C’mon. This whole Fiat and Chrysler hook-up is a joke, right? I mean, what could possibly motivate an Italian car company that got its ass kicked seven ways to Sunday in the US market for peddling sorry-ass rust buckets and [almost] providing some of the worst dealer service in the history of four-wheeled transportation to re-enter the fray under the Chrysler banner? That’s like Kodak teaming-up with Polaroid to make high end digital cameras for the Japanese. Like Cambridge’s instant photo folk, ChryCo’s business model is so busted all they’ve got left is an iconic brand name (Jeep). And there are still plenty of Americans who know that Fiat stands for “Fix It Again Tony.” So what’s it all about Alfetta?
Explanatory theories are floating through the autoblogosphere. The Fiat – Chrysler plan is an Italian head-fake. They’re having a peek at what they can buy when pennies from C11 heaven start to fall. Or Fiat’s “rescue” plan is a cunning ploy to use U.S. taxpayer money to fund Fiat’s American aspirations. After all, they got $2b from GM for not merging with GM. With inflation, that’s got to be worth at least $8b in today’s freshly-printed dollars. And then there’s a far more likely motivation for all this Mopar madness: ego.
The US car industry is a “yeah, too quiet” kinda place these days. The Presidential Task Force on Automobiles (PTFOA) has done the cappo si tutti cappo thing at GM: silencing Car Czar Bob Lutz and cashing ex-CEO Rick Wagoner’s bankruptcy-proof pension check. Wagoner’s clone, an overpaid caretaker who goes by the name of Fritz Henderson, has all the charisma of four-day old cod fish.
Ford CEO Alan Mulally is the same again, only fresher and more swordfish-like (if you know what I mean). And having learned that discretion is the better part of a $240m severance package, Chrysler CEO Bob Nardelli has sent out a memo saying, “Him! Let him run the company! Or them!”
In short, the American automotive industry doesn’t have a single charismatic spokesman at this, its hour of need. Which no doubt suits PTFOA chairman Steve “Chooch” Rattner. But it doesn’t alter an immutable fact: the auto industry is an ego-driven business.
Remember when we were discussing the strategy of Kirk “The Lion of Las Vegas” Kerkorian (ready to chill with Walt Disney), as his major domo (arrigato) Jerry York joined GM’s board and told them to sell something, anything, before the lights went out? Or the going, going, Ghosn GM – Renault merger?
That was then, and this is now. Now we have Sergio Marchionne. The Italian auto exec’s stolen the spotlight. He’s busy holding court—I mean chairing meetings. Issuing pronouncements. Making ultimatums. Flying hither and yon in Fiat’s private jets (yes, they still have them). Scheming. Dreaming. Coveting ChryCo’s CEOship. And putting on a show for Fiat’s shareholders.
To wit, the Wall Street Journal reports that “Italian carmaker Fiat SpA (F.MI) shares surged over 10% in Milan Friday, as investors expect a deal between the Torino-based company and Chrysler to be finalized by the end of April.”
How a ChryCo hook-up will help Fiat’s CEO achieve his profit target ($1.3b for 2009) in this moribund market is anybody’s guess. But the limelight does wonders for Marchionne’s rep in his native Italy, insulating him from the sales disaster waiting for Fiat’s politically-fixed sales incentives to expire.
Lest we forget, Sergio is, like Wagoner and Henderson, an accountant by training. Who started his career as a tax specialist. In other words, Marchionne’s a man whose craves attention not to say adulation. Which motivates the Canadian – Italian to rush in where any sensible corporation fears to tread. No, really.
“Canada was a mixture of pain and pleasure for the Italian teenager,” Canada’s Globe and Mail reported in a Marchionne profile. ‘Trying to get friendly with girls with whom you cannot communicate was a problem,’ he said.”
Surely this isn’t all about appearances, is it? Don’t call Sergio Shirley.
“The [Fiat] board room has a frescoed ceiling that would not look out of place in the Vatican Museum,” the Globe reports in a more recent article. “Coffee is served in fine china on a silver tray. The employees make sure the place is well stocked with Murattis.”
And so, here we aren’t. Chrysler’s private equity owners tried to dump the failed American automaker on China’s Chery (Hornet much?). Cerberus then tried to off-load their automotive non-fortunes onto Nissan (Hornet that, Titan this). And now they’re trying to palm off the whole schmeer on Fiat. Well, the U.S. government really. With the help of an egomaniacal Italian who either knows better and doesn’t care, or should.
Of course, you could say that the same thing about all parties concerned with this, Chrysler’s final fling, before it slinks off into that long goodnight.
I think it’s a sick joke. Nobody involved could possibly gain anything from this merger. It’s just this months Hail Mary. Remember this fall, and the proposed shotgun-wedding between Chrysler and GM….
Given the swirling multiple variables, it’s impossible to handicap this Live/Die race.
Here is an interesting piece of conjecture: Chrysler may actually have a product portfolio worth saving.
Cerberus has dropped its customary secrecy and allowed quite a few industry types to tour the Design Dome at CTC recently. The reviews, from people I’ve talked to who have gone on these tours, are universally optimistic: it’s good stuff.
The forthcoming Wrangler MCE and new Charger, in particular, are getting rave reviews.
Consider the following lineup:
Iconic SUV (Wrangler)
Competively-priced RWD/AWD Midsize (200)
Competitive RWD/AWD Fullsize (300/Charger)
Competitive Pickup
Competitive minivan
Competitive powertrains (Pentastar, Cummins, Hemi, etc.)
Could a company like this be competitive in NA?
Ingvar :
April 17th, 2009 at 6:16 pm
I think it’s a sick joke. Nobody involved could possibly gain anything from this merger. It’s just this months Hail Mary. Remember this fall, and the proposed shotgun-wedding between Chrysler and GM….
Not to mention the Nissan/Chrysler hook-up talks prior to that.
Kerkorian died?
“The [Fiat] board room has a frescoed ceiling that would not look out of place in the Vatican Museum,” the Globe reports in a more recent article. “Coffee is served in fine china on a silver tray. The employees make sure the place is well stocked with Murattis.”
I’d pay to see that. Beats the watered-down food service coffee and the perpetually clogged toilets I had when I worked with the Koreans in Sterling Heights.
sorry-ass rust buckets
I was kind of young, but it seemed like a lot of cars were rust buckets back then.
mowtownr:
That lineup could have worked a couple of years ago, but not in this environment. People are demanding value, not flash in their purchases. That’s why Kia / Hyundai are doing comparatively well while GM and Chrysler founder (even with all that cash on the hood, it’s still not all that great of a deal when you figure in resale and maintenance costs).
You are dealing with two generations (human, not design) of substandard reputation. I’ll tip my hat to anyone who can change that in the matter of months, especially in this environment.
I also don’t believe RWD / AWD are the end-all and be-all of design. Sure, for sport and offroad they are kings, but for everyday economy balanced against performance on ice, I’ll take FWD everyday. AWD is undoubtably nice in foul weather, but the hit to gas economy is nothing to scoff at. If you live in an area that rarely experience ice or snow, you won’t get any argument out of me. Unfortunately, >50% of the country deal with these conditions six months out of the year.
If Eaton did not sell Chrysler down the river in 1998 maybe the company would at least be in as good shape as Ford.
I don’t know about Chrysler in this. Frankly, I don’t care about either the Dodge or Chrysler brands. The only one I like of the entire bunch is Jeep, which I think should be given to Ford. I care about the workers, but there simply aren’t enough jobs to keep all of them employed.
I say let Chrysler/Dodge file Chapter 7 or get merged into the Gubmint Motors fiasco, and let Ford get Jeep and replace Mercury with it. Jeep doesn’t deserve to be forced into Government Motors. Hummer yes. But not Jeep.
@ConspicuousLurker
My suspicion is that poor resale values are going to kill off all three domestic car companies. I own a 3 year old Ford that is worth only 25% of its new price at 70,000 miles.
Even though reliability has been very good, it will be my first and only new domestic car. Even with the high mileage, a Honda or Subaru would have retained almost twice the value.
While I’ll probably drive it long enough to make the point moot, I’m very mindful that I’m one idiot driver away from writing a large check to Ford Credit.
As for AWD fuel economy, I call our Subaru “the piglet” for a reason.
“The employees make sure the place is well stocked with Murattis.”
What is Murattis??
None of this makes any sense, I think Fiat is simply maneuvering around trying to get into the American market using other peoples’ money. Not that I give it a chance of a snowball in hell; Chrysler’s reputation for quality is basically sunk-Fiat’s is no better. I had a friend once tell me in the early 70’s never to buy a Fiat-even back then their vehicles had a reputation for falling apart as soon as they left the dealer’s lot. The merger between Chrysler and Mercedes(the merger of equals!) was an absolute disaster–what leads one to believe a merger with Fiat will be any more successful?
At last count, Chrysler has done real business or proposals with five companies: Mitsubishi, Daimler, Chery (fail), Nissan (fail), and now Fiat. (Worst. Merger. Yet.) Oh wait, there’s Volkswagen…the Volkswagen Grand Caravan, er, Routan.
There was also a British-built Plymouth Cricket (from Hillman) way back in the early ’70s. And Renault shared cars with AMC, which became the Chrysler Eagle division in the 80’s, producing the Renault-sourced Dodge Premier/Monaco/Vision. Renault owned AMC, which was sold to Chrysler, which was sold to Daimler, which was sold to Cerberus…and so on.
Jeep came from the AMC acquisition. That makes eight or nine partners, depending on how you count.
Chrysler couldn’t get Nissan into bed, who are aligned with Renault. Fiat couldn’t get GM or Ford into bed, and are now apparently courting Chrysler…but not without a gigantic prenuptial agreement. And I thought Fiat also has agreements with Chery and Tata Motors.
So it’s musical chairs. What happens next is anyone’s guess.
The current Fiat lineup is *extremely* European-market specific. The design is very un-American, and Fiats are small. If a Rabbit/Golf doesn’t sell in the US, then Fiats *certainly* will not sell…
If I ran Fiat, I would mess with Chrysler only if it came with a fortune in dowry. Otherwise, I would focus on expanding in small car markets in countries with relatively expensive fuel. This summarizes Fiat’s current position, I think.
Patrickj:
I know what you’re talking about. A couple of years ago my mother got a used Ford (a Grand Marquis). She got a steal on it. Practically brand new (~18,000 miles if memory serves), still under warranty, for about 40% of the cost of new. The vehicle wasn’t even 3 years old. A year or two after that, the thing was worth a quarter of it’s original value, not even 48 months old.
It may have been a good deal for her when she bought it used, but some poor consumer took a bath for those 18,000 miles.
Helping her maintain it has reinforced my prejudices against the Big 3. They’re just not up to snuff.
Point is, I think many people have been in our positions and share our feelings. Even if the Big 3 were around to take our business (a major ‘if’ right now), they still have to contend with these relatively bad impressions. I just don’t see it happening.
I have reason to believe that Marchionne simply wants dealers, a couple of plants, and Jeep. That is the whole reason he is even here talking to Chrysler IMO.
Makes perfect sense to me…. But then I don’t think the car business has much to do with cars anymore.
Option A – You really can borrow your way to prosperity and the USA will be very rich in the next few months. In this case they are getting in on the ground floor for pennies.
Option B – Global depression and Fiat is going into bankruptcy themselves, so who cares if they take Chryco with them.
No sense caring about option B so you might as well play your hand with Option A.
GO FIAT! A great distraction and a way for Chryco dealers to spend their last few nickels!
Well Mr. Farago, you could be right and are on some points, but…There are a whole lot of buts.
This whole Fiat and Chrysler hook-up is a joke, right? I mean, what could possibly motivate an Italian car company that got its ass kicked seven ways to Sunday in the US market for peddling sorry-ass rust buckets and [almost] providing some of the worst dealer service in the history of four-wheeled transportation to re-
enter the fray under the Chrysler banner?
Well, this was a long time ago. And despite the sins of the 70s (as pointed out by poster mcs they were not unique in this) Fiat survived. And prospered. And went through tough times. And as of late has prospered again. All of this upheavel has promoted a culture of survival. Of knowing that survival depends on products. And products they now have. Not to mention that European companies have understood Toyotism better than American ones. Fiat in particular. On any given day there are teams of Japanese specialists at the factory down here, overseeing and teaching the ways of Japan. No they’re not at Toyonda levels yet, but even as Katie (another Euro-poster) has pointed out many times, they now lead European reliability surveys.
And on the Chrysler side, before the Daimler debacle, I recall they had some nice and desirable cars. Not to mention profits. It’s disappeared? All that talent?
The rust bucket comment…I’m sorry. That’s just stereotyping. It’s like saying that Mercedes are still the mo’ f…’ best overengineered cars of the world. Or that American cars are all junk. Or any other comment that is always repeated when this comes around. Please, try another argument.
There are plenty of theories floating through the autoblogosphere. The Fiat – Chrysler plan is an Italian head-fake. They’re having a peek at what they can buy when pennies from C11 heaven start to fall. Or Fiat’s “rescue” plan is a cunning ploy to use US taxpayer money to fund Fiat’s American aspirations. After all, they got $2b from GM for not merging with GM. With inflation, that’s got to be worth at least $8b in today’s freshly-printed dollars.
I believe it was more like US$4 billion.
And it’s true Fiat is having a peek. Word has it they already know what’s worth keeping. And it sure wouldn’t hurt if they got some money to finance the necessary changes themselves. And save Chrysler’s brand and some jobs in the process. With as little risk to them as possible. Again, as I’ve heard, they’re not even talking to Chrysler anymore (hence Nardeli’s cryptic memo – a cry for relevance). Good or bad it’s in the hands of the politicians now. And in the political calculation of what would the American public accept.
How a ChryCo hook-up will help Fiat’s CEO achieve his profit goal ($1.3 billion for 2009) in this shit market is anybody’s guess. But the limelight does wonders for Marchionne’s rep in his native Italy, insulating him from the unmitigated sales disaster that will no doubt occur when Fiat’s politically-fixed sales incentives expire.
Not so much gloom and doom Mr. Farago. In the current crisis, if there are any winners, Fiat is one of them. Germany’s clunker program is doing wonders for Fiat and they are, in fact, gaining market share in Europe as we speak. They are still the leaders in Brazil, growing their market share in what is amounting to be a record year (how does 750 000 cars sound?). Plans in India are being followed through. Poland’s factory is backlogged for at least 4 months…Doesn’t sound to bad…Unless you make it so in order to milk more gov money.
And as you say, it’s a shit market (in NA). But you have to be positioned to start running as soon as the recovery comes. No, 17 million cars in US will not be reached in the next 3 even 5 years, but it won’t be 10 million cars for more than a year. And you have to be ready to produce when the market is growing. As prices are low now you should take advantage and build your infrastructure. As the recession goes away in 1 to 2 years time, they’ll be ready. It’s a risk. But if you don’t risk it you don’t make money. And it takes guts.
Surely this isn’t all about appearances, is it? Don’t call Sergio Shirley. “The [Fiat] board room has a frescoed ceiling that would not look out of place in the Vatican Museum,” the Globe reports in a more recent article. “Coffee is served in fine china on a silver tray. The employees make sure the place is well stocked with Murattis.”
Sure. This is a European corporate board culture at its best (or worst). And I guess in Italy it’s even worse (I’ve heard that Italians are the people who most spend on clothes yearly in the Eurozone).
But it’s not the whole story. Gianni Coda. Heard of him? He’s there a little under the top board (and under the radar). He’s the previous CEO of Fiat Brazil. And a driving force in the changes still being made to the rank and file. When he was called back to Italy he was in charge of changing the culture there. Installing a little of, may I be so bold?, Brazilian bad-ass emergency business culture into a stilted, bureaucratic, almost government agency corporate culture. He did so by bringing in at least 50 Brazilian mid level execs. Those guys started to act before the GM pay-out. And they were so ruthless insiders called them “Coda and his barbarians”. They fired people for being late, for being wasteful, for being idle, for being incompetent. Imagine that in a Euro company. They pinched every penny. They eliminated the free coffee! They went so far as to allocate just one pen and pencil to managers who would get another when they physically proved the pen or pencil was a goner (LOL!). And it was on purpose. To shake thing up, by really shaking it up. To show the rank and file the new direction.
And by doing so they won over the blue collar guys, too. They promised and delivered on their plan to cut expenses, develop new cars, all the while saving the little guys’ jobs by cutting inefficiency. A company that can do that is one that is alive. Imagine if the American car companies did the same. For many years there in the 90s to early 00s, bonuses for suits, you serious? That exists?
And so, here we aren’t. Chrysler’s private equity owners tried to dump the failed American automaker on China’s Chery (Hornet much?). Cerberus then tried to off-load their automotive non-fortunes onto Nissan (Hornet that, Titan this). And now they’re trying to palm off the whole schmeer on Fiat. Well, the U.S. government really. With the help of an egomaniacal Italian who either knows better and doesn’t care, or should.
Have never met Marchionne so even though your insight might be correct, it’s not what I hear. Yes, this comment and all I’ve said above is hearsay. Take it as you like. But I’ve seen, bought, kept, sold Fiats. In the 70s, 80s, 90s and 00s. And they just keep getting better. So maybe they’ll make it in America? Sure hope so as I intend to go on buying, driving and enjoying my Fiat until the day I die.
I agree. I saw some Italian movie on cable the other day and it was in Black and White! BTW, are there German’s still there?
Come on! FIAT has been gone from the US for about 30 years. Things may have changed since then. Anyway, not everyone finds Japanese cars to their liking. Sure, they are nice in a Sam’s Club kind of way. But, sometimes people want a car with a sense of a human touch and not just a robotic one.
What does Chrysler have? As far as I can see, nothing. There is not a single appealing product coming from that company. The only thing they have is dealerships, which is what FIAT lacked when they were in the US.
If FIAT wants to sell a 500 with a 10 year rust through warranty, zinc plating and plastic inner fender liners, I am interested. I am not worried about the electronics or interior, and certainly not worried about the drive train. My 1985 Alfa GTV6 was the most fun car I ever owned.
One of the quotes on the site the other day from Marchionne gave me the impression that he sees himself as the next Carlos Ghosn.
…Or Jurgen Schrempp.
FIAT hasn’t been here for 30 years, but Alpha has (and they bailed because of.. quality issues). It’s worth noting that even Brit car reviewers slag FIAT’s quality (and they think that VWs are reliable). And it’s not like coming in under the Chrysler umbrella is going to give them much of a halo.
If Fiat just wants dealerships and a distribution network, they could probably pick up a few of those GM dealerships that need to be unloaded/closed very cheaply. Or pay nothing, and offer the dealers a nice, new franchise agreement.
If they want plants for manufacturing capacity, same story…don’t all of GM, Chrysler and Ford have over-capacity? Wouldn’t it make more sense just to lease or buy capacity for manufacturing Fiats from someone else? Why actually pay for plants and own them, when you don’t even know how well your product might sell in NA?
One of the two local Saturn dealers here closed up without a word of local media coverage last winter. One weekend, all the Saturns and the Saturn signage disappeared from the lot and the dealership.
Over the next week, shiny new Kias, signage and decor magically appeared. It was as if the Saturn dealer had never existed. Saturn Who?
I have trouble believing Chrysler dealerships could be replaced with Fiat dealers. Fiat doesn’t have much of a reputation in NA. Hyundai and Kia are more of a known quantity. They’re much more of a threat to GM/Ford/Chrysler than Fiat.
I am willing to accept casualties if it means bringing Alfa Romeos back to US shores.
Yes the Fiats back in the 1960s and 1970s were poorly made cars but so was every other car back then. My father’s and my VWs were real junk back then and judging from comments on TTAC they still are.
My father’s late 60s Alfa coupe was the most fun car I ever drove.
I have been driving Toyotas and they have been good to me but I am ready for something different.
Welcome back Fiat.
From Brazil, it was $2B in cash to back out of the deal.
“GM swapped a 6% stake in itself for 20% of Fiat – and gave Fiat a “put option” to sell GM the rest of the car maker between January 2004 and July 2009 . . . But despite the alliance Fiat failed to put itself back on track, continuing to lose money and market share . . . The relationship soured further after Fiat sold half its finance arm and recapitalised in 2003, halving GM’s stake to 10%.” All this according to BBC News.
Who knows if the total investment was worth $4 billion. We do know, for a fact, that $2 billion of fiat money was paid to FIAT.
“Lest we forget, Sergio is, like Wagoner and Henderson, an accountant by training. Who started his career as a tax specialist. In other words, Marchionne’s a man whose craves attention not to say adulation. Which motivates the Canadian – Italian to rush in where any sensible corporation fears to tread. No, really.
….With the help of an egomaniacal Italian who either knows better and doesn’t care, or should.”
That’s an interesting theory. I wonder what John Elkann thinks of it.
But seriously, the Agnellis were fully willing to put Fiat to GM. They have a history of making tough and rational business decisions without sentimentalism. Would they really let Marchionne do this deal as some flight of fancy? I don’t buy it.
In 1972 I owned a Fiat 1500, a small family sedan with a manual column shift.
It was a fabulous car, quite luxurious even. Didn’t look like much, but was great to drive and that twin-choke Weber carb delivered the goods when you put your foot down.
Along with my late-70s Alfa Giulia Super 1300 (the boxy one), Italians have designed and made two of the best cars I ever owned.
But it doesn’t alter an immutable fact: the auto industry is an ego-driven business.
Hmmm, this I doubt. Takeo Fukui, Katsuaki Watanabe, (ok, replaced by Akio Toyoda, the guy with the family name, but is he ego driven?) Ikuo Mori (ceo of Fuji heavy industries – maybe there are separate CEOs in charge of Subaru?) Anyway, my point is some car comanies are run by guys who seem to quietly go about the business of making really good cars and selling them at a profit. The one’s who can’t make good cars, and/or can’t sell them at a profit, are the ones who make all the noise.
FromBrazil
The rust bucket comment…I’m sorry. That’s just stereotyping. It’s like saying that Mercedes are still the mo’ f…’ best overengineered cars of the world. Or that American cars are all junk. Or any other comment that is always repeated when this comes around. Please, try another argument.
You are correct, this is stereotyping, but you are dismissing it too easily. Fair or not, this is how we think about Fiats. The last time we saw a new Fiat was 25-30 years ago. If Fiat returns to America, they will be up against their past reputation – and that reputation was for unreliable rust buckets. If their cars really are good, that info will spread, by word of mouth. But they should count on slow and difficult sales in the begining.
To be fair, FIAT have come a long way since the days of “Fix It Again, Tony”.
They’ve issued their new FIAT Bravo with a 5 year warranty (a la Hyundai) and it’s quite a good looking car. FIAT really are trying to put the days of rust buckets and bad reliability to rest. Give them a chance, they may surprise you…
As for Sergio Marchionne, I really wouldn’t put him in the same vein as Wagoner and Henderson. Mr Marchionne is an accountant by training, but he’s a pragmatic one.
When he turned FIAT around, he did it by vowing not to close any plants down or sack any blue collar staff. He did it by downsizing middle and upper management.
His other alliances (i.e the Ford KA/FIAT 500, Tata, etc) are going quite well. Tata even want to forge closer ties with FIAT. So, Chrysler could have picked a worse partner.
But like you say, FIAT are just there to see what they can get post chapter 7.
Isn’t it amazing how the closer FIAT and Chrysler got to an agreement then suddenly the stipulations came to light? (e.g. Unions must make concessions, FIAT have control over the board, etc). It’s a clever play by Mr Marchionne, if Chrysler/the union concede, then, great, Chrysler is a slightly more attractive proposition; if they don’t, FIAT just have to wait another 12 days, then see what bargains they can pick up.
Either way, Chrysler is doomed.
“And there are still plenty of Americans who know that Fiat stands for “Fix It Again Tony.”
True, BUT there are also a LOT of pinhead consumers in this country that will buy a “nifty” car for show. They will look at Fiat in a semi-exotic sort of way…mark my words on that. I do think the sasme people who look at VW and Mini will look at Fiat vehicles.
The # to watch is unemployment. Every month 600K new people lose the ability to buy a car in the US. If that doesn’t reverse, it won’t matter how “nifty” your product is.
To be fair, FIAT have come a long way since the days of “Fix It Again, Tony”.
They’ve issued their new FIAT Bravo with a 5 year warranty (a la Hyundai) and it’s quite a good looking car. FIAT really are trying to put the days of rust buckets and bad reliability to rest. Give them a chance, they may surprise you…
I have to agree with this. I’m in Mexico right now, see fair number of Fiats, they make some attractive cars. Aside from the 500, the Panda (reviewed on this site) is nice and the Brava is a good looking car. The Palio Adventure is sharp too. Fiat/Chrysler would be a good fit product wise. Fiat for everything smaller than the Strada, Chrysler for the Trucks, Large Cars and Jeeps (with the line pared down to the Wrangler and GC). Of course, you’d have to get past the shitty economic environment.
I hope they do come back to the US. A Panda 4X4 would be my ideal daily driver.
Yes, my beloved late 70’s Fiat X1/9 fell apart.
But then again, so did my mid 80’s Mustang.
And my late 80s Pontiac.
And my ’68 Olds Delmont.
Right now, my 95 VW is falling apart. To be fair, it has 225,000 miles on it.
And I’m pretty sure that Fiat could sell cars here. Their cars are modern, well made, and best of all the new 500 and Abarth are cool.
Who is going to buy Fiats branded as Dodge or Jeeps branded as Fiat?
@Paris-Dakar: I hope you drive stick because the Panda 4×4 is not available in Automatic.
Seriously, the thing to understand is that Fiat is one of the most resilient car companies around.
Whereas Toyota might panic, battles with bout of self-doubt, and change its CEO because of the crisis; for Fiat this slump is just another day at the office. This company has been on the brink of oblivion so many times that the fear of death is no longer there. I personally believe that Italians perform better when they have nothing left to lose.
Fiat needs Chrysler because outside of Europe (mainly Italy) and Brazil, it does not sell anything in the rest of the world (not much at least).
Keep your eyes on PSA (Peugeot-Citroen) and Tata Motors. There might be a Chrysler-Fiat-PSA-Tata alliance in the making.
I’m not sure why the notion that there isn’t anything for either company to gain is getting any traction. Fiat has a product line of innovative smallish cars that are by all accounts reasonably priced and decent quality. Chrysler’s product line, on the other hand, is strongest in the large sedan and SUV (Jeep) segments. It’s just about the only merger that makes any sense at all or has any chance of success.
I’m not sure why the notion that there isn’t anything for either company to gain is getting any traction.
Because we have witnessed what has happened to Chrysler as a result of the Daimler merger. And that was in good times. What makes anyone believe that this merger will work now? It will not be an overnight success and time is something Chrysler has very little.
On some levels, this deal makes a lot of sense. (And on others, it doesn’t.) I suspect that the whole venture will probably fail, but it’s probably worth trying, anyway.
Put yourself in Fiat’s position. By global standards, you’re a global player, but fairly small player compared to your rivals. (To put things in perspective, Fiat’s global revenues from selling cars is similar to what Honda generates from vehicle sales just in North America alone. And Honda itself is not the biggest dog on the block.)
You used to enjoy the protection of trade barriers and intense national loyalty, but now you don’t have either. Most of your car sales are in one region — Europe — where competition is intense and growth prospects are limited. Meanwhile, you have major competitors that are both strong and growing, and that have a head start in what looks like may be the future of the auto industry in Asia. All of your competitors understand that growth isn’t just about selling more vehicles, but about taking away sales from their competitors, which means you have a big bounty on your head.
In that environment, Fiat is vulnerable and its future is questionable. Car companies have three basic options: (1) Pick a strong niche, do well with it, and stick with it, (2) grow, or (3) die. Fiat is fearful of #3, and is going for #2.
The American domestic blowout may be Fiat’s only opportunity to grab a lot of market share very quickly. A chance like this is likely to never happen again, anywhere on earth. Put yourself up against that wall, and suddenly, Chrysler is starting to look like a terrific idea.
That doesn’t mean that it’s going to work. But it makes sense for Fiat to make a radical move to make it work. If they have strong management and a viable product plan, they have a shot. In their circumstances, they have to take it.
Robert Best line of the day: That’s like Kodak teaming-up with Polaroid to make high end digital cameras for the Japanese
And there are still plenty of Americans who know that Fiat stands for “Fix It Again Tony.” A big problem to overcome. The new Malibu is a good car but the perception of chevy stinks.
It sounds like something out of a sitcom. “Hey crazy enough to work.”
IMO They can sell the cars with drip pans and spare fan belts
Then again let’s see if the Alfa MiTo makes it here
All this discussion brings up some intriguing ideas. Fiat gets control of Chrysler. Keepers: Jeep Wranglers, Patriot and Grand Cherokee, Dodge Caravan and Ram. All of these are modern and competitive, for the most part. Maybe the Chrysler 300 platform, but maybe not. It is getting old, segment is not growing long term, and they will get Killed by CAFE if this is the only domestic passenger car they sell. Anyhow, Keep Jeep and Truck operations only, some of which may be suitable for export.
But I still wonder if Jeep and trucks only could be profitable in the US. Lots of dealers would have to go away, of course. The remaining dealers could eventually get US versions of select Fiat cars. Not sure if it will work, but its fascinating, nonetheless.
They’ve issued their new FIAT Bravo with a 5 year warranty (a la Hyundai) and it’s quite a good looking car. FIAT really are trying to put the days of rust buckets and bad reliability to rest. Give them a chance, they may surprise you…
They may surprise us, but I don’t think it will be quick and easy for them. I suspect most Americans would prefer that their neighbor be the first on the block to own a new Fiat. Then, after 10 years, if the Fiats are still going toe to toe with the Toyotas and Hondas, then we may start to buy Fiats in appreciable numbers.
My crystal ball is showing 3 or more years of dismal car sales in the US. So Fiat will be coming to our shores, again, when the market is shrinking and people are value conscious. People will feel better about buying cars from makers with good reps. The time to take a flier is when all is going well and one can afford a mistake. Fiat’s past reputation haunts them, however unfair that may be, and it will take years and years for them to prove themselves in this market.
I think Fiat are able to do a world of good for Chrysler. Lord knows they are well experienced in saving carcompanies; look what they’ve managed to do for Maserati, for Ferrari, for Alfa Romeo, and to a certain extent for Lancia. And they are making good money from most of them, so why not make ChryMoCo prosperous again and cash in from them as well?
If it wasn’t for MY tax money they want to use for those stupid mergers I wouldn’t care. When Cry/Daimler merged they burned billions… however, the stockholders had elected the board members who made sch stupid decision (and back then I and everyone on the street knew Crysler and Mercedes don’t go along… just look at the cars..) .
Now, it is my money and I don’t even get to vote on it. or any possible profit (ha ha!)
Let Chrysler go C7, and someone picks up Jeep and their dealers network… then it will be the same as they plan, but without my money.
I can’t blame Fiat for trying to get our money, though. It is the CEO’s duty to do what is in their best interest. If they get Chrysler, our money and all for free… they are very good CEOs and won’t be able to sleep because they won’t be able to stop laughing about Americans and how foolish we spend trillions just to keep a destroyed brand-name alive.
@Paris-Dakar: I hope you drive stick because the Panda 4×4 is not available in Automatic.
That wouldn’t be a problem. I’d be getting it to save money over the Jeep.
Keep your eyes on PSA (Peugeot-Citroen) and Tata Motors. There might be a Chrysler-Fiat-PSA-Tata alliance in the making.
Peugeot is the other Euro Brand I’ve been impressed with. Their 2-series and 4-series cars are sharp. They also made a Pininfarina-bodied 406 Coupe a few years back that was beautiful.
As far as the quality issues regarding Fiat, from everything I’ve read, they’re currently equal/better than VW/Audi – faint praise, I know.
Paris-dakar
I had a Peugeot 406 coupe before my Jaguar X-Type and it was a stunning car.
It was the only (modern) French car which I liked.
It was achingly pretty, the fuel economy wasn’t that bad and the reliability was OK.
But, Peugeot had naff all to do with it. It was styled and built by Pinifarina. That was what made it different from the rest of the Peugeot range.
I actually see the synergy here.
Chrysler is strong in SUVs, large trucks and large cars. Where it is absolutely uncompetitive is small cars and midsizes.
That’s where Fiat is strong.
So, if the plan is to build Fiats restyled to American tastes in Chrysler plants, it makes perfect sense to me. Chrysler gets the products it needs, and Fiat gets access to the American market.
And let’s talk about “Fiat built lousy cars,” shall we? Yes, they were unreliable…but they were also unsuited for this market. Same problem that plagued Peugeot, Citroen, Alfa Romeo and a host of other European brands. They weren’t necessarily bad cars – they were just not engineered well enough to handle the extremes of the North American market, and their dealer organizations were a Keystone Kops affair.
(The exception: the English cars, which sucked on BOTH sides of the pond)
Chrysler, with an established dealer network, would help solve that problem.
If Fiat cars performed as badly in Europe as they did here, the company wouldn’t have survived. Lord knows a ton of brands have failed there.
I think this might be a good idea if they can do it right.
By the way, anyone who thinks Fiat products suck should check out this one…what kind of freakin’ loser would drive THIS pile of junk?
http://eweiss.files.wordpress.com/2008/03/ferrari-f430-6-big.jpg
Other than the billions of dollars promised by the feds to put this together, nothing in this deal makes any sense for FIAT. I say this not because of their products, I would by a 500 in a second (actually much more practical to live with than the Mini Cooper and they seem to be doing well in the U.S.). I had lunch at the FIAT executive dining room on Turin once… the wine served by the white-jacketed waiters was superb though it did throw our small group of Americans for a bit of a loop when they put the bottles down… was this a trick? You had to be there.
Rather, if it’s factories they want why not simply cherrypick a factory or two here post Chrysler CH11 in the U.S. or build a greenfield site and probably get hundreds of millions of dollars in subisidies fro Sen. Shelby’s constituents directly. It seems easier to let Chrysler go through the cost and pain of closing all of the redundant plants as in any scenario, most of Chrysler’s product lineup will be euthanized.
If it’s a dealer network they are looking for, not only do Chrylser’s dealers seem poorly matched to the sale of quirky European cars to quirky European car shoppers, it’s much too large for the future lineup of remaining Chrysler/Jeep and Fiat/Alfa cars the market will bear. Again, it’s not like there isn’t a glut of experienced but struggling or bankrupt dealers to pick from to create a new network. Saturn’s dealer network comes to mind. A Chrysler CH11 first would free Fiat from the cost of telling 2/3rds of Chrysler’s dealers to take a hike.
Let’s not forget, when Alfa Romeos were last sold in the States in the early 1990s they were sold through a small number of Chrysler dealers who could have barely been bothered to talk to customers about them. The last cars sold here were the still cool (IMHO) but woefully aged and overpriced Spiders and the 164, which was a fantastic modern FWD sedan. If I remember correctly, the last few years that dealer network couldn’t move more than a few hundred 164s a year. Putting FIATs in showrooms next to crew-cab Dodge pickups or, perish the thought, Sebrings, seems like a recipe for disaster.
Whatever. I just want to be able to test drive and at least have the option to buy a 500. Fiats may fall apart after 15 minutes, but it’ll be a great 15 minutes.
The ignominious retreat Fiat beat from the US market in the 1980s has minimal bearing upon it’s prospects today. Ferrari and Maserati are doing just fine in their niche, and they made some horrifically unreliable cars back in those days as well. Audi was at least as beaten up of a brand at the time, yet Audi chose to stick it out at the time and has become successful in its niche as well.
The original Mini was a flop in the US, but has enjoyed a good revival. Whether or not Fiat can successfully bring its modern products into this market is certainly an open question, but the answer does not hinge on the prior efforts. One piece of the puzzle people forget is that the US was far ahead of the curve on emissions standards, wholesale adoption of unleaded fuels and safety standards throughout the 1970s and 80s. Heck, the UK didn’t ban leaded motor fuels until 1999. The need to engineer significantly different vehicles for the US vs. Europe has narrowed significantly over the past two decades. Further unification of regulations between the continents would be most helpful, but the gap is much smaller today than it once was.
Also, today’s US buyer population is more open to European sized vehicles than it has been since the oil embargoes of the 70s. This is yet another reason that common development for both markets is much more doable today than in the past.
Dismissing a Fiat-Chrysler tie-up out of hand is, IMO, short sighted.
@John Horner : That should be the final post of the thread. You have said it all, cut through the rabid anti Chrysler and Fiat rhetoric and made a clear, rational, statement about this tie up.
Two thumbs up, Mr Horner.
Dweezil,
I disagree. Everything Horner said is insightful about why a Fiat return to the U.S. could work. Nothing here, however, explains why a tie-up with Chrysler makes this return any more likely to succeed.
Given the market here, they could just as easily re-enter without Chrysler and probably be better off for it with the exception of the Federal bailout money. But, most of that money will be going to clean up the mess the old Chrysler/Cerberus has left behind.
If the U.S. market is more open to European-sized vehicles and U.S. and Euro regulations are now more closely matched, then these factors could also point to Fiat entering the market with a fresh group of dealers and products imported from existing (undercapacity) factories around the world, no?
Could well be, Steve. I just thought his take on it was clear headed. GM and Ford are not looking for a tie up, they’re looking to divest. Who is left?
A fresh dealer set up would be very costly. Where could Fiat start from zero essentially with little to no cost with a car maker that is already established [and until only just recently]
had a 10% market share and sales of a million units.
Now whether they would be better served picking through the remains for $$$$ or getting in before the final flag for free, essentially, is the question.
Importing leaves a lot to be desired when a central location in NA [and Canada and Mexico] would benefit both makes. Fiat is already in S. America. Cars are backing up on docks everywhere.
Chrysler still has some strong products that don’t overlap and the brands wouldn’t be in danger of cannibalizing each other.
My point is essentially that Mr Horner’s post was even handed and level headed and not blurred by the sort of flaming contempt that a lot of people seem to have toward both makes, justified or not.
To just dismiss it out of hand because of the participants is to deny that there is some sort to activity going on whether any of us thinks it’s smart or not. And because of that, the story will get lost.
If the U.S. market is more open to European-sized vehicles and U.S. and Euro regulations are now more closely matched, then these factors could also point to Fiat entering the market with a fresh group of dealers and products imported from existing (undercapacity) factories around the world, no?
What you are missing is that acquiring an existing company provides a known brand and a faster time to market.
The primary issue for a company in Fiat’s position is not the cost per se, but the timing. If buying Chrysler provides market share quickly, that alone could be a reason to buy it. This is why companies often acquire existing rivals at a premium even though they could theoretically build their own units and compete against them.
But, most of that money will be going to clean up the mess the old Chrysler/Cerberus has left behind.
I wouldn’t assume that. A buyer can pick and choose what pieces that they buy.
It’s not as if Fiat or anyone else is obliged to buy every piece of the business. That’s a matter of negotiation.
Buying “Chrysler” may just be a matter of buying the name, the existing inventory, intellectual property (designs, R&D) and whatever factories that it may want. If the feds create a Good Chrysler that is sold while bankrupting the remaining Bad Chrysler, a lot of the existing baggage goes away and won’t be Fiat’s to own.
Buying a business does not have to be an all-or-nothing affair. Under these circumstances, it’s almost certain that it won’t be. They’d be buying the pieces of the company that they want, not the whole thing.
ConspicuousLurker: People are demanding value, not flash in their purchases. That’s why Kia / Hyundai are doing comparatively well while GM and Chrysler founder (even with all that cash on the hood, it’s still not all that great of a deal when you figure in resale and maintenance costs).
Hyundai and Kia have propped up sales by unloading a high percentage on fleets and using hefty incentives (including the promise to buy back the vehicle if the buyer loses his or her job).
John Horner: The ignominious retreat Fiat beat from the US market in the 1980s has minimal bearing upon it’s prospects today. Ferrari and Maserati are doing just fine in their niche, and they made some horrifically unreliable cars back in those days as well.
Ferrari and Maserati build cars for buyers with entirely different expectations. Reliability isn’t their number-one expectation, because most Ferrari and Maserati buyers aren’t expecting their toys to run every day in all types of weather and in all kinds of traffic.
Anyone who can afford a brand-new Ferrari or Maserati can afford to take a chance on a vehicle that offers more performance and sex appeal than reliability.
Fiat will be competing with Honda, Toyota, Ford, Hyundai and Nissan, all of which offer vehicles with at least average reliability (most actually score better). They will be competing with these brands for buyers who cannot afford to make a costly mistake on their new vehicle purchase. These buyers aren’t about to view spending time in the dealer’s lounge for the latest repair as a worthwhile exchange for “charm” or the urge to drive something different or unique.
Really, Fiat will be able to pick and choose which parts of Chrysler they want and easily dispose of those they don’t? They will be free of any of the liabilites that normally come with acquiring a company? The 50 different states that control franchise law will easily let them simply close dealerships and waive the liabilities that normally hit companies without a CH11 restructuring?
I don’t see why allowing interested dealers to apply for and build new dealerships will take longer than culling the existing over-large Chrysler, Dodge, and Jeep dealers to a sustainable number.
That said, I think Fiat leadership has shown themselves to be very savvy businesspeople… and in the case of GM, 2 billion examples of such. They must know more about this deal than we do. Then again, there was that Mercedes merger of equals…
Fiat will be able to pick and choose which parts of Chrysler they want and easily dispose of those they don’t?
Of course. It’s all subject to negotiation.
This happens all the time. The company gets cut into pieces, and they buy the pieces that they want. In circumstances like this, this would be the norm.