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Chrysler and Fiat - Italian-American Flavor?

OK, the German-American relationship (i.e. DaimlerChrysler) isn't going well and thoughts of filing divorce papers is surfacing (or already in the process).

The rumor-mill is running amok of a possible French/Japanese/American (i.e. Renault/Nissan/Chrysler) menage-a-trois or even a Chinese-American (i.e. Chery Motors/Chrysler) partnership.

Bah, I say it's all a soap-opera re-run. Therefore, I say it's time for some Italian passion and a tie-up with the Fiat Group shouldn't be ignored. And please, don't bring up the old "Fix It Again Tony" jokes about the reputation of Fiat cars of yore.

Interestingly, this isn't the first time a Chrysler-Fiat partnership has been considered. Back in 1988, Lee Iaccoca and then Fiat Chairman Giovanni Agnelli, were longtime friends (http://www.findarticles.com/p/articles/mi_m3165/is_n11_v24/ai_6829756).

So, why look at this relationship again? Here are my observations:

- Style/Design -
Personally, I find Chrysler vehicle styling and design to be between average and boring. Not a good position to be in when even the likes of Honda of America are finally spicing things up (e.g. new Civic and forthcoming new Accord).

If you take a look at the new Fiat Bravo and the recently introduced new Grand Punto, styled by Giugiaro, these are cars that have a 21st century look, enhancing "drivability" which should appeal to all demographics and most importantly, women who are image conscious and have a disposable income.

Oh, and let's not forget that Alfa Romeo is part of the Fiat Auto Group. Therefore, Chrysler-Fiat could offer vehicles to BMW/Audi/Mercedes-Benz buyers too.

Go to http://www.fiat.com to see Bravo and Grand Punto.

- Technology -
Fiat's core competency is making small, stylish and economical cars. Something that America is, finally, beginning to accept again. And more than likely will continue for the foreseeable future.

The Fiat engine line-up includes everything from economical to high-performance. Indeed, Fiat's MultiJet (sulfur-free) diesel engines are on par with the Germans and most are very fuel-efficient.

- Safety and Reliability -
The equivalent of NHTSA testing is Euro NCAP and Fiat's latest range of cars get the highest ratings possible.

As to reliability, well, it's certainly better than the "Fix It Again Tony" days, and the most recent cars have had good reliability ratings thus far. Still, this is where Chrysler, with it's ten year association with co-German engineering experience, can benefit the relationship.

- Positioning -
I think certain domestic models (e.g. SUVs, trucks, vans) should be emphasized with the Dodge and Jeep brands and Chrysler take on compact and sub-compact Fiat based cars like the Grand Punto and the Bravo.

And yes, bring back Alfa Romeo with readily available Chrysler/Dodge dealerships.

So, a Chrysler "Soprano" anyone?

Comments welcome of course.

YipYipYipee
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Comments

  • hpmctorquehpmctorque Posts: 4,205
    I imagine Fiat is running some numbers on such a combination. Among other considerations, Fiat will need a dance partner sooner or later, and Chrysler could provide an entree into the North American market. On the other hand, the negatives of such a combination, for Chrysler and Fiat alike, are numerous.
  • Thanks for the reply, HPMCTORQUE.

    Agreed. I've only done a "scribbles on a napkin" approach to this idea and admit there is still a great amount of due diligence required to see if this partnership is even possible.

    From a technology perspective, I'm not sure if Fiat cars, like the Grand Punto or new Bravo, are engineered to be "global platform" vehicles. I certainly hope they can be.

    If you've had the opportunity to look at the afore mentioned cars, and were in the market to buy a compact/sub-compact, would you consider looking at one? And if so, what would you compare it with?

    YipYipYipee
  • jaserbjaserb Posts: 858
    "And yes, bring back Alfa Romeo with readily available Chrysler/Dodge dealerships." Um... no.

    Alfa entered into a distribution agreement with Chrysler back in the '80s called ARDONA that did exactly that - sold Alfas in Chrysler dealerships. Given that you can no longer buy an Alfa in the US I'll let you imagine how well it worked.

    -Jason
  • In hindsight, I think you're right, Jason. It hadn't and wouldn't work.

    In any case, there are established plans to sell Alfa Romeo through the existing Masarati dealerships. If it ever happens.

    YipYipYipee
  • hpmctorquehpmctorque Posts: 4,205
    "If you've had the opportunity to look at the afore mentioned cars, and were in the market to buy a compact/sub-compact, would you consider looking at one? And if so, what would you compare it with?"

    Yes, I'd consider them, since I'm familiar with Fiats. They're fun to drive, and I think that now that they've got to compete with Toyota and others, their quality has improved significantly.

    I'd compare them with VW golf/Rabbits and Jettas, Focuses, Astras, etc.
  • hpmctorquehpmctorque Posts: 4,205
    A three way merger between Fiat, Peugeot, and Chrysler might make strategic sense in terms of scale, and reintroducing Fiat and Peugeot (which also owns Citroen) products in the North American market. Such a combination would be a huge challenge in terms of execution, however.
  • snakeweaselsnakeweasel a Certified Edmunds Poster.Posts: 11,753
    And please, don't bring up the old "Fix It Again Tony" jokes about the reputation of Fiat cars of yore.

    Rats there goes all my fun.

    But in reality I think it could benefit Fiat as it would give them entry into the North American market again. But for Chrysler I think it would be a mistake to merge with a make that hasn't been in North America for decades. If Fiat had a good presence in NA then I would say it would work, but since they don't Chrysler would have to be crazy to even consider it.

    The sign said "No shoes, no shirt, no service", it didn't say anything about no pants.

  • "Yes, I'd consider them, since I'm familiar with Fiats. They're fun to drive, and I think that now that they've got to compete with Toyota and others, their quality has improved significantly."

    I assume that by you saying you're familiar with Fiats, you've driven the more recent products in Europe or elsewhere? If so, which one(s)?

    Personally, I drove a Grand Punto, although it was powered by the 1.2L engine. Great around town, but get it out on the highway and you really had to be careful about overtaking traffic.

    "
    I'd compare them with VW golf/Rabbits and Jettas, Focuses, Astras, etc."

    Yes, I'd agree with you there. In terms of fit, finish and preceived quality, pretty much on par with what else is available in the class.

    YipYipYipee
  • Yes, that would be a challenge to execute. And it would be great to introduce some of the cars in the Peugeot/Citroen stable to the U.S.

    However, I'm concerned the French designed products would be culturally or even functionally challenging to the U.S. market.

    YipYipYipee
  • Well, I wasn't strictly thinking of a merger. Rather a technology sharing and/or licensing scheme.

    As I've mentioned before, Chrysler lacks access to small car technology, which it desperately needs to compete. What Mercedes-Benz has is inappropriate or too expensive to manufacture.

    I think Fiat's absence from the American market is a good thing. Cars like the new Bravo and Grand Punto would be so distinctive and different, they'd make refreshingly decent alternatives to what's already available in America (think Mini, which really was a Rover product and the only thing kept by BMW). Just make sure they're badged Chrysler (or maybe Dodge).

    Fiat understands licensing and has a tradition in this business. So, assuming the cars can be easily modified to comply with U.S. safety and emissions, it's a matter of re-tooling a plant to manufacture them. Far cheaper (especially with Federal and State incentives in place) and a faster turn-around than building a "new" car.

    YipYipYipee
  • hpmctorquehpmctorque Posts: 4,205
    "...If so, which one(s)?"

    The most recent one was a '99 Punto 1.4. Before that a 1.3 turbo-diesel, can't remember the model name, but it was one size smaller that the Punto. That was particularly impressive, as it had suprising power and handled well. It was a blast to drive in the mountains.
  • "The most recent one was a '99 Punto 1.4. Before that a 1.3 turbo-diesel, can't remember the model name, but it was one size smaller that the Punto. That was particularly impressive, as it had suprising power and handled well. It was a blast to drive in the mountains."

    Smaller than a Punto with a 1.3 turbo-diesel... Hmm, are you sure it was a Fiat? I wonder if you're referring to a VW Lupo. If so, I had one of those. Great car, lurched a bit on round-abouts as it had the significantly heavier 1.4L "Pumpe Düse" turbo-diesel (with intercooler no less!). Still, it was a hoot to drive on the Welsh roads... Unfortunately, it got totaled so I replaced it with a used Audi A2 with all the toys. Anyway, I digress.

    Reuters recently reported Fiat's CEO has no interest in buying Chrysler, but I still think there is an opportunity for Chrysler to license vehicles for production or importation into the U.S. market.

    YipYipYipee
  • boaz47boaz47 Posts: 2,750
    Fiat was bleeding red ink so bad it was hard to think of them buying anyone. It wasn't all that long ago the economists were warning everyone that before GM divested themselves of part of Fiat that they might have to honor the "put" order in the contract and that would have cost GM a boatload. Has Fiat by some miracle found a way to stop the bleeding?
  • "Has Fiat by some miracle found a way to stop the bleeding?"

    Comparatively speaking, yes.

    The soon to be released new Bravo went from design to manufacturing in 18 months. And it's a car they hope will get them clearly in the black (along with the Grande Punto and soon to be released Fiat Nuova 500).

    Fiat also has finished arrangements with its union and the Italian government, the early retirement of 2,000 Fiat workers.

    So far so good.

    YipYipYipee
  • andys120andys120 Loudon NHPosts: 16,639
    (think Mini, which really was a Rover product and the only thing kept by BMW).

    Rover did inherit the original Mini from the defunct Bitish Leyland but the modern day Mini was designed entirely by engineers inthe employ of BMW AG, it is built at Oxford rather than the old Rover plant at Longbridge.

    To get back on topic, I think the Fiat Bravo would sell well in the US market now that small car sales are rising. IMHO this makes a Sentra or a Corolla look downright frumpy.>

    image

    2000 BMW 528i, 2001 BMW 330CiC

  • boaz47boaz47 Posts: 2,750
    Well I will admit in most cases I like the look and style of Italian cars. But I don't think you can go from near death to buying Chrysler in one felt swoop. Comparative or not it sounds like a lot of wishful thinking. The history of Fiat in the US has always been as an interesting second car but not something you can count on for day to day driving. I have to admit smaller cars are doing better than they have in years but I am not sure we are ready for a return of the Italians just yet. I agree they left of their own free will when they left the US market, unlike the French who were driven off of our shores much like hounds chasing a fox. I also agree they must have a ready made dealer network to even get e foothold. It just doesn't seem possible that they can go from pleading for their life to buying Chrysler in less than five years. I am not ready to start holding my breath just yet. Though I could see taking the plunge for a Alfa if they could pull it off.
  • "Rover did inherit the original Mini from the defunct Bitish Leyland but the modern day Mini was designed entirely by engineers in the employ of BMW AG, it is built at Oxford rather than the old Rover plant at Longbridge."

    Thanks for volunteering the clarification.

    And yes I agree the new Bravo, the Grande Punto and even the new 500 are great looking cars, perfect for the compact/sub-compact market. Indeed, I've been disappointed in what Chrysler has been putting out in the market these past few years. It's time for a change.

    YipYipYipee
  • "It just doesn't seem possible that they can go from pleading for their life to buying Chrysler in less than five years. I am not ready to start holding my breath just yet. Though I could see taking the plunge for a Alfa if they could pull it off."

    Well, for the record, Reuters reported yesterday the CEO of Fiat has "Zero" interest in purchasing Chrysler.

    I agree that some of the Fiat products of the late 90's and early 00's had quality, reliability or design issues. Thankfully, Fiat not only restructured themselves financially, but product, manufacturing and design wise too. And you can see that in cars like the Panda, the Grande Punto and the new Bravo. All have the highest Euro NCAP safety ratings and so far, favorable initial customer satisfaction surveys.

    I don't expect Fiat to take over Chrysler. Rather, I expect the new owners to possibly license some of Fiat's car models and manufacturer them domestically. Perhaps on a kind of lend-lease or even profit-share program.

    An example scenario could be the "new" Chrysler will embark on an immediate crash program to get the Fiat models emission and safety compliant. Then start building and importing these U.S. bound models from existing Fiat factories (e.g. South America). Then at some phase, re-tool an existing U.S. Chrysler factory to build them domestically.

    I think the trend is favorable for smaller, European styled cars to make it here in America. Indeed, Saturn seems to have done well by introducing the Aura (aka Opel Vectra), recently voted "North American Car of the Year".

    Speaking of Saturn, I hope they bring in the new Opel Corsa. That's a great looking car.

    YipYipYipee
  • Latest news is VW and Renault-Nissan are going to take a pass on Chrysler. Indeed, ultimately I don't expect GM to go for the company either.

    So, that leaves the Chinese and the equity firms. Therefore, my theory on getting some hot new Fiats is still a possibility.

    YipYipYipee
  • By Fiat marketing its cars through another name brand, they can sell cars in the US without having to set up another dealer network like what they are doing with the FIAT Seidici/Suzuki SX4.

    Chrysler would be my first choice for a marketing partner. The Alfa Romeo nameplate would also be a welcome addition. The automotive press, while often harsh, will acknowledge a fine automobile.

    I do have a question. Can they make the FIAT product line comply to Emission/Safety standards?
  • nippononlynippononly SF Bay AreaPosts: 12,692
    that GM PAID OUT $2 billion such a short time NOT to be lumbered with Fiat. What looks like it is on an upswing on the surface may be quite the opposite behind the scenes.

    I fully expect my speculation of six months ago to come true before the end of the decade: that Chrysler will be in Chinese hands (owned by Chery or perhaps SAIC). Clearly Cerberus is panicking even as it is trying so desperately to demonstrate that it is not. Perhaps that sale will come sooner than even I imagined.

    2013 Civic SI, 2009 Outback Sport 5-spd (stick)

  • boaz47boaz47 Posts: 2,750
    I like Chrysler and would hate to see them go. I was not impressed with their relationship with Daimler and would be less impressed with them being acquired by an Asian company.

    I was around when Studebaker went under and it was hardly a blip on the car buying screen. When American Motors shut down I don't know many even noticed. I had never even driven a AMC vehicle. But the one upside I could see in Chrysler being bought by an Asian company is we might get a delivery system for some cars more people could afford. The economy is taking a big hit and new cars sales are taking a big hit with it. Maybe the Chinese would infuse some affordable vehicles into the system so people wouldn't have to resort to older used cars? At least it would be the parts and service disaster the French had when they were here.
  • hpmctorquehpmctorque Posts: 4,205
    This discussion has been dead for over a year because a Chrysler-Fiat alliance seemed such a long shot, and, to many, the business case didn't seem sound. Well, the improbable has happened. Hopefully, Fiat has learned from Daimler-Benz's mistakes.
  • steverstever Viva Las CrucesPosts: 40,826
    Good job sniffing this one out.

    The alliance wasn't such a long shot in the end game after all, eh?

    Moderator
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  • hpmctorquehpmctorque Posts: 4,205
    Yeah, and the interesting this is that this deal, if it goes through - it's not a don deal yet - makes strategic sense. Chrysler gets the small cars it desperately needs for the North American market, plus greatly increased distribution in Europe for its Jeeps and minivans, and perhaps its large RWD sedans, if they're dieselized. Fiat gains distribution into the North American market.

    Another strong point, from a strategic standpoint, is that there is minimal, if any, product overlap.

    Additional factors include the fact that Chrysler dealers will, hopefully, get new models that people will want to buy. As a corollary, North American consumers will get more choices, and the increased competition from a viable Chrysler will help values. Additionally, Fiat has leading edge technology, which could be very useful to Chrysler.

    Now, it goes without saying that an alliance that makes strategic sense doesn't guarantee success, because Murphy's law hasn't been repealed. However, is the outlook for Chrysler more hopeful than it just a few days ago? You betcha!
  • steverstever Viva Las CrucesPosts: 40,826
    Maybe the upshot will be that Chrysler will export US made Jeeps to India using Fiat's connections there. Or maybe they'll just wind up shipping the tooling there.

    Moderator
    Need help navigating? stever@edmunds.com - or send a private message by clicking on my name.

  • dtownfbdtownfb Posts: 2,915
    Overall, a good move. I guess the big question: is this deal too late to save Chrysler? it takes a while to integrate car lines. Can they start selling Fiats right away?
  • hpmctorquehpmctorque Posts: 4,205
    The U.S. government should grant Fiat a temporary waiver on safety and emissions regulations to permit Chrysler to begin selling Fiats or Fiats rebadged as Dodges and/or Chryslers without delay. These are extraordinary times, and extraordinary times justify extraordinary measures. After all, Europe isn't exactly the third world, so just how unsafe and polluting can cars that qualify there be?

    In order to be fair, other automakers should be allowed the same exemptions. Ford would already be selling Fiestas here if the regulations were relaxed. And just imagine how many excellent diesel cars would be available. Again, this would be a temporary measure, to accommodate the current crisis.
  • nippononlynippononly SF Bay AreaPosts: 12,692
    It's the U.S. crash requirements that make it hard for automakers to import their European models here, not the emissions regulations. The emissions regs only impact the diesels.

    Do you really want less safe cars to be sold here, in a time of decreasing driver involvement, more and more powerful cars, and a proliferation of higher-centered SUVs and crossovers? The safety requirements for cars sold in the U.S. are already fairly minimal.

    It would be nice to see cars with a European flavor compete in the U.S. with VW, the only other low-priced European brand here. But Fiats? They might end up making us feel we had it pretty darn good with VW.

    2013 Civic SI, 2009 Outback Sport 5-spd (stick)

  • hpmctorquehpmctorque Posts: 4,205
    How confident are you that your knowledge or perception of Fiat's reliability are up-to-date, and not based on cars from the imported Fiats of the '60s, '70s and '80s?
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