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EuroWire – March 2009
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Writing in the Detroit News, Alisa Priddle reported the first
comments on the deal from the Italian side, made during a
conference call held 22
nd
January by Fiat SpA chief executive
Sergio Marchionne with company investors. Both automakers
will be the stronger for the alignment, said Mr Marchionne,
who saw little product overlap and no danger to Fiat in the
relationship with Chrysler. He said. “We carried out a sufficient
level of due diligence [on Chrysler] just to get us to sign a
relatively detailed letter of intent.” (“Fiat: Chrysler Is A Good Fit,”
23
rd
January)
Indeed, Fiat has troubles of its own, having reported a 69.8%
drop in fourth-quarter 2008 profit largely on falling demand in
Western Europe and Brazil. Its CEO told the investors that 2009
could see Fiat’s global sales dip perilously close to its breakeven
volume of 1.84 million vehicles.
Hence, Ms Priddle noted, Fiat’s need to do something – and Mr
Marchionne’s personal commitment of many hours to helping
Chrysler, which had already scored $4 billion in emergency
funding, to commend itself for billions more in US government
loans. As he spoke, a Fiat team was at Chrysler headquarters in
Auburn Hills, Michigan, lending a hand with the revitalisation
plan Chrysler would bring to Washington by the initial
17
th
February deadline.
While Fiat will not fund any part of Chrysler’s restructuring, Mr
Marchionne said it will provide turnaround expertise and years
of development work for new vehicles, free. Chrysler is to be
given access to all of Fiat’s vehicle platforms except the Ferrari
sports car line. But, as noted by Ms Priddle of the Detroit News,
the cost of tooling and building Chrysler-badged Fiats goes on
Chrysler’s account. Fiat would benefit from Chrysler’s North
American distribution network, but it would provide its own
network in Europe and South America – presumably to Chrysler’s
advantage.
According to Mr Marchionne, the global economic crisis will
force consolidation in the automotive industry. “The Chrysler
arrangement,” he said, “is a first step in that direction.”
❈
On the same day that the Fiat chief expressed these
views, Jim Press, president and vice chairman of Chrysler,
spoke at an automotive roundtable in New Orleans, hosted by
the global marketing information services firm JD Power and
Associates. Mr Press said that the Chrysler-Fiat alliance would
combine engineering experience and technology in a way
almost unknown in the competitive auto industry. It will also, he
said, preserve jobs, accelerate delivery of fuel-efficient cars to the
market, and help stabilise the US car industry.
“That’s not a bad thing,” the Chrysler executive commented,
before putting a question to reporters at the forum: “That’s a
good thing, right?”
Elsewhere in automotive . . .
❈
In an effort to quickly raise about $257 million in cash,
Detroit-based General Motors said it would sell and lease back
some of its non-manufacturing operations in Britain. Properties
that could be sold by GM’s United Kingdom and Ireland Division
include its headquarters in Luton, a parts warehouse there, and