Jeremiah 29:11

Wouldn't that be a trip!


Chrysler, Fiat discuss partnership
The maker of Ferrari and Maserati could take a stake in the ailing U.S. automaker, according to a report.

Last Updated: January 19, 2009: 3:23 PM ET
TURIN, Italy (Reuters) Fiat is talking with Chrysler LLC about giving it access to its technology in exchange for a stake in the U.S. car maker, a source close to the Italian group said on Monday.

"Between the two groups there is talk about Chrysler possibly using Fiat technology in exchange for a stake," the source told Reuters, confirming a report by industry publication Automotive News Europe. The source spoke on condition of anonymity.

Citing people familiar with the matter, Automotive News said in a report posted on its Web site earlier in the day that Fiat could give Chrysler access to platforms, engines and transmissions.

The source told Reuters a deal with Fiat would help Chrysler make vehicles that produce fewer harmful emissions.

"To get financing U.S. (car makers) have to show that they are really committed to developing over the short term a new family of vehicles that pollute less," the source said. "By itself, Chrysler would not be able to meet this condition."

Along with General Motors (GM, Fortune 500), Chrysler has gotten billions of dollars in government loans to avert collapse in exchange for meeting certain cost-cutting targets and demonstrating that they are viable by the end of March.

Neither Fiat, Chrysler nor its owner, Cerberus Capital Management, were immediately available for comment.

Fiat's stock ended 4.9% lower at about $5.94, recovering some lost ground after earlier news that it could only meet its 2010 targets if the market returned to normal - something seen by analysts as being far from likely.

Bet on Chrysler's future
In an interview with the same publication in December, Fiat Chief Executive Sergio Marchionne said Fiat needed a partner because it was too small to survive the crisis alone. He said automakers needed to have scale - producing at least 5.5-6.0 million cars a year - to have a chance of making money.

One London analyst said scale was probably the reason behind Fiat's interest in Chrysler, despite the U.S. car maker's desperate situation.

"This is a bet that Chrysler in some form will exist (in the future)," he said on condition of anonymity.

Apart from Ferrari and Maserati, Fiat does not sell cars under its three other brands in the United States.

Before crisis struck the car industry and decimated sales, Fiat had been talking with the three U.S. automakers about using some of their idle production lines to help it make a return to the U.S. market.

A second London analyst said the stake that Fiat could take in Chrysler would likely be a token 5%. Fiat would probably use Chrysler's dealership network to sell small cars, something which is lacking from Chrysler's product portfolio, the analyst said.

Although Chrysler denies positioning itself for a sale, it has been in talks with other manufacturers.

Chrysler Vice Chairman Tom LaSorda said last week it was not selling brands but hoped to sell equipment used to make one of its models, the PT Cruiser.

He declined to comment on a Reuters report about Chrysler having discussed selling assets to Renault-Nissan and Magna International

Seen as the weakest of the Detroit manufacturers, Chrysler is in such a difficult situation that analysts question whether it can survive without a merger partner.

It suffered a 30% drop in sales in 2008.

In the second half of 2008, it burned through $9 billion to end the year with $2 billion in cash.

In a bid to cut costs and save cash, it has shut down all 30 of its U.S. plants for a month from the middle of December.

Fiat and other car makers have also been halting production to lower their inventories of unsold vehicles.

Moving the metal has meant offering attractive deals to lure drivers back to showrooms.

In Chrysler's case, its finance arm has begun offering zero percent financing after getting a $1.5 billion loan from the U.S. Treasury.

First Published: January 19, 2009: 12:50 PM ET







Find this article at:
http://money.cnn.com/2009/01/19/auto...ex.htm?cnn=yes

BLK 6050

Sounds like it may just be the best thing that could happen for Chrysler....much better
than anything the GM/Chrysler meger would lead to.....

I can see the new ads now....."The New Fiat-Dodge Challenger, powered by the V-12 Maserati Hemi...."

People thought having a Viper powered Challenger would make you king of the hill...
how about a Ferrari or Maserati powered Challenger.........(YOU WANT HOW MUCH FOR
THAT TUNEUP??!!.....it only cost me $_____ for a tuneup when I had a HEMI.......)

Better start training the Dodge Techs how to speak a second language.....

Axel

Looks like it's a little more official now.

Fiat uses GM money to help rescue Chrysler

Jeremy Cato, today at 12:47 PM EST


Today Fiat S.p.A. and Chrysler LLC (Chrysler) – with its parent Cerberus Capital Management L.P. – announced plans to strike a global alliance, and it never would have happened without the help of General Motor Corp.

Fiat, of course, used billions of dollars of GM money to rebuild its product line and refashion its business under the leadership of Canadian Sergio Marchionne, CEO of Fiat Group. Ah, the GM connection.

Back in 2000, GM struck an alliance with Fiat not unlike the one announced today with Chrysler. For Fiat back then, it was a defensive alliance.

The then-DaimlerChrysler was pursuing a full acquisition of Fiat at a time when all the world's auto makers were striking deals with one another following the so-called “merger of equals” between Daimler-Benz and Chrysler Corp. But Fiat did not want to be taken over completely.

Instead, GM paid $2.4 billion in stock to acquire 20 per cent of Fiat Auto (figures in U.S. dollars). The deal also made Fiat a 5.1 per cent shareholder in GM.

Fiat needed the help from what was then a profitable GM and GM needed Fiat's expertise in small engines and diesel engines. GM's goal then was not very much different than Chrysler's goal now – get small car and diesel help from Fiat.

At the same time, Fiat's goal was not very much different from Chrysler's now – get help from someone with deeper pockets and a healthier balance sheet.

The big picture goal in 2000 was for GM and Fiat to eventually share platforms. Many assumed that Fiat would even make a return to the United States after leaving in 1983 because of poor sales and endless quality problems.

Well, none of that ever worked out. GM has proven over the years that it's not great with alliances, the Daewoo purchase notwithstanding. By early 2005, Fiat was in dire straits and threatening to exercise a put option that would have forced GM to buy the remaining 20 per cent of Fiat.

GM wanted none of that. Fiat was in stronger position, however, and the struggle came to an end when GM threw in the towel and agreed to pay out nearly $2 billion to terminate once and for all the Fiat put.

So add it up: GM paid $2.4 billion for 20 per cent of Fiat and another $2 billion to give it back. GM did get some engine technology out of the deal, but not $4.5 billion worth.

As veteran commentator Jerry Flint of Forbes magazine noted at the time: “The $2 billion handed to Fiat could be enough to turn GM around. It is enough to buy a rear-drive platform for the Cadillac DeVille and a big Buick, plus a hybrid for Chevrolet. It's enough to tool a plant for five-speed automatic transmissions so Bob Lutz's new models don't have to carry outdated four-speeds, with enough money left over to add XM radios to a year's production.”

Fiat, of course, took the money and did just the sorts of things Flint said GM could and should do with $2 billion. The Fiat product line was rebuilt and now Fiat is relatively healthy by global car company standards.

This should be a cautionary tale for the Chrysler people: Do not underestimate Marchionne and the Fiat people. They are shrewd business people who know how to build cars and brands.

For instance, the Fiat 500 microcar is a sexy hit in Europe and so well done that Ford Motor will use its mechanical underpinnings, the 500 platform, for its next-generation Ka. Yes, yes, Fiat has other alliances in the works.

Of course, today Fiat is having its struggles just like other auto makers. Sales were sliding at the end of the year and profit on the automobile side was a meagre €190 million for the third quarter and for the first nine months of the fiscal year profit at Fiat Group from automobile was €626 million. But unlike Chrysler, Fiat is worth something.

They aren't printing money on car sales in Turin, but no one disputes that Fiat has emerged as a success story in the past few years and it never would have happened without a cash infusion from GM.

Chrysler's people say the alliance with Fiat will provide “access to competitive, fuel-efficient vehicle platforms, power train, and components to be produced at Chrysler manufacturing sites. Fiat would also provide distribution capabilities in key growth markets, as well as substantial cost savings opportunities.”

Fiat will also help Chrysler manage its business, something sorely needed. And the deal gives Cerberus the exit strategy most observers say it wants desperately.

In another twist of irony, Daimler AG is also getting its little piece of Fiat after all these years. Remember, Daimler still owns about 20 per cent of Chrysler.

Will the Fiat-Chrysler alliance work? Will it help Chrysler survive? Of course it will, at least in the short term, although it remains to be seen how this alliance fits into the restructuring plans Chrysler must soon submit to the U.S. and Canadian governments as a condition of getting bailout money.

But in the longer term, alliances and takeovers in the auto business have generally gone badly. Only the Nissan-Renault alliances stands out as a huge success, though again I should give credit to GM for doing a good job using Daewoo as a source of small cars.

But the Daimler and Chrysler, that merger of equals, was a share-destroying fiasco. Ford's efforts with Jaguar, Land Rover and so on also turned out very badly. It's not easy getting different companies and different cultures to work together.

If I were a betting man, I'd wager Fiat gets the better end of this deal.


http://business.theglobeandmail.com/...tory/WBdriving

Axel

Here's another site.

Archive for the 'Fiat' Category

Fiat to get 35% of Chrysler

January 20th, 2009 by Bill Cawthon

Fiat SpA, Chrysler LLC and Cerberus Capital Management have confirmed the Italian automaker will take a 35 percent share of Chrysler. There will be no cash involved in the deal.

The agreement will still need to be approved by the Treasury under the terms of the $4 billion loan extended to Chrysler which gives the U.S. government approval of all transactions valued at more than $100 million.

According to the agreement, Chrysler will get access to Fiat’s platforms, powertrains and components that would be produced at a Chrysler facility in the U.S. Fiat would also provide distribution support in key foreign growth markets. Fiat will provide assistance to Chrysler in its preparation of a viability plan to the U.S. federal government.

The new alliance does not commit Fiat to make any cash investment in Chrysler, now or in the future.

The agreement already has the support of the United Auto Workers. In the press release announcing the deal, UAW President Ron Gettellfinger said, “This is great news for the UAW Chrysler team and we look forward to supporting and working with them to ensure Chrysler’s long term viability.”

RoswellGrey

Boy, I feel a LOT better now. It looks like we won't wind up with orphan cars!

RLSH700

This could work or it could be a disaster (yes, I know I'm being captain obvious as what other option is there with this). This could work because the last time Chrysler and an Italian company worked together we got some of Chrysler's best products from a marketing and profitability standpoint in recent years. The LH car design came from a Lamborghini Portofino which had the cab forward design inspiration. The Neon also was the result the team. The problems I can see is possibility quality issues. Fiat I've heard doesn't have the greatest quality and Chrysler needs more than anything else to get rid of the heads hung around their necks of the poorly executed Ultradrive, weak head designed I4s, and the 2.7L V6.

I'm a little skeptical of it working after the last European ownership turned a successful Chrysler into it's nearly dead state; however, those were stiff Germans and these are Italians so it could be different. I would feel better if it was under Magna's control, but if I had my way Bob Lutz would have been Iaccoca's replacement instead of Bob Eaton anyhow. Perhaps Italy has different standards than the rest of Europe, from what I've always read, European cars although they get better gas mileage (when their economy cars, its the opposite way around for mid-sized and large cars to keep the record straight) do not have quite the emission standards that we do, hence being allowed to have more diesel models more easily.