Find Reviews by Make:
Considerare l’aritmetica, asks Rob Cox at breakingviews.com. Sure, the Chrysler freebee deal has sent Fiat stock soaring, but if you strip away the non-auto components of the Fiat group and factor in the firm’s $8 billion in debt, and what’s left is worth only $5.5 billion, according to Cox’s math. Which means Fiat will face some major challenges in cobbling together its 5 million annual global sales empire, a fact we’ve already explored here. And based on Chrysler’s insatiable appetite for taxpayer dollars, Fiat’s going to have a tough time just feeding the cash-burn beast.
11 Comments on “Fiat Motors Is Worth Only $5.5 Billion...”
Read all comments
So when this deal goes bad (as it inevitably will) it will likely take Fiat down with it. Why is it so hard for the PTFOA, the Obama admin. and the UAW to let Chrysler go to liquidation, where it belongs? Chrysler will never be viable again, no matter how much money is pumped into it.
yeah there’s a giant bit of schadenfreude going on with me right now
deep down i kinda know that most of the automakers and the attendant hangers on are TARP… toxic assets… as in “IT’S a TARP”
companies who buy other toxic asset companies are fools
we are not talking about VW buying Porsche (or whatever the hell was going on in that hedge fund clusterf*ck)
Renault buying Saturn? The French motor industry is in the toilet isn’t it just like it was before the GFC.
Geely buying Saab? Easier to buy than to crib other peoples’ designs now I guess.
Indians owning Jaguar/Land Rover? Good luck.
Most of these ‘shotgun relationships’ or ‘fire sales’ are built on endless blue sky and I don’t think any serious person thinks that any of these sales will end well.
I’m not old enough to remember the days when the US had dozens of car manufacturers, but I have to assume that most of them considered or actually went through with these kind of “shotgun weddings” near the end of their lives. And, in the end, what did it do to save them? Nothing. They all died anyway.
It appears that we are destined to repeat history on a larger scale with a giant dollop of taxpayer-funded bailout money thrown on top.
PLEASE, PLEASE, PLEASE just let Chrysler fucking die! They’ve been trying to do it for decades now, and if it hadn’t been for a government loan in the ’80s (or was that the late ’70s?) they would have. Euthanize Chrysler and let them go not-so-quietly into the night. Please?!?!?
Fiat needs to grow, or it’s going to die. Marchionne’s choices are limited and his play seems fairly straightforward — try to grow the auto business, before its fate is decided for him by the competition (death).
Marchionne has to do this or at least something like this, assuming that the price is right (which it is, if the US government lends as much as support as it seems willing to lend.) If things work out, he has created value, has helped to ensure the longevity of Fiat, and perhaps has created a business that he can spin out. If things don’t work out, he dumps it, which he would have to have done, anyway.
It’s not a guaranteed option or a home run, just the best choice. “Best” and “fantastic” aren’t necessarily the same thing.
Ultimately Carlos Ghosn, Sergio Marchionne and Ferdinand Piech will be fighting each other in a street brawl to see who carries the European automotive flag to the world from here on out. As with most knife-fights, there will be moments of excitement, other moments of inelegance, with various cheering onlookers each rooting for their favorite guy. These are tumultuous times.
Ultimately Carlos Ghosn, Sergio Marchionne and Ferdinand Piech will be fighting each other in a street brawl to see who carries the European automotive flag….
Geeze, with Piech and Ghosn in the same room aren’t we risking a critical mass of ego punching a hole in space-time?
Hmmm, ripping open a space-time singularity right here on our planet would certainly solve a lot of the world’s problems!
Marchionne will be the new CEO of Chrysler when (if) it emerges from bankruptcy:
http://www.bloomberg.com/apps/news?pid=20601087&sid=aaOneH_aNcs0&refer=home
What’s really going to be interesting to see, assuming Newco and GM make it out of bankruptcy, is how consumers respond to government-backed firms vs. those that are still fully private (Ford).
If Newco and GM can somehow turn their government funding into an advantage, either in product or the “deal”, Ford may be next in line.
Although the odds seem long that these mergers can result anything good, recall that both General Motors and Audi (Auto Union) were the result of mergers of struggling auto companies in the early 20th century. So it has been done before.
“Which means Fiat will face some major challenges in cobbling together its 5 million annual global sales empire, a fact we’ve already explored here. And based on Chrysler’s insatiable appetite for taxpayer dollars, Fiat’s going to have a tough time just feeding the cash-burn beast.”
I thought FIAT was not going to be putting any money into this deal? If so, there is not “beast” to feed. Did something change?