What will be the outcome of the wedding between American Chrysler and Italian Fiat?
The proposed marriage between Chrysler and Italy’s Fiat is showing signs of strain even before it is consummated. At the same time, Republican Sen. Robert Corker of Tennessee, who gained Congressional rock star status during last fall’s hearings on aid to U.S. automakers, told the Wall Street Journal that giving additional federal funds to Chrysler is “somewhat troubling for all of us as U.S. taxpayers,” though, he admitted, “for Chrysler itself, it may be the best outcome.” Even with all Chrysler’s flaws, we bet that the young couple will end up happy together. Of course, that’s not just a romantic happy ending, but also in both companies’ economic self-interest. Chrysler needs small cars and Fiat needs to sell their products in the lucrative North American market. Like any good marriage, the two partners complete each other. We bet they’ll stick together despite the odds, and we hope that rumors of a Fiat 500 in Chrysler showrooms by very early 2011 are true. Sources:
He’s an awkward, middle-aged Midwesterner, desperate to find someone to avoid the lonely life of an irrelevant bachelor. She’s a hip Italian who has traveled the world and wants to settle down. Can the marriage work? We’re speaking, of course, of the Chrysler and Fiat union, which the Obama Administration seems to think is Chrysler’s best shot at survival. The CEO-In-Chief who ousted Rick Wagoner as the head of General Motors has all but wielded a shotgun to promote the marriage. The way he sees it, if the two automakers are close enough to share technology, dealer networks and even (gasp!) shares of Chrysler stock, they’re close enough to get married. The administration has given Chrysler 30 days to secure a deal in which Fiat reduces its stake in Chrysler and promises not to seek majority control until Chrysler’s $6 billion loan is repaid. Anyone who doubts that threat need only watch Wagoner combing the want ads to see just how much Obama means business. Fiat is worried about Chrysl
The new firm, which will most likely retain the Chrysler name, could emerge from bankruptcy with a reach spanning the Americas and Europe. An early look at what to expect: What does each side get out of the alliance? For Chrysler, survival. And of course access to Fiat’s ( FIA – news – people ) fuel- efficient vehicle technology and its distribution network across Latin America and Europe. Fiat obtains a nice equity stake in the new company, which can increase over time. But much more important, it gets Chrysler’s dealership network and a way into the United States market, a long-time goal of the company. Sources: http://www.forbes.com/2009/04/30/fiat-chrysler-bankruptcy-business-autos-deal.
