Word: fiat
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...Three. The $4 billion in federal loans it received last month to help keep it afloat, and the additional $3 billion it hopes to obtain in March, carries the stipulation that the company move quickly to find ways to produce smaller, more fuel-efficient models, which have long been Fiat's bread and butter. "A Chrysler-Fiat partnership is a great fit," said Chrysler chairman Bob Nardelli in the joint communiqué. "It creates the potential for a powerful new global competitor." Nardelli pointed to Fiat's "competitive, fuel-efficient vehicle platforms, powertrain and components" as well as its distribution...
...Fiat is hardly a magic pill for Chrysler, which is burdened by inefficient factories that need major overhauls to allow for production of smaller, smarter automobiles, says Giuseppe Berta, a Milan-based car-industry expert. "At this point, Chrysler can say it tried to get out of a corner, that it found a European company that makes more marketable cars," says Berta. "But if you want to actually use Chrysler facilities to construct a Cinquecento or Alfa MiTo, you're talking about a major cost." (See the 50 worst cars of all time...
...Fiat, which began a remarkable turnaround with the whopping cash payout from GM in 2005, is also struggling again, along with the rest of the auto industry, as car sales plummet amid a deepening economic crisis. Fiat has been itching to get its stylishly economic models on the market in the U.S., and the deal with Chrysler can be seen as part of a series of "strategic partnerships" it has sealed with other automakers in recent years, including one with Tata motors and a deal to build diesel engines with Daimler-Chrysler, before the breakup last year of that German...
Indeed, to understand the evolution that led to Tuesday's announcement, it is worth returning to the 2005 negotiations in which GM was forced to buy itself out of the cumbersome put option in its alliance with Fiat. The then brand-new CEO of the Turin company, Sergio Marchionne, emerged as a tough-as-nails dealmaker as he sat across the table from top GM executives. The Italian-born, Canada-raised Fiat chief told his American counterparts they would cough up the full value of the put option or battle it out in court. GM blinked, and the huge payout...
...Fiat, on the other hand, the sudden infusion of cash and the new chief executive's plans for streamlining management helped the Turin company begin a notable turnaround after its decade-long crisis and raised Marchionne to near mythical status in carmaking circles. Tuesday's joint statement notes that "Fiat would provide management services supporting Chrysler's submission of a viability plan to the U.S. Treasury as required. Fiat has been very successful in executing its own restructuring over the past several years...