as Jesus Christ turned water into wine, Bob Nardelli turned the no-cash-at-all deal into a bonanza.
The deal with Fiat is worth up to $10B for Chrysler and could preserve 5,000 North American manufacturing jobs, Chief Executive Bob Nardelli said on Monday in a missive to his minions.
“We estimate the cash value of Fiat’s contribution to be between $8 and $10 billion considering the cost to develop these vehicles, platforms and powertrains from scratch,” Nardelli said in a email to employees, which Reuters intercepted.
The value of the proposed deal would come from synergies in the areas of purchasing, engineering and contribution of technology, Nardelli said.
“Production of vehicles for Fiat in North America will allow Chrysler to increase its plant utilization, helping to preserve and create in excess of 5,000 manufacturing jobs,” Nardelli said. “The overall contributions from Fiat and the synergies we realize will far exceed the value of the government loans.”
Chrysler, has already received $4 billion in emergency US government loans. They want another $5 billion. So if the cash value of Fiat’s contribution to be between $8 and $10 billion (and that’s a very big if), how does it far exceed $9 billion?
Hang on a minute, “Production of vehicles for Fiat in North America will allow Chrysler to increase its plant utilization, helping to preserve and create in excess of 5,000 manufacturing jobs”?
FIAT are having trouble selling cars and have underutilisation issues themselves. Do Chrysler honestly think FIAT’s going to ask them cars for them, when they have production facilities begging for work? And that’s putting aside the issue of whether FIAT want to come back to the US market.
I think you’re right, Herr Schmitt, methinks Mr Nardelli is embellishing this deal in order to appear “viable” to the government.
“The overall contributions from Fiat and the synergies we realize will far exceed the value of the government loans.”
This may have been some sneaky manipulation of language. He didn’t say “the original amount of the government loans”, he said “the value of the government loans.”
Given their chance of being repaid I would say that the “value” of the government’s loans to Chrysler is pretty close to zero.
“We estimate the cash value of Fiat’s contribution to be between $8 and $10b considering the cost to develop these vehicles, platforms and powertrains from scratch the % of US bailout funds FIAT requested be funneled to them if the deal goes through.”
There fixed that for him.
Bwahahaha!!! $8-10B, that’s a good one. Under what accounting scheme? If Fiat thinks the US market is such a great opportunity then they should be willing to put up the cash. Paid-for tooling for designs that won’t sell here doesn’t count. Salesmen the world over know that people and companies are willing to pay only what they think the merchandise is worth. Customers who demand “free” are telling you that that’s what they think your product (or in this case Chrysler) is worth. GM and Chrysler need to go bankrupt. Rip the Band-Aid off already and be done with it. Better for everybody ultimately.
Anytime you see a press release on a deal you can stop taking it seriously once you encounter the word “synergy”…
The “synergy” never happens, because in the end combining two huge screwed-up companies just results in an even larger mess. The supposed savings and streamlining swirls down the drain of political turf wars and kingdom building.
In the end the companies are no better off; the rank-and-file get screwed and laid-off; and a few fat cats get rich off the deal.
Honestly, I don’t care about any of this crap. So long as it brings me my Alfa MiTo GTA…
So long as it brings me my Alfa MiTo GTA
If you get it (and this is a big, big “if”) you’re more likely looking at a MiTo rebadged as a Caliber. If you’re lucky.
What will actually happen, if the Routan is any example, is that they’ll reskin the Durango as a FIAT-badged crossover and the Sebring as, well, something that could only be better by virtue of not looking like a Sebring. Perhaps we might get another minivan variant.
Not much Veritas in this Vino, methinks…
Hopefully the best part of the alliance will be Nardelli’s departure. Can’t come soon enough. Oh yeah and Cerberus will manage to give away the rest of their stake and become a bad memory.
Anytime you see a press release on a deal you can stop taking it seriously once you encounter the word “synergy”…
Yeah, I stold it, kicks up my efficiency tho.
If you get it (and this is a big, big “if”) you’re more likely looking at a MiTo rebadged as a Caliber.
If you get it (and this is a big, big “if”) you’re more likely looking at a Caliber rebadged as a MiTo.
There. Fixed it for you.
Great, Fiat has about the reputation in Europe as Chrysler has here. FIAT=Fehler in allen Teilen (flaws in every part). Alfa is not any better.
So they should be a good match for Chrysler. Except Fiat builds small shitty cars, Chrysler builds large shitty vehicles.
If that deal is worth $9b cash… so why do they need our money then if Fiat contribution has a cash value (like cash)? So take $5b from that cash value and pay back the bridge loan immediately.
So, how come GM didn’t find any “synergy” before paying FIAT to go-away?
Didn’t Daimler write down their 19.x% to $0? So, let me see here, $0 X 5 is… (carry the 0), oh, about $0. So the way I see it is that Fiat will be the sole owner of whatever bastard love child this coupling produces. Is it just possible that Feinberg, Snow, Quayle & Co. will somehow be able to wash their hands of future obligations after this shell game? And skip town with the loot of course.
So, how come GM didn’t find any “synergy” before paying FIAT to go-away?
It’s hard to think synergy when you’ve got vaseline dripping off your ass.
ok – the $8-10 b valuation came when Bob called the Finance dept at 10.30pm one night and asked the question. The reply was “heck, I don’t know, say $5-10 bil, whatever”, then hung up and got back to the ‘real’ work of the bailout plan, cashflow, and the other day-to-day tasks of Finance in an auto company. Hey, have pity on the poor slob, how many balls can you keep in the air. Bob turned to the PR flacks and said “Finance say it’s worth up to $10B – let’s tell Congress how clever we’ve been to get another company to ante up that sort of value”. Hey, who’s to ask for the backup to support the number.
@Kaleun – I’m with you, Fiat also has a s%^t rep in the UK so at least Britain and Europe agree on one thing!
kaleun:
For people old enough, or gearheads, FIAT has the same reputation in America. In English “Fix It Again Tony.”
Fiat stands for “Fix It Again, Tony” here in Australia.
I must admit to having much experience with Fiats as they departed these fair shores for lack of sales due to their dire reputation way back when.
However, they’ve just come back and are now selling the 500. Very cute car. I just wonder how reliable could it be?
Here’s an idea though – Chyrsler could get the tooling for the old Multiplia’s. They are an awesome MPV -Three abreast, two rows. Awesome. We had a ride in one in Rome to the airport that I will never forget due to our crazy Italian taxi driver. Road rules are for pussies, and our driver was most certainly not a pussy, going down one way streets the wrong way, through lanes that were at least 10 cm too narrow for the car, etc.
The Multiplia could slot in under their T&C offerings.
http://en.wikipedia.org/wiki/Fiat_Multipla
The low quality low price leader of Europe comes to America to bail out the low qauality low price leader here. This is called synergy. If you look at the European stats, Volkswagen and others are soundly trouncing Fiat in Europe. No wonder, they want to take excess capacity to the States. But if you think the Japanese and Koreans will be muscled out of the low end market that they created here in America by Fiat you are delusional. I can see the consumer reports not recommended listings now. “the fiat can do most of what the honda can do, but we cannot recommend it due to it’s far worse than average repair costs and it’s non-existant resale value”. A couple of those reviews and yes we have chrysler all over again. This is synergy. Hell, the mercedes label wrapped around chrysler didn’t mean a thing, the fiat label will mean nothing either.