Daimler still owns what- 20% of Chrysler?
Fiat will own 35%?
That means Cerebus will end up owning less than 50%?
I'll tell you why this is happening.
Chrysler is competition to Fiat in Italy. Chrysler sells more cars in
Italy in the past year or so, more than any other country outside of
But here's whats really going to happen:
Once Fiat has it's 35% of Chrysler, it's going to clamp down and reduce
Chrysler sales in Italy and in Europe generally. It's the typical scam
thats performed by what seems like an enthusiatic business partner who
in reality is your competition.
Daimler did much the same with Chrysler in Europe. In the late 90's,
Chrysler designed the 300m specifically to compete in Europe (5m length
was important design consideration). We all know how well that worked
out for Chrysler.
Read the story below. Fiat will get 35% of Chrysler.
What will Chrysler get?
Hope? Change? Hot air? A lot of talk, but no action?
What does Cerberus get? A more dilluted stake in Chrysler?
Back from brink of collapse, Fiat bids to rescue Chrysler
By Dave Hall, Windsor Star
January 21, 2009
An Italian automaker, which was in dire straits only five years ago, is
now being counted on to help rescue Chrysler -- the smallest of the
struggling Detroit Three.
Led by CEO Sergio Marchionne, who earned an MBA at the University of
Windsor in the mid-1980s, Fiat SpA has reached an agreement to take a 35
per cent equity stake in Chrysler LLC.
The deal will give Fiat access to the North American market and Chrysler
will gain from Fiat's small-car technology and engine innovations, but
one analyst says it was too soon to tell if the alliance will be
successful for both companies.
"It's hard to say at this point because the devil is always in the
details and we simply don't know enough about how this will work to tell
if it will truly help both companies," said David Cole of the Ann Arbor,
Mich.-based Center for Automotive Research.
"But clearly both need help and this deal gives them both some scale
across the globe," said Cole. "Fiat doesn't do a lot of business here
and Chrysler is not all that active outside of North America so this
gives them both access to new markets."
The Canadian Auto Workers' union has always felt that a merger or
partnership with a global company "made far more sense than with a North
American rival such as GM because of the potential access to different
products and markets," said president Ken Lewenza.
"On the surface, I'm satisfied with what I've heard, but I'm also
cautious because not too long ago we were hearing that the partnership
between Daimler and Chrysler would be a win-win situation and we all
know how that turned out," Lewenza said. "But those two companies
continued to operate virtually independently, and I think this needs to
be much more of a partnership to have a chance of being successful."
Chrysler chairman Bob Nardelli said in a statement issued to employees
Tuesday that "under the agreement, Chrysler will have access to all Fiat
group vehicle platforms, with the exception of Ferrari, which would
complement our current product portfolio with fuel-efficient,
environmentally-friendly small cars and powertrain technology."
Fiat and Chrysler, while operating in vastly different markets with
different product lines, are similar in size. Last year, Chrysler sold
two million vehicles across the globe while Fiat sold 2.5 million. Both
depend heavily on sales on their own continent.
Marchionne was unavailable for comment from Fiat's headquarters in
Turin, but earlier Tuesday he issued a statement saying "this initiative
represents a key milestone in the rapidly changing landscape of the
automotive sector and confirms Fiat and Chrysler's commitment and
determination to play a significant role in this global process."
Marchionne, who took over as CEO in 2004, has been largely credited with
pulling the automaker back from the brink of collapse.
At one point Fiat was the largest car producer in Europe, but by 2004 it
had slipped to eighth amid rising debt, leadership woes and labour
Losses have steadily fallen under Marchionne's leadership and the
company recorded its first profit in 17 quarters during the first three
months of 2005.
With three successful models -- the Grande Punto, Bravo and the
award-winning 500 -- the company has re-entered markets, such as Mexico
and Australia, it had previously abandoned.
But despite the turnaround, analysts still question Fiat's long-term
viability, especially in the small car market where profit margins are
The company has been seeking a North American partner for months and
will now have an opportunity to begin assembling its small vehicles on
this continent while, at the same time, relaunching the Alfa Romeo
It's expected Fiat will initially ship vehicles to North America while
selected North American plants are retooled to accommodate its small
"It's probably not that difficult to retool from an engineering
standpoint, but they will be looking for assembly operations where they
can build these Fiat models on similar vehicle platforms," said Cole.
Lewenza said that would likely not include Chrysler's Windsor Assembly
Plant which assembles the Town and Country, Grand Caravan and Volkswagen
"It's expensive and time consuming to undergo major retooling so it
makes sense eventually to assemble Fiat models in plants where Chrysler
currently assembles its own small vehicles," he said.
- Founded in 1899.
- The Fiat Group is the largest industrial enterprise in Italy.
- The company name is an acronym for Fabbrica Italiana Automobil Torino.
- It designs, manufactures and sells automobiles, trucks, tractors,
agricultural and construction machinery, engines and automotive
components and production systems.
- It owns Maserati, Ferrari and Case New Holland.
- It has 185,000 employees worldwide.
-- Source: Fiat Group website