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Chrysler Allies With Fiat
hpmctorque
Member Posts: 4,600
in Chrysler
This is an interesting and exciting development, but it will also be controversial, as two less-than-major players with less-than-stellar reputations must prove that, together, they can compete in this tough market.
The following is from today's Detroit Free Press...
"Fiat and Chrysler sign alliance plan
ROME
1/20/2009 4:48:11 AM
By ARIEL DAVID
Fiat and Chrysler said Tuesday they have signed a nonbinding agreement for a strategic alliance that would give the Italian auto empire a 35-percent stake in the troubled U.S. carmaker.
The two companies said in a joint statement they would share technologies and vehicle platforms. Under the proposed alliance, Fiat would not invest cash in Chrysler but would provide access to its successful small-car platforms, as well as to its more environmentally friendly and fuel-efficient engines.
The statement said Fiat would take an 'initial' 35-percent stake, suggesting the deal may be broadened. It stressed that under the agreement the company is not committing to funding Chrysler in the future.
For Chrysler, based in Auburn Hills, Michigan, the deal would mean breaking out of the North American market and gaining access to more competitive products.
'A Chrysler-Fiat partnership is a great fit as it creates the potential for a powerful, new global competitor, offering Chrysler a number of strategic benefits, including access to products that complement our current portfolio (and) a distribution network outside North America,' said Bob Nardelli, Chairman and CEO of Chrysler LLC.
Fiat Group SpA, which makes Fiat, Lancia and Alfa Romeo vehicles, is trying to re-enter the United States market. The company has expressed interest in bringing its Fiat 500 compact car and the Alfa Romeo brand to the U.S.
The alliance is subject to a review of company finances and regulatory approvals, including by the U.S. Treasury Department, which last week announced an emergency bridge loan for Chrysler, which analysts say will have difficulty surviving as an independent company.
'This initiative represents a key milestone in the rapidly changing landscape of the automotive sector,' said Fiat CEO Sergio Marchionne.
'The agreement will offer both companies opportunities to gain access to most relevant automotive markets with innovative and environmentally friendly product offering, a field in which Fiat is a recognized world leader, while benefiting from additional cost synergies,' he said.
Chrysler, which is 80.1 percent owned by Cerberus Capital Management LLP, has been hurt by its reliance upon slow-selling trucks and sport utility vehicles and analysts have said it may not survive the year as an independent company despite receiving the $4 billion government loan.
The Treasury Department said Friday it will provide a $1.5 billion loan to Chrysler's financing arm, Chrysler Financial, and the automaker plans to offer zero-percent financing on several models and expand lending to car buyers with less than ideal credit.
Nardelli said the partnership would provide a return for taxpayers on the loan, 'securing long-term viability of Chrysler brands,' boosting consumer confidence and "preserving American jobs.' "
The following is from today's Detroit Free Press...
"Fiat and Chrysler sign alliance plan
ROME
1/20/2009 4:48:11 AM
By ARIEL DAVID
Fiat and Chrysler said Tuesday they have signed a nonbinding agreement for a strategic alliance that would give the Italian auto empire a 35-percent stake in the troubled U.S. carmaker.
The two companies said in a joint statement they would share technologies and vehicle platforms. Under the proposed alliance, Fiat would not invest cash in Chrysler but would provide access to its successful small-car platforms, as well as to its more environmentally friendly and fuel-efficient engines.
The statement said Fiat would take an 'initial' 35-percent stake, suggesting the deal may be broadened. It stressed that under the agreement the company is not committing to funding Chrysler in the future.
For Chrysler, based in Auburn Hills, Michigan, the deal would mean breaking out of the North American market and gaining access to more competitive products.
'A Chrysler-Fiat partnership is a great fit as it creates the potential for a powerful, new global competitor, offering Chrysler a number of strategic benefits, including access to products that complement our current portfolio (and) a distribution network outside North America,' said Bob Nardelli, Chairman and CEO of Chrysler LLC.
Fiat Group SpA, which makes Fiat, Lancia and Alfa Romeo vehicles, is trying to re-enter the United States market. The company has expressed interest in bringing its Fiat 500 compact car and the Alfa Romeo brand to the U.S.
The alliance is subject to a review of company finances and regulatory approvals, including by the U.S. Treasury Department, which last week announced an emergency bridge loan for Chrysler, which analysts say will have difficulty surviving as an independent company.
'This initiative represents a key milestone in the rapidly changing landscape of the automotive sector,' said Fiat CEO Sergio Marchionne.
'The agreement will offer both companies opportunities to gain access to most relevant automotive markets with innovative and environmentally friendly product offering, a field in which Fiat is a recognized world leader, while benefiting from additional cost synergies,' he said.
Chrysler, which is 80.1 percent owned by Cerberus Capital Management LLP, has been hurt by its reliance upon slow-selling trucks and sport utility vehicles and analysts have said it may not survive the year as an independent company despite receiving the $4 billion government loan.
The Treasury Department said Friday it will provide a $1.5 billion loan to Chrysler's financing arm, Chrysler Financial, and the automaker plans to offer zero-percent financing on several models and expand lending to car buyers with less than ideal credit.
Nardelli said the partnership would provide a return for taxpayers on the loan, 'securing long-term viability of Chrysler brands,' boosting consumer confidence and "preserving American jobs.' "
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I think this alliance will benefit American motorists by providing new fuel and space efficient, yet fun-to-drive choices.
I also think this deal make more business sense than a GM-Chrysler merger.
Here's some more links from Edmunds.
It's Official: Chrysler gets hitched to Fiat
Chrysler, Fiat Sign Global Strategic Alliance Deal
There's no news yet as to possible management changes at the companies.
As for domestic Chrysler sales, Chrysler will get several smaller and more fuel-efficient models out of the deal. Will they be called Chryslers or will they be Fiats sold at Chrysler dealers? Or some new brand name?
This will ultimately prove to be very similar to the Daimler deal for Chrysler, in only worsening its future prospects I'm sure. But I'm not totally against it if it provides Fiat with a means of getting back into the American market, at least with Alfa.
2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)
I could also envision a diesel version of the Chrysler 300 for the European and U.S. market.
There's little product overlap, Chrysler would get much needed new product, while Fiat would gain a ready made distribution network that would be grateful for the opportunity to remain alive. Additionally, Chrysler would get expanded distribution for its Jeep models, minivans, and rear wheel Drive cars in Europe. Further, as mentioned in my previous message, Fiat's diesel engines and technology could be very useful to Chrysler.
A good strategic fit is hardly a guarantee that Chrysler will survive, or Fiat, for that matter. However, this deal offers a "YES, WE CAN!" type of hope just when Chrysler was given up for dead by many, and at a time when hope is scarce in the auto industry.
Another consideration is that this alliance, if it comes to pass and works well, could eventually be expanded to include one or more other automakers. I'm sure Peugeot-Citroen, just to name one possibility, is taking note of this deal.
It's a plausible plan for viability that they don't otherwise possess... a promise of new product that they can't afford to design themselves.
It may not WORK, but it will sell to congress, I think.
Oh, man, that is funny. Unintentional, perhaps, but still funny.
However, I do agree with you on your first point. It's not like Fiat can start selling 500's and Bravo's in the next few months at your local Chrysler dealerships, and it will take even longer to update the factories here in the US to build Fiats locally.
The other side of the coin, though, is that Jeeps and minivans were built in Europe at the old DC factories - does Chrysler still retain ownership, or did they go back to Daimler when the company was sold to Cerebus?
I was looking at the Fiat UK website ... here's what they offer:
500 - Halo car; would compete well with the Mini.
Bravo - The "large" small car that Chrysler can't seem to get right. Spicy alternative to the Golf or Mazda 3.
Grande Punto - Seems to slot between the Panda and the Bravo in size, but marketed as more of a sporty alternative to either.
Panda - A worthy competitor to the Fit or Yaris.
Sedici - Twin to the Suzuki SX4 crossover - makes me wonder if the partnership with Suzuki will continue.
Multipla - Segment buster when it was first introduced, but now would compete with the Mazda 5 and the Kia Rondo. Ugly as sin, but I believe that the small minivan market could use something like this.
Doblo - A slightly larger people carrier; if Chrysler decided to drop the GC, this might serve well.
Qubo - A small van, used as both a commercial vehicle and a Honda Element-like funky people carrier. If Ford is federalizing the Transit for the US, it makes sense for Fiat/Chrysler to offer this as well.
What's interesting about the whole deal is that no money is changing hands -- did Cerebus just give Fiat 35% of the company? Tells you how much Cerebus thinks it's worth.
Uuugggghhhhhhh! Do you know how much money Chrysler could lose, that the taxpayer will have to cover, during that time?!! And for what? What benefit would a Chrysler-Fiat be to anyone except those who own or work at Chrysler-Fiat? The U.S. already has Priuses, Insight, Smart, and Ford has the new Fiesta, amongst others.
I don't want to shovel $30B into Chrysler to keep it afloat, so that 50K people can buy a Fiat a few years from now!!! :mad:
Also the European market is severely declining due to the recession, and I doubt it would be good for anyone to introduce new brands in Europe.
The only answer to the current global vehicle market - meaning too many brands and too much production, is for several to go out of business. I don't see it as very logical for each government to prop up their companies, to pay for workers and vehicles no one wants.
Owner of a 2004 Quest
Yeah. Kind of like the VW Rabbit but without the legendary Volkswagen reliability. :sick:
I was racking my brain for the name Strada until zoomzoom brought it up but the car itself was stuck in my head. I looked at one when they were new. The dealer sold Fiats, Mazda and I think Mercedes at the time. Later he added Buicks.
The good news is i didn't buy the Strada. The bad news is I bought the Rabbit.
They are talking about two years before any fruit of this alliance would show up. Two years is an awful long time for Chrysler in its present condition. Can you say BILLIONS more in American taxpayer life support by 2011?
Because of the Dodge Ram pickup and Jeep SUVs, Chrysler relies mostly on beefy Hemi V8 engines and large-displacement V6s to power its high-volume vehicles. That dependence cost Chrysler in 2008....
......For now, Fiat probably would shun Chrysler’s pushrod Hemi V8s, said Andrew Close, senior technical research analyst at Global Insight in London. Fiat likely would turn to its Maserati unit for a lightweight, more technologically sophisticated overhead-cam V8 for Alfa Romeo sports cars and sedans, Close said.
......Fiat also has invested in technologies that save fuel and reduce emissions. One such technology is the dual-clutch transmission, which retains the fuel economy of a manual transmission while providing the convenience of an automatic.
Another is the stop-start system, which automatically turns off the engine when the vehicle stops and quickly restarts it when the driver is ready to accelerate.
Because of those investments, Fiat likely would not use Chrysler’s front-wheel-drive, Two Mode hybrid technology.
....Chrysler couldn’t profitably transplant Fiat’s new generation of four-cylinder diesel engines into its small vehicles because of high European production costs and the expense of getting the engines to meet stricter U.S. emissions standards, said Jim Hall, an analyst with 2953 Analytics in suburban Detroit.
Chrysler also couldn’t profitably import two small four-cylinder gasoline engines--a 1.4-liter and a 1.8-liter--because of the high production costs stemming from building the engines in Europe.
Yet despite all this there is supposedly some benefit to Chrysler in this "alliance"?? The article goes on to say that maybe in some distant future Chrysler could build Fiat-designed engines in the U.S., and use Fiat platforms as the basis for new models. How many years out is that? 5? 10?
It alternates between "2011 is a realistic timeframe" and "someday this could provide benefit". Absurd. The truth is this alliance has less potential than the proposed one earlier between it and GM. And I wouldn't have thought that was possible. :sick:
http://www.autoweek.com/article/20090121/FREE/901219987
2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)
"Italian automaker Fiat, which is set to take an initial 35% stake in Chrysler, reported a 69.8% drop in fourth-quarter profit, to $232.38 million, blamed on a slump in demand in western Europe and the economic slowdown in South America. Full-year profit was down 16.2%, to about $2.24 billion."
Profits were down, but, unlike our domestic automakers and others, including Toyota if I'm not mistaken, Fiat was profitable. I'm sure the margins are very fragile, but that's the state of the industry today.
I would love it if they were right on this one though.
2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)
Since you've indicated you like small, nimble, economical cars, does the Fiat 500 appeal to you?
2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)
Let's talk about money first. The consummation of the deal requires the U.S. government to kick in another $3 billion in bailout aid to Chrysler. That'll be a really tough sell in Washington. Second, lets look at the time factor. Even if Chrysler were given $3 billion, it's unlikely to tide the company over for the time it will take to get federalized Fiats or Fiat-badged Dodges and Chryslers into U.S. showrooms.
A third, though less serious hurdle than the first two, is Fiat's legacy of unreliability in this country. I think this is surmountable, and that perception lags reality on this issue, since, like Volkswagen, Fiat has been competing with the leading Asian and European brands in Europe and around the world for many years now. Competition has forced Fiat to improve its quality and reliability significantly. Fiats may not yet be as reliable as Toyotas and Hondas, but they've got compensating attributes. They're economical, feisty, fun-to-drive cars, with interesting styling. I predict that competition will continue to exert pressure on Fiat to focus on improving quality and reliability, until these will cease to be significant issues.
I'll also petition my Congressmen to have Chrysler and/or Cerberus to return 35% or all of the loan $ ! :mad:
(Although, it will affect the attitudes of previous Fiat owners.)
FIAT still means Found in A Toilet to me. I spent way too much money maintaining a Fiat Spyder for my son while he was in HS. He just had to have that POC. I don't think I would every look at another FIAT.
"Don't dismiss Fiat so quickly
Recent products show it has plenty to offer its would-be U.S. partner
BY MARK PHELAN • FREE PRESS COLUMNIST • January 25, 2009
Boxy, rusty, antiquated and unreliable. To understand how Fiat engineers and designers feel when Americans talk about their cars this way in discussions of their proposed alliance with Chrysler, Detroiters should remember how they felt when members of Congress dismissed American vehicles as low-quality, unreliable gas guzzlers.
The vehicles Fiat produces today bear as much resemblance to the lousy cars that sent it slinking out of the country in the 1980s as the excellent 2009 Chevrolet Malibu does to a 1986 Chevy Chevette, which, you may recall, was an ugly little rustbox.
There's no telling yet if Fiat's alliance with Chrysler will pay off, but if you want to see what the Italian automaker has to offer, consider the Fiat 500, the award-winning little car that has become the company's poster child.
The tiny 500 is a Mediterranean Mini Cooper, but 9.1 inches shorter. It offers charming style and advanced technology in a package that buyers across Europe have found irresistible since it debuted nearly two years ago.
Like the Mini Cooper, the 500 trades on heritage. The stylishly rounded 500 harks back to two previous models that built Fiat's reputation. The prewar 500 or Topolino, was so beloved that its nickname means "little mouse," the same thing Italians called Mickey Mouse. The postwar 500 was a simple and inexpensive car that put Italy on wheels in the same way the VW Beetle helped restart the German economy. Fiat ended production of the 500 in 1975 before resurrecting it a couple of years ago.
Today's 500 builds on their looks, but adds a beautifully trimmed interior and advanced features like Blue & Me.
As Ford did developing its trailblazing Sync feature, Fiat worked with Microsoft to provide a system that seamlessly integrates hands-free phones and iPods into the car, providing voice control and minimizing driver distraction.
Several small engines make the 500 one of Europe's most fuel-efficient cars.
It sold out in weeks after debuting, and it costs thousands of dollars less than a Mini Cooper that starts at $18,500.
The 500's platform is also the basis for Ford's new Ka city car. Fiat is to build the car for Ford at a plant in Poland.
The 500 is high on the list of cars Fiat would like to build in North America, and it's one of the reasons Chrysler's potential partner is worth a second look."
Yeah, the original Omni/Horizon 1.7 engine came from VW. Chrysler even sourced a 1.6 from Peugeot (around 1980) for a brief period before equipping these cars with a carburated version of the Chrysler 2.2.
A 100 hp Fiat 500 is a gas guzzler?
:confuse:
(Maybe in comparison to a hybrid or diesel, but in comparison to most US economy cars?)
The reason that most of the really frugal European diesels (especially the small cars) never come here is not the emissions standards, it is that that they are DIRT SLOW by U.S. standards, and the automakers are afraid no-one will buy them. And that remark includes the 500 diesel, I'm sure. More's the pity.
2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)
You looking to displease as many factions as possible there, garice?! ;-)
2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)
Maybe partially true, and partially true that the safety standards are not exactly alike. One of the best things international organizations could do for the world is to have 1 set of standards, rather than having products redesigned for each market's environmental and safety specifications.
Oh, Audi seems to have a fairly fast diesel. :P
Not in the $15-25K small car segment. ;-)
2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)
Anyway back to Chryslers and Fiats. Despite the rhetoric coming from Chrysler, and depending on their definition of viable, I don't see Chrysler making any money in this economy. And Fiat like every other manufacturer is going to have a tough time surviving, so I really don't see who's going to have any money. I wouldn't be surprised that at the end of 2009 that 25% of the auto brands of the world were gone.
What I see are a lot of desperate companies trying to put a smile on and tell a good yarn to either get someone to invest in them, or con some more government money to live a few more months.
I dunno about demise of that many brands. A few economists are starting to hint around that the economy may be bottomed in some sectors and existing home sales spiked because of the bargains out there. And money supply increased a small amount, so maybe credit will ease.
Fiat isn't the only one still on the table apparently:
"Press said Chrysler is in talks with other possible partners in case the U.S. Treasury Department rejects its proposed alliance with Italy's Fiat, the Detroit News reported. Indeed, there has been some debate about whether U.S. taxpayers should fund a U.S. company that is giving a 35 percent equity stake to a foreign automaker -- a stake that may well go higher -- with no cash changing hands.
"If it doesn't work out with Fiat, we still have had other conversations with other potential partners and alliances and those obviously can continue, so we have other alternatives," Press said, according to the paper. "It's a little bit like dating: nobody knows who we're dating. We don't need the paparazzi to follow us around and put pressure on the dates"
Chrysler's Press: On Sales, Incentives, Cash and Alliances
http://www.usatoday.com/money/world/2009-01-28-imf-global-economy_N.htm
Add to this that people like Greenspan, and any group of economists is in uncharted waters, and you'll get the picture that these guys are like the passenger who has to take the controls of the plane, because the pilot collapsed. They know they need to do something and that some combination of actions will work, but which, how much and when. Oh, it may be a little harder, because the crisis is global, there are actually a bunch of passengers working the controls.
Here's a rundown of possible models Fiat could bring to the US:
Raiding the Fiat Cupboard (Edmunds Daily)
"Fuel-efficient minicars, subcompact and compact cars could begin rolling out of Chrysler plants by mid-2011 if the company's alliance with Fiat goes through, the Italian automaker's chief executive officer said Monday..."
The question that's often raised these days is, how will Chrysler survive for the next 30 months? My solution would be to give Chrysler and the rest of the industry a temporary waiver on safety and emissions, so that vehicles that meet the European Union standards could be sold here. The justification would be that, (1) this is a highly unusual period for the economy and the auto industry; (2) we're not talking third world standards here, but those of a highly developed region of the world; and (3) the wiaver would be temporary.
A valid counter argument is that we have productive overcapacity in the U.S. auto industry, and that we don't need Chrysler and Fiat in our market. The fact that Chrysler was recently bailed out with a government loan suggests that there's a sizeable constituency that would like Chrysler to survive in some form, if it can be viable. Most people are of the opinion that Chrysler's only hope for survival is to partner with another company. The counter arguments to this partnership have been well articulated in this discussion.
Wouldn't the introduction of many models from Europe mean that the "market/pie would be divided up into more pieces". So every model that is currently being made and sold here, would then decrease, as these cars from Europe would steal their sales? So if Chrysler's plants are already slow, then the introduction of European cars decreases the sales of the existing brands. This then makes the financials of Chrysler worse, as their factories are producing less. Or Chrysler has to drop models, close factories and get rid of more U.S. workers then before the Fiats are sold.
2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)