Will Fiat Drive Chrysler Out of the Crisis?

by Andrea Loquenzi Holzer
April 7, 2009 at 5:30 am

http://www.hudson-ny.org/451/will-fiat-drive-chrysler-out-of-the-crisis

The Fiat-Chrysler forthcoming agreement will function as bridge between two worlds: by signing the deal, in fact, the Americans will have access to a series of new technologies (such as fuel efficient engines) while the Italians will gain a base for start selling in the U.S.

Who would have thought, just a few years ago, that one day one of the big American names of the car industry would have ended up being rescued by the Fabrica Italiana Automobili Torino (but many called it Fix It Again Tony, remember?).

Five years have gone since GM decided to quit its joint venture with the old Italian auto maker, losing 2 billion in the withdrawal. The Obama administration has suggested that Chrysler sign an agreement with Fiat, in order to get the big check they need (6 billion dollars) for their survival (at least until the end of the month).

But by joining forces with Fiat, Chrysler may not buy its way out of the abyss.

If it is true that history reveals the future, then the Detroit’s smaller auto maker is already dead, as not even the mighty German giant, Daimler, could save Chrysler in the course of almost a decade.

Given this premise, why in the world is there optimism in the air while Sergio Marchionne - Fiat CEO - is in the U.S. talking to his Chrysler counterparts? Perhaps because he proved to be a fantastic manager by rescuing the Italian auto maker from hell five years ago.

Since Marchionne’s arrival, Fiat went from being a zombie to a champion; its sales went up in Europe and the rest of the world.

Another thing seems clear: Fiat and Chrysler are made for each other with the American brand good at making big cars and the Italian firm being the master of small, fuel-efficient vehicles.

While the deal represents a last chance for Chrysler, Fiat would not risk much of its assests if things will turn out badly. In the era of wire transfers and collossal bankruptcies, this Italian/American deal resembles a barter.

Fiat will, indeed, pass its know-how (the most relialable fuel effcient engines money can buy, gearboxes, robots and platforms) over to Chrysler in exchange for a chance to enter in the American market with three brands, Fiat, Lancia and Alfa Romeo, that will certainly be appreciated.

The new 500, for example, a fantastic looking small car, as well as the Mini’s rival, Alfa Romeo MiTo, are bound to succeed. They both have small and powerful engines, not to mention the good look.

Many pundits and personalities around the world have already blessed this agreement - - starting with Obama, who complimented Marchionne and the Italian brand by stating that: “the current management team has executed an impressive turnaround” and that Fiat is ready to transfer its “cutting-edge technology to Chrysler and, after working closely with my team, has committed to building new fuel-efficient cars and engines here in America.”

Of course, Marchionne quickly replied: “I would like to publicly thank President Obama on behalf of the entire Fiat management team for the kind words he used in referring to our work over the past five years”.

Even Henry Kissinger spoke about a “very good wedding, a perfect alliance between two firms very different from each other but at the same time complementary”. Finally, for Tony Lewin (a car industry guru) of the Wall Street Journal, “the Fiat hook-up represents Chrysler’s only chance of surviving the next 30 days and probably its best hope of staying in business beyond then, too”.

Also, don’t forget : Fiat owns Ferrari and Maserati, two of the most desirable brands in the world. We do not know if this deal could actually save Chrysler from failing, but being driven by Fiat might end-up like a good exit strategy for the Americans, while for Marchionne’s creature, the deal could be a great chance to enlarge its business.

http://www.loccidentale.it/articolo/will+fiat+drive+chrysler+out+of+the+crisis%3F+.0069038.

Related Topics:  Andrea Loquenzi Holzer