Chrysler Fiat Merger

From Forbes Jerry Flint

The announced deal between Chrysler and Fiat has benefits for both, but it is not a game changer--not yet.

The alignment between Fiat of Italy and Chrysler does not exactly save Chrysler, but it gives Fiat an entry into the U.S. In short, Fiat is to get 35% of Chrysler, will not pay any cash for the stake, and it will give Chrysler access to its technology.

Fiat (nyse: FIA - news - people ) had publicly said it wanted a production base in North America for its Alfa Romeo brand--and presumably the Fiat brand, too. Through its 35% interest that it is getting in Chrysler, it would presumably have access to a U.S. plant to build its cars.

The chief executive of Fiat, Sergio Marchionne, has also worried that his company was not big enough to survive in today's world. Marchionne was born in Italy in 1952 but built his early career in Canada and has dual Canadian and Italian citizenship. Chrysler has some Canadian plants, and the Canadian autoworkers union, separated from the American UAW, has been quite cooperative in working with the industry in recent years.

So at no cash cost, Fiat may have its production base on this continent. What about Chrysler? The company has been weak technically and does not have enough money to finance the kind of new vehicle programs that Chrysler needs to stay competitive in this market.

Fiat is strong in small cars and in their engines and transmissions, as well as in luxury cars and diesel engines. Getting the technology could be a huge help for Chrysler, but the American company will still need the money and ability to create new cars even with Fiat technology.

The alliance might help Chrysler if it needs to get more money from the American government in its battle to survive.

Chrysler's strength has been in sport utility vehicles, pickup trucks and minivans. We do not know Fiat's degree of interest in these businesses. Meanwhile, another foreign maker, Nissan (nasdaq: NSANY - news - people ) (which is part of the Renault/Nissan alliance) has an agreement with Chrysler whereby Nissan is to get a version of the Dodge Ram, a big pickup, and Nissan is to build small cars destined for Chrysler....More

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The GM Chrysler Giant! Goodbye Ford!

A merger between the two legendary auto companies could mean serious trouble for Ford and smaller competition!

This merger would make GM-Chrysler the largest auto company in the world. It will no doubt trim some fat, probably at Chrysler headquarters.But it would have an arsenal of automotive capability and innovation no company could rival. This giant then would be set to deliver the knockout blow to Toyota. It would have the capicity to challenge Toyota and could drive Ford out of business.

Ford has relied on the sales of the F-150 pickup to keep the company alive for to0 long. They are struggling to come up with funds to design and launch new products.

With GM Chrysler possibly sharing car/truck platforms for Chevy and Dodge vehicles they could build them cheaper and drive Ford out.

There is also the Alliance that Chrysler was building with Nissan to build small vehicles and Dodge to build the New Nissan truck off of the New Dodge Truck platform.

If these companies can commonize their platforms and business strategies, look out!

While the economy is ailing now,The companies are aligning themselves for the next 5 to 10 year electric car boom.

They know that which ever candidate wins the 2008 election, they are promising to dump billions into the alternative energy infrastructure. This means rethinking the American automotive industry.

General Motors has already released the Chevy Volt slatted for 2010 and Chrysler unveiled 3 electric hybrid vehicles produced by their Envi division.



An electric powertrain with a small backup gasoline engine to recharge the batteries after about 40 miles when the plug-in charge is used up was shown in a Chrysler Town & Country minivan and a Jeep Wrangler. Also on display was an all-electric Dodge sports car called the EV. It has only a lithium-ion battery with a range of about 150 miles before it must be recharged externally.

At least one of the three will go on sale in 2010; Chrysler said it has not decided which. The electric models will cost a yet-to-be-determined amount more than the gas equivalents but will be one-fifth to one-sixth cheaper to run, Chrysler says.


Buyers of pure electric cars, such as the Chevrolet Volt and the model Chrysler decides to produce, could qualify for a tax credit up to $7,500 under energy legislation passed Tuesday by the Senate. It's unclear if plug-in hybrids planned by several automakers would qualify. The measure still needs to be passed in the House and signed by the president.


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