Chrysler Allies With Fiat

hpmctorque · February 2009

" Or Chrysler has to drop models, close factories and get rid of more U.S. workers then before the Fiats are sold."

I'm virtually certain this would happen. Chrysler would drop its intermediates (Dodge Stratus and Chrysler Sebring), which have never sold well. Also, it's already been announced that '09 is the last model year for the PT Cruiser and, at a minimum, the Compass will be dropped from the Jeep lineup. The Caliber is iffy, in my estimation. The Chrysler Corp. models that would probably survive have no Fiat equivalents, and include the Jeep Wrangler and Jeep SUVS, the Dodge and/or Chrysler minivans, the Dodge Charger and/or Chrysler 300 rear-wheel-drive cars, and the Dodge Challenger.

The government loans may give GM and Chrysler an opportunity to weather this storm, but will by no means guarantee their long-term survival. If there are too many models sold in the U.S., and I agree with you that there are, the marketplace will ultimately weed out the least competitive ones.

gagrice · February 2009

give Chrysler and the rest of the industry a temporary waiver on safety and emissions

That is a great idea. Let all the auto makers offer the small trucks and cars that are high mileage into the country for 5 years. As long as the meet the current Euro4 emissions standards. It would give GM and Ford a chance to compete against the Asian imports in the smaller car segments. Face it the Big 3 has never done a good job building small cars in the USA.

stever · February 2009

"In an interview with the Detroit Free Press, Fiat CEO, Sergio Marchionne said that Chrysler must meet the terms of federal loans and, "stand up on its own two legs."

"If it doesn't, we won't play," Marchionne added."

Fiat Boss: Chrysler "needs to stand up on its own two legs"

fezo · February 2009

I dunno. That doesn't sound good to me. Essentially sounds like Fiat is saying that if we fix it up enough they'll do us a favor and take it off our hands.

gagrice · February 2009

Didn't Fiat cost GM about $4B in a deal gone sour?

hpmctorque · February 2009

"Didn't Fiat cost GM about $4B in a deal gone sour?"

That's correct, but this historical fact doesn't serve as an analogy for Chrysler's partnership with Fiat, if that's what you're implying. The situations between the Chrysler-fiat deal and the earlier GM-Fiat one are very different, and shouldn't be compared.

stever · February 2009

"The deal for Italian automaker Fiat SpA to take a 35 percent stake in Chrysler LLC will not be finished until after Chrysler submits a restructuring plan to the federal government, a Chrysler official said Friday."

Chrysler official: No Fiat deal closing by Tuesday (AP)

roeteena · February 2009

Yes it would be nice,I think no matter what you get ahold of now days seems like they all have similar problems,I still can't get my factory alarm off,I to have read alot of bad reviews,no wonder there there sales are down,what really irrates me the most is you get out here on the street and you see one right after the other Town & Country and you just start cussing all of them and makes you that much more madder.I agree it will sell to congress.I know one thing I will never own another Chrysler again.

kernick · February 2009

Is this like a man and woman falling in love while waiting outside of bankruptcy court?

http://www.marketwatch.com/news/story/Moodys-cuts-Fiats-long-term/story.aspx?gui- d=%7B6868272C%2DD5CE%2D44DA%2DA321%2DFD1F889BEEC5%7D

hpmctorque · March 2009

From Today's Detroit Free Press...

BY MARK PHELAN  FREE PRESS AUTO CRITIC  March 4, 2009

"GENEVA  On the eve of Fiat CEO Sergio Marchionnes meeting with the presidential automotive task force to discuss his companys proposed alliance with Chrysler, the Italian automaker unveiled a new engine technology it says can reduce fuel consumption as much as 25%.

The system is expected to be available to all Fiats current and future partners, including Chrysler, Fiat powertrain chief Alfredo Altavilla said at Geneva's annual auto show.

The first engine using the system goes on sale in the Alfa Romeo MiTo sporty compact in Europe later this year. The MiTo is among the cars Fiats Alfa Romeo brand hopes to sell in the Untied States if its alliance with Chrysler comes to pass.

Called Multiair, the system uses electronic controls and hydraulics to vary an engines valve timing over a wider range than the mechanical systems automakers use today. Many automakers have turned to variable valve timing to improve fuel economy and boost performance in recent years.

Development of Multiair began with Fiats Ferrari Formula 1 racing team.

The system will initially be fitted to Fiats family of 1.0-liter to 1.4-liter four-cylinder engines. It will also be used on an upcoming line of 900cc two-cylinder engines the automaker has developed for use in small cars. Fiat will eventually use it on all its automotive engines.

Multiair reduces an engines fuel consumption 10%, but its high power output will allow automakers to replace big engines with smaller ones, leading to the potential 25% decreased in overall fuel consumption, Altavilla said. It also reduces exhaust emissions by 40% to 60% he said.

Fiat has proposed taking a 35% stake in Chrysler in exchange for providing the struggling automaker with a variety of vehicle platforms and engine and transmission technologies to produce the small, fuel-efficient vehicles Chrysler needs.

If the alliance goes through, Chrysler would build vehicles, engines and transmissions based on Fiat technology, in addition to assembling Fiat and Alfa Romeo models at some of its North American assembly plants. Fiat could eventually raise its stake in Chrysler to a controlling 55%.

Multiair can be used on both gasoline and diesel engines. Fiat thinks it will allow diesels to meet strict 2014 European emissions limits without the costly exhaust treatment systems other automakers have said they will use."

Is this a ruse by Fiat to get the Chrysler deal done, or is this new technology for real?

nippononly · March 2009

Yes. Too good to be true.

Will result in an actual mpg improvement of maybe 10% (if that), as they will end up choosing to boost power at the same time as increasing fuel economy, I'm sure.

stever · March 2009

"Fiat CEO Sergio Marchionne does not assume that 2009 will be a year of losses for his company. In an interview with Automotive News, the non-carguy chief executive said that assuming losses is a terrible message for the company."

Fiat CEO Displays Odd Sense of Competency, Refuses to Accept Losses

nippononly · March 2009

Yet ANOTHER CEO in denial of reality? Maybe that is part of the MQs to become an automotive CEO these days...

There was a spiel on the evening news the other day regarding the potential Fiat tie-up, and how "analysts said" it was a non-starter as Fiat was not bringing enough money to the deal and Chrysler would most likely founder before year's end.

The little Fiats pictured in the piece were sure cute though! ;-)

kernick · March 2009

I remember reading about the desert war in North Africa in WWII, when the then 20,000 man British army defeated and captured most of the 240,000 man Italian army. Maybe this CEO is a descendent of that Italian general? I wonder if Fiat made the Italian tanks?

dtownfb · March 2009

Here's an article by Keith Crain (AutoNews) about the Chrysler/Fiat alliance:

To save Chrysler, let Fiat have it

Keith Crain
Automotive News Europe
March 16, 2009 06:01 CET

Anyone who has studied Chrysler for any length of time realizes it is on the brink of going out of business.

There may be a number of viable solutions to the dilemma, from finding a Chinese buyer to letting the employees own the company to letting Carlos Ghosn make it part of his alliance. But no one has stepped forward.

No one, that is, except Fiat. Regardless of what we think of the terms and the risk/reward ratio, there is no one out there except Fiat. So Fiat wins by default.

If you accept the premise that Chrysler LLC cannot make it on its own, you look at the Fiat offer quite differently.

No one wants to see the tens of thousands of jobs related to Chrysler disappear. When you add the people who work for Chrysler's dealers and suppliers, the total grows to hundreds of thousands of jobs just in the United States.

Even with a substantial bailout by the federal government, Chrysler is unlikely to survive without some sort of affiliation. Going forward, Chrysler doesn't have the products necessary to compete in the most fiercely competitive market in the world.

So if most of Chrysler is to be kept intact, it must be acquired by a company with products that are complementary to the vehicles Chrysler builds or has in its pipeline.

Fiat will bring a variety of smaller, fuel-efficient vehicles that will be necessary in the months and years ahead when fuel climbs back to much higher prices. Fiat has the diesel technology that all companies will need.

Yes, Chrysler's shareholders would again be outside the United States. But it's a matter of determining how the most jobs can be saved and what the only viable choice other than dissolution is.

If the proposal of merging Chrysler with General Motors comes up again, remember that the resulting loss of jobs would be gigantic. A deal with Fiat would save the most jobs and give Chrysler the best chance for survival.

It's not a perfect world, and the decision will come down to the analysis of the government's task force. But Chrysler doesn't have a lot of options.

nippononly · March 2009

I remember reading this in the magazine when it arrived. I read this....
No one wants to see the tens of thousands of jobs related to Chrysler disappear. When you add the people who work for Chrysler's dealers and suppliers, the total grows to hundreds of thousands of jobs just in the United States.
....and I think so what? We are losing 600,000 jobs per month in this economy, from companies that had a much better business plan and much more viable bottom line a year ago than Chrysler did.

I think they should break off the small pieces of Chrysler that would actually be useful to Fiat, ask for some money for them, and dissolve the rest. This is a company whose time has come and gone.

gagrice · March 2009

I agree that letting Fiat have it for the dealer network and maybe the minivan and trucks. They also own Freightliner I believe, though the trucking industry is in the toilet as well.

dtownfb · March 2009

If partnering with Fiat is such a good idea, why doesn't Cerberus find investors to support Chrysler instead of begging money from the government? Chrysler's executives have been blowing a lot of smoke lately which tells me they are very worried. I don't want to see job lost either but I can't see supporting this company another 2-3 years until the partnership with Fiat kicks in.

nippononly · March 2009

that the plan for the Fiat alliance is well-developed and includes nixing pretty much all existing Chrysler Group products in favor of selling five different Fiats and Alfas (to be built at existing U.S. Chrysler plants) direct from Chrysler network dealers as well as building four more Fiats and one Alfa in the U.S. with Chrysler Group badges. ONE of the plans is to sell the Fiat Panda Cross as a new "pint-sized Jeep":

The Fiat-Chrysler vision

Viability plan details 6 Fiats that could be made in North America if alliance flies

The future of Jeep in a 40-mpg world may lie in a pint-sized off-road vehicle already plying the back roads of Europe. The vehicle is called the Fiat Panda Cross and is available only in a 1.3-liter diesel version that gets nearly 40 mpg.

....Here's how current Fiat and Alfa Romeo vehicles could fit into Chrysler LLC's lineup. They are only tantalizing hints of what might finally be sold in North America.

Fiat products for U.S.
These vehicles could be built in Chrysler factories and sold in Chrysler dealerships under their Italian brand names.
 Fiat 500 minicar: Big hit, retro hatch, possible Mini fighter
 Alfa Romeo MiTo: Stylish 3-door hatchback
 Alfa Romeo Milano: Compact sedan, will replace current Alfa 147
 Alfa Romeo Giulia: Sleek mid-size sedan, will replace current Alfa Romeo 159
 Alfa Romeo compact SUV: Compact utility vehicle hinges on Alfa Romeo's re-entry into U.S.

In addition, they detail the five Fiat Group models to be rebadged and sold as Chryslers or Dodges, including the Grande Punto as a new subcompact Dodge, the Linea to replace the Caliber, the Alfa 159 (which will itself be replaced by the Guilia in 2012, a model designed around the so-called D-Evo platform) to replace the Avenger and Sebring, and a new Patriot and Compass based on the current C-Evo platform.

http://www.autonews.com/article/20090323/ANA03/903230332/1193
(registration link)

For all you diesel lovers, I suppose there's a decent chance some if not all of these will be available with diesel engines, because
(a) the next generation European cars will all be designed to meet the 2014 Euro emissions standards, which are stricter than our existing standards for diesel, and
(b) Chrysler and Fiat both seem to be deadly serious about becoming fuel economy leaders. There's still talk of many of these models also being available with all-electric drivetrains.

gagrice · March 2009

I can just see this Fiat 500 in your drive way :shades:

nippononly · March 2009

You got it! :-)

Actually, I would want the Abarth model, and with the plans this fully developed, I am kinda hoping an Abarth model or two will be part of the game plan as well!

Oh, and mine wouldn't be PINK, thank you very much! :-P

fintail · March 2009

If they sell them here in that color, it will have a hard time gaining any cred, no matter how fun it may be.

nippononly · March 2009

But that's Italian for you: stand out and be different. Chrysler and Dodge will be VERY different companies once/if they are only selling Italian vehicles, with Italians running the show.

And say what you will, but the 500 Abarth is a fairly serious little performer. It can certainly go head to head with the likes of Mini Cooper, Fiesta RS, and Swift GT.

fintail · March 2009

Oh, I know it's a cool little car...just sell it in white, black, maybe grey or silver or a period Italian color like an orangey red, with Abarth trim. Girling-it-up would just be mean to the car.

nippononly · March 2009

Well, if they could sell the base-model 500 for around $10K or so, they could chase the Koreans (and maybe GM too) right out of town...in that case having a few neon and pastel colors available might be just quirky enough to help sell a boatload of them....

fintail · March 2009

Yeah, and to make it a sales success, you can't be exclusive when aiming for customers. Both genders have to want them.

gagrice · March 2009

I just could not resist. Here is the rest of the story.

Fiat 500 makes headlines once more, as befits an authentic Made in Italy icon. This time its an original Fiat 500 show car dedicated to the most famous fashion doll ever: Barbie. This exceptional vehicle, created by a partnership between the Fiat Centro Stile and Mattel, will be given officially to Barbie on 9 March next, at her fiftieth birthday celebrations in Milan.

gogogodzilla · March 2009

I showed a picture of the Fiat 500 to my mother... and should it come out in the US, she'd sell off her Hyundai Elantra for it in a heartbeat.

dtownfb · March 2009

Can we just shut Chrysler down now??!!??? This way Fiat can align with Saturn which makes more sense.....and actually pay money to get back into the market and not receive the government cheese....I mean bailout.

gagrice · March 2009

Did you say Abarth? I think you have to find your own blonde.

nippononly · March 2009

Well, if Fiat gets Chrysler they get a bunch of wholly owned production facilities with which to build all their cute Italian cars. If they buy Saturn they get a more appropriately sized dealer network, but they also get no dedicated factories.

hpmctorque · March 2009

There are plenty of shuttered auto facilities for Fiat to buy, for cents on the dollar.

stever · March 2009

"Fiat chief Sergio Marchionne immediately headed to Detroit Tuesday, a day after President Barack Obama,gave Chrysler and Fiat only 30 days to pull together a deal if they had any hope for obtaining another $6 billion from U.S. taxpayers/"

Fiat's Marchionne Is Bound for Detroit (AutoObserver)

nippononly · April 2009

Fiat says it could abandon Chrysler due to unions

Fiat S.p.A. CEO Sergio Marchionne said he is ready to abandon plans to form a partnership with Chrysler LLC unless the U.S. carmaker's unions accept substantial labor cost reductions by the end of the month.

....."Absolutely we are prepared to walk," Marchionne said in an interview published on the website of Canada's Globe and Mail on Wednesday. "We cannot commit to this organization (Chrysler) unless we see light at the end of the tunnel."

Marchionne said there is only a 50-50 chance the Fiat-Chrysler partnership will be formed because of the lack of progress on labor negotiations, especially on the Canadian side.

From what I can tell from a distance, the Canadian Auto Workers may have taken more rigid positions," he said. "The dialogue is out of sync. I think they need to see what state the industry is in. Canada and the U.S. are coming in as the lender of last resort."

.....Sources famiiar with the negotiations said Fiat is not interested in cherry picking Chrysler's assets from an eventual bankruptcy sale, because it wants an alliance with a full-fledged North American automaker.

Fiat and Chrysler are in talks with Chrysler's unions and bondholders to agree a partnership before an April 30 deadline set by the U.S. government.

Washington has warned that Chrysler would go into bankruptcy if it fails to complete a deal.

If Chrysler and Fiat prove their alliance is workable, the U.S. government will grant Chrysler up to $6 billion in additional loans.

Chrysler and Fiat negotiators are in talks with UAW officials about reducing Chrysler's $10.6 billion obligation to the union's health care trust.

The U.S. Treasury Department also is negotiating with the major banks holding $6.9 billion in Chrysler debt, according to a Bloomberg News report. Bloomberg said the four largest lenders are JPMorgan Chase & Co., Citigroup, Goldman Sachs Group and Morgan Stanley.

http://www.autoweek.com/article/20090415/CARNEWS/904159997

This whole thing sounds real darn shaky, and that's BEFORE you consider the poor financial shape Fiat is in itself. I'm quite sure that even if everything goes ahead under the best-case scenario, Fiat will not need all the manufacturing capacity Chrysler currently has in North America. So when it says it is not interested in "cherry picking", I don't understand what they mean. Are they in La-La Land here with their expectations for what the bondholders, health care fund, and workers will accept in the form of reductions? Sounds like it.

gagrice · April 2009

I don't think Fiat ever intended to use much of Chrysler's manufacturing. They wanted certain names like Jeep & Dodge Ram along with several 1000 dealers to sell Fiat products. They would become a full fledged auto company in a 2nd rate country.

Fiat would probably be better off waiting until C files for liquidation and bid on the parts they want. Chase JP Morgan tried to buy Washington Mutual Bank a couple years ago. WaMu said no way. When they went bankrupt last year Chase got the whole system for pennies and the stockholders lost their shorts. Fiat would be crazy to buy into any kind of deal the UAW is a part of.

iluvmysephia1 · April 2009

they ain't nuthin' but a ball and chain. Sing this song to a thumpin' gangsta rappa UAW beat, man.

dtownfb · April 2009

Completely agree with you gagrice. Fiat can simply wait two more weeks and pick up the brands they want for much cheaper and not have to deal with the UAW. Then they can buy Saturn and a few Chrysler plants to bring some of their operations here.

It's interesting that before the March 31st deadline the management of Chrysler was out in full force talking up the company and discussing how great things were despite selling only half the cars they sold last year. Now with the April 30th deadline and reality has set in, I haven't heard a thing from Press or Nardelli.

This whole situation with Chrysler and GM is like watching a train wreck. Exciting and waitng to see how it ends; but you know their will be a lot of carnage.

hpmctorque · April 2009

From Today's AutoWeek...

"The proposed partnership between Fiat and Chrysler has been thrown into a tailspin with revelations that the Italian carmaker has made a secret offer to purchase a majority stake in Opel.

Klaus Franz, chairman of Opel's works council, on Thursday confirmed Fiat's interest in a takeover of General Motors' European subsidiary, suggesting that officials have cleared the way for the signing of a letter of intent as early as April 28."

nippononly · April 2009

Yes, I saw something on this a couple of days ago as well. There is also a piece of Vauxhall in it for Fiat.

My question is where is the functionally broke Fiat getting all the money to be making these big deals for auto brands?

I expect they will liquidate Chrysler after May 1. I hope Jeep finds a buyer, as I have a certain fondness for the Wrangler. All the rest can go onto the ash heap as far as I'm concerned, including the Ram, but I suppose Nissan may make a bid to save that piece for itself.

kernick · April 2009

Yes now that I think of the Chrysler vehicles that I like, I see that most of them are above average $, and have a V-8 or 10 in them.

That's probably not good based on the economy, or the price gas will go to if the economy turns around.

I do like some Jeep products, but not with those mpg ratings. A lighter weight Jeep Wrangler with a 4cyl turbo-diesel delivering 30+mpg would be on my shopping-list.

dtownfb · April 2009

Very interesting! Iread this story on AutoNews. Even more interesting were the comments on the article. One person suggested that a Fiat-Opel deal could lead to Fiat buying Saturn from GM and selling Opel cars under the Saturn name. Which was GM's original plan.

nippononly · April 2009

Which was GM's original plan.

And, in fact, the plan it executed two years ago, with the result of failure. Saturn sales are non-existent with a completely new portfolio of Opels.

Get the feeling European meddling will be of little to no help to ailing U.S. automakers? I do.

kyfdx · April 2009

The only Opel that Saturn sells is the Astra, though... The rest of them are just re-badged Chevys, Pontiacs, etc..

As far as GM spinning off Saturn? Saturn doesn't have anything unique (except the Astra, which is really Opel, so they won't even have that). The only reason to buy Saturn would be for the "name" and access to the dealer network, which GM doesn't own, anyway...

At least Chrysler has their own line of cars to sell, sad as they might be.. I could see Fiat buying it, shutting down everything but Jeep, and turning the dealer network into Fiat/Jeep dealerships... Assuming they can buy it for next to nothing (which is probably 5 times what it's worth..).

regards,
kyfdx

dtownfb · April 2009

As far as GM spinning off Saturn? Saturn doesn't have anything unique (except the Astra, which is really Opel, so they won't even have that). The only reason to buy Saturn would be for the "name" and access to the dealer network, which GM doesn't own, anyway...

this is why a Fiat/Opel merger followed by a Fiat purchase of Saturn makes sense. It gives Fiat time to certify Opel vehicles to be sold under the Saturn name. GM will supply Saturn for a couple of more years. Fiat does not need Chrysler's vehicles. Opel has much better products.

The other thing is Fiat would not have to deal with the UAW this way and still get their foot back into the US market. this makes more sense than merging with Chrysler and having to deal with the closing dealerships and plants. Opel is in better shape, both financially and product development, than Chrysler. The German government is willing to help Opel. The US government loan to Chrysler will have tons of requirements that may restrict Fiat. Why bother with that mess if you can accomplish the same thing with a merger with Opel?

Also for GM you get much needed cash from Opel merger and more cash from the sale of Saturn. Two brands gone with the sale of Hummer in the near future. This gives GM new life.

kyfdx · April 2009

Only drawback? No U.S. factories... Even the Spring Hill, TN plant is just a regular GM plant now, right?

Most automakers want to be able to make cars where they sell them... With a Chrysler merger, they can make Fiats at Chrysler plants..

At least that's how I understand it...

gagrice · April 2009

Fiat would be money ahead to negotiate with different states to build new factories with the latest technology & innovation. And stay out of the UAW non RTW states. They would be crazy to just take over a plant in an area that is infiltrated with UAW workers.

michaellno · April 2009

I'd have to agree with you. Spring Hill was retooled to build the Chevy Traverse, so there are no "Saturn" assembly plants in North America.

My first thought was that by aligning with Opel/Saturn rather than Chrysler, Fiat doesn't pick up the costs of the assembly plants nor the labor and maintenance costs associated with them.

However, the flip side - as noted above - is that by having local assembly, you minimize the risk of currency fluctuations hurting your ability to import finished goods. See the Astra as an example -- when the dollar fell in relationship to the Euro, it made the Astra much more expensive to bring in from the plant in Belgium and cut GM's margins on every unit it sold.

So, really, what Fiat needs is some of Chrysler's manufacturing capacity plus the Saturn dealer network - which, IMO, is about the right size (400 or so dealers).

dtownfb · April 2009

There are plenty of plants for Fiat to purchase esp. after both Chrysler and GM file chap. 11.

Here's an interesting article on the Chrysler mess: http://money.cnn.com/2009/04/23/autos/who_killed_Chrysler.fortune/index.htm?post- version=2009042315

dtownfb · April 2009

Autonews is reporting that there is an agreement between Chrysler and its creditors. Also the UAW has agreed to take a stake in Chrysler in exchange for payment into the retiree health care.

This means that Chrysler may be around on May 2nd. I still don't think they will make it but at least we get more time to follow this soap opera.

nippononly · April 2009

There is a third leg though: the pact with Fiat. It has to be done in a way that is amenable to both sides AND satisfies the government that it will make Chrysler viable in the future.

And if they manage to do that, are we just going to prop Chrysler up for the next two years while Fiat brings its products online? With billions and billions and more in aid? I don't know about you, but that prospect doesn't make me too happy.

Chrysler Allies With Fiat

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