By on July 8, 2013

Marchionne - Picture courtesy theglobeandmail.com

Fiat bought another 3.3 percent of Chrysler, “bringing it a step nearer to its goal of creating the world’s seventh-largest automaker by sales,” says Reuters. What Fiat really wants is to consolidate loss-making Fiat with profitable Chrysler, and to get “access to some of Chrysler’s cash flow for investments in new models,” the wire says.

With any luck, this time we won’t hear forever “that all they wanted was Chrysler’s cash.” This time, the unions will get a hefty chunk of the cash, and silence is guaranteed once the final price has been agreed.

Fiat was handed 20 percent of a worthless Chrysler in 2009 for free, and has options to increase its stake to 75 percent until July 2014. Fiat can buy 16.6 percent of Chrysler from UAW’s Veba. A court decision on the price Fiat will pay for the shares is still pending, but Fiat said its calculation of the value of the shares is $254.7 million. The UAW probably has a different opinion.

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45 Comments on “Fiat Owns 68.49% Of Chrysler, Will Soon Own More...”


  • avatar
    billfrombuckhead

    Fiat will become an American company and hater heads will explode.

  • avatar
    Lorenzo

    I can understand why people would say all Fiat wants is Chrysler’s cash, since that’s about all Daimler got out of its “merger of equals”. The difference is Fiat’s auto group probably can’t survive on its own and Marchionne’s past statements that a certain critical mass is needed to survive the impending shakeout of automakers indicates Chrysler’s American plants will survive as long as Fiat Auto Group does.

    The big question is what plan is in place for American operations, and what the product lineup will look like from a merged entity. If the new models are basically Fiats built in America vs the traditional Chrysler/Dodge/Ram/Jeep lineup, the plan could be a disaster. It’s Chrysler products making money, not Fiat Auto Group’s models.

    The delayed and botched introduction of the Dart can’t be duplicated without paying a heavy price, and there is risk in switching from Chrysler’s currently successful business plan of selling cheap middle-of-the-road American models to smaller Fiat models with smaller engines.

    The intro of Dart without auto transmissions doesn’t inspire confidence that Marchionne and Fiat engineers have a good understanding of what drives the American market. The American facilities will survive, but I think the final merger with Fiat will be the last chapter of Chrysler as we’ve known it.

    • 0 avatar
      gslippy

      If I recall correctly, the Dart was introduced with the stick only because the automatic wasn’t ready (the basic 6-spd auto is sourced from Hyundai). Evidently there was time pressure to release the product as-is, but they would have been better off to wait a little.

      Having driven the 1.4T/6M and 2.0/A, neither was satisfying and the long-awaited 2.4 is the last hope for this car in my opinion. Something is seriously awry for this engine to be so delayed, especially when it’s just a juiced version of the 2.0 (emissions, mpg problems?). If the Dart ultimately fails, the company will be in jeopardy.

      But as far as Fiat/Chrysler is concerned, I still think it’s a marriage made in heaven because they’re both equally wacky.

      • 0 avatar
        Onus

        The 2.0 is just a refreshed gema engine. The 2.4 is getting / has multiair. Thats where all the work is. Allpar is filled with details on this.

        • 0 avatar
          gslippy

          Thanks; I checked out allpar at your suggestion. If the Dart is losing fans at the fan club, it could be curtains. After over a year on the market, it’s not remotely competitive for sales numbers.

      • 0 avatar
        Scoutdude

        Yes the Dart was rushed to market as they had a deadline to get it on the market since part of the deal to give Fiat part of Chrysler and to allow them access to buy even more of it.

        • 0 avatar
          KitaIkki

          Wasn’t Dart rushed to market to satisfy some CAFE MPG requirement deadline? (specific to the US Gov deal that gave Chrysler to FIAT) IIRC it was 40 MPG (CAFE MPG, not window sticker MPG)

      • 0 avatar
        Wheeljack

        Presumably the Dart is selling better than the Caliber and the Compass/Patriot are doing well. This means the plant in Belvidere is operating at or near capacity which is important since it is expensive to have it running inefficiently.

        • 0 avatar
          Scoutdude

          Selling better than the Caliber isn’t saying much at all. Since the actual sales are well under the initial projections I’d say they are far from operating at capacity at that plant.

  • avatar
    sportyaccordy

    Where is Fiat getting the cash for these purchases? Fiat & Lancia are knock knock knocking on heaven’s door.

    • 0 avatar
      Onus

      They still have cash. They just don’t have good cash inflow at the moment.

      Think of if you have a savings account but you lost your job. You’re living on your saved cash. Your not going to spend it all at once but will instead be cautious.

    • 0 avatar
      CJinSD

      Two possibilities:
      1.) European banks that have been promised looting Chrysler will be all fun and profit.
      2.) They’re using Chrysler’s money to buy Chrysler.

      • 0 avatar
        Athos Nobile

        @CJinSD

        “2.) They’re using Chrysler’s money to buy Chrysler.”

        This is your answer. Probably with some loans thrown in.

        There are so many ways to get that cash without straight ownership. I guess it just makes the whole process “inefficient”.

    • 0 avatar
      EquipmentJunkie

      Automotive News reported today that “Chrysler has become Fiat’s most reliable profit generator.” And went on to add that “Without Chrysler, Fiat’s losses would have exceeeded 1 billion euros.”

      Sergio Marchionne knew that Fiat needed sales diversity that only another continent could deliver.

      As for the remaining Chrysler shares to be purchased from VEBA to arrive at 75% ownership, there are some further cards that can be played.

    • 0 avatar
      Lorenzo

      Fiat paid off the government loans by borrowing from banks and then having Chrysler profits pay for the loans. I imagine Fiat can complete the “purchase” with bank loans and use the merged company’s cash flow to pay back the banks.

      • 0 avatar
        highdesertcat

        If we had only done the same for GM!!!

        Alas, for some odd reason Obama thought it was better to have the UAW party hardy while the US tax payers took it in the shorts for $50B.

  • avatar
    Beerboy12

    Fiat must be doing something right. If you focus only on past Chrysler mergers and current European economic issues I can see how this is hard to understand. I expect Fiat’s success in Brazil is the missing link in this conversation.

    • 0 avatar
      highdesertcat

      I am surprised that the 500 hasn’t caught on more with inner-city folks.

      I rarely see a Fiat around the gas&sip where I live, and when I do, it is usually just passing through the area (We can tell from the license plate).

      They sell them in El Paso, TX, but I haven’t actually seen one on the streets yet when I go there, nor at the malls, nor at any of the places where I go to, like the VA Med Cen or Wm Beaumont Army Med Cen.

      • 0 avatar
        gslippy

        Surprising to me, since they’re fairly common here in western PA. Our local megadealer keeps 50-60 500s on hand at all times.

        • 0 avatar
          highdesertcat

          One of the guys I play poker with is a co-owner of Chrysler/Jeep/Dodge/RAM/Fiat/Mitsubishi dealerships and he told me that they get a lot of lookey-loos, but no buyers.

          But we live in a region where pickup trucks are the best sellers and commuters use el cheapos for the daily grind and as grocery getters.

          That doesn’t leave a whole lot of demand for niche/novelty cars like the 500. Your area may fare differently.

        • 0 avatar
          28-Cars-Later

          I have noticed them alot more in the past six months. I’m not sure why but I suppose in the “cheap” car market it’s that or an Accent, Versa, or whatever toy car Daewoo-rolet is selling these days.

          • 0 avatar
            highdesertcat

            The ones I have seen in the show room were not cheap. They hovered around $20K before tt&l, transfer&documentation fees, for those who finance.

            For the same $20K you can get a Sonata, Camry, or Altima in my area, not to mention a ton of el cheapos (with air) from $12K up.

            Maybe back East the 500 is marketed along the same lines as the BMW Mini. But that would be a stretch, trying to make that comparison.

          • 0 avatar
            andyinatl

            I don’t know, highdesertcat…. I’ve sat in both, and there isn’t a part on the Mini’s interior that feels/is better than part on Fiat’s inside. BMW is getting away with murder charging as much as they do for Mini, as Fiat is closer to value than Mini is, for similar content. Mini is definitely not worth $5K premium over similarly equipped Fiat based on content/quality, especially since they’re in same pool quality-wise. They are both “accessories” more than cars, and are used primarily for commuting in city. If you consider that in 2+ years in US market Fiat’s numbers are steadily growing year over year, combined with no recalls or any published problems of note, i’d say Fiat is better than Mini in more ways than one, and is competing against Mini (vs the other econoboxes that focus on value rather than style) just fine.

            Regarding the $20K Camrys/Sonatas, they’re basically equivalent of public transportation. In US there’s not many options for that, so if you need appliance to get A-B, those cars suit just fine for that purpose. If you care about style however, there’s not many options more stylish than Fiat that are affordable.

          • 0 avatar
            highdesertcat

            andyinatl, you got me on both counts since I have never sat in either the 500 nor the mini, and have no desire to ever do so.

            However, there is a clientèle for both but to me it seems as though I encounter a lot more minis on the road. Very popular with the military people in my area. No 500s.

            It should be said that when my grand daughter was given a choice of any car for her HS graduation gift in 2011, she immediately gravitated to the Elantra and the Mazda3.

            I would have thought that the mini would appeal to her since it is such a girlie car made famous in the movie “The Italian Job” with Charlize Theron at the wheel.

            My grand daughter ended up choosing the 2011 Elantra because of the “cool” factor, but I preferred the road manners and ride of the Mazda3. It all worked out well.

            And as far as those $20K midsizers, they are very popular in my area. They’re hard to get at the beginning of the model year but during the summer-sales months of Aug and Sept the dealers often mark down the unsold ones with the higher trim so that they can make room for the new model year’s crop, or reduce their stock on hand.

            One old codger in my area bought a 2013 Camry LE for $19,995, plus tt&l. Exactly as advertised.

            Actually, it wasn’t too shabby. It had everything needed for comfort, AC, Auto, Cruise, PW and PDL, and manual seats. The biggies in my area are AC and Cruise.

            The Sonata is advertised for $18,995 but there never are any to be had, so it’s just bait and switch. Too much demand, not enough stock on hand.

            The 2013 Mazda6 also is available for less than $20K in my area, but the 2014 is 6K more. They’re sold side by side.

            Style is such a personal preference that it varies from person to person. My preference for style favors my 2011 Tundra 5.7 SR5 so there is no accounting for tastes.

            Even the girlie part of my family, my wife, favors her 2012 Jeep Grand Cherokee over a mini or a 500.

            Different strokes for different folks.

  • avatar
    Conslaw

    To date, Fiat’s contributions to Chrysler have been a net positive, at least from the point of view of this outsider. The possibility of turning Daimler and sucking up all the capital is real, though. Chrysler still has some huge product line holes that will take billions of dollars of capital to fill. The 200/Avenger need to be replaced with new technology AND will need to be heavily supported by marketing dollars. The minivans are due for replacement. The Dodge Journey will need to be replaced by something very different if they want to stay in the “small seven-seat” segment. If Fiat can provide all this new product, the marketing to support Chrysler and have money left to help Fiat in Italy, more power to them. I have my doubts.

    • 0 avatar
      highdesertcat

      From what I can tell, the Chrysler/Jeep/Dodge/RAM dealers are so successful at this moment that they are developing a ‘tude.

      A friend of mine went to a Jeep dealer in Albuquerque on 3 July to buy himself a 2014 Grand Cherokee to park next to his wife’s 2012 Grand Cherokee and the dealer wouldn’t cut him any slack, even though he had already bought one from them in Oct 2011.

      Since they are selling their hottest sellers 3% to 5% OVER MSRP, they must be making up for the lean times of 2008/2009/2010/2011.

      • 0 avatar
        Scoutdude

        Other than the Dog Dart their vehicles are selling better than they ever have so it doesn’t surprise me that there are dealers out there thinking they are gold. You can’t really blame them for looking to make some profit after the dismal sales since 2008. However they better be careful or they may drive away good customers which is what it sounds like happened with your friend.

        • 0 avatar
          highdesertcat

          I think that has happened already since he has now chosen to buy a 2014 Sequoia when they hit the market.

          Back in the late eighties and early nineties I taught graduate and undergraduate courses in marketing/advertising/salesmanship for a business curriculum and I always told the students that the only thing that mattered was to get that sale, in order to make money.

          So I don’t blame the dealer for wringing out every penny they can from a potential buyer, and eventually the demand will level out and fewer people will be willing to pay that premium.

          For some people money is a tool. For most of us who don’t have much of it, money is best wisely spent.

          So let the people with a lot of money pay the premium prices. The rest of us can walk away and spend another day.

          Right now, Chrysler has three hot sellers; the 2013 RAM, the 2014 Grand Cherokee and the 2013 Chrysler 300. And Sergio is raking in the dough even though all the hard work was done by Daimler some time ago.

          Imagine if we had bribed some other (Chinese, India, Japanese, European) carmaker to take GM’s dead carcass off our hands. No doubt, we, the people, would have been as well off as we are with the gift of Chrysler to Sergio and Fiat.

          • 0 avatar
            sunridge place

            ‘Right now, Chrysler has three hot sellers; the 2013 RAM, the 2014 Grand Cherokee and the 2013 Chrysler 300.’

            Uhh…better make that 2 instead of 3. Chrysler 300 sales are down 28% 1H 2013 vs 1H 2012.

            http://media.chrysler.com/newsrelease.do?id=14516&mid=23

            Click the pdf on the right side if you don’t believe me.

          • 0 avatar
            highdesertcat

            You’re right. The 300 doesn’t sell as well right now as it did when it first came out.

            What I had in mind when I wrote that was the crap cars of the past and how they sold back then, compared to the winners that came out of the Daimler school of design and engineering.

  • avatar
    oldyak

    Yes the halo has worn off the 300 but what a run!!
    Still a great car and not a afterthought like the Ford Taurus became!
    Not bad for a company on its knees.
    I am very disappointed with the Dart..not so much with the car itself as with the marketing.
    This should have been a worthy successor to the Neon but they botched the advertising soo bad its beyond belief!!!!
    If even half the money promoting the Neon would have been spent….me thinks a whole different result would have occurred.
    You cant play catch up in the add business so I must mark this car a major and costly mistake by Chrysler/Fiat management!!
    and They want people to flock to the 500L??????????

    • 0 avatar
      Lorenzo

      “…but they botched the advertising soo bad its beyond belief!!!!”

      I’m shocked to hear you believe that. Don’t you know Chrysler Chief Marketing Officer Olivier Francois is a genius? Adweek actually named him ‘Grand Brand Genius’ at their annual awards event just this last December. He’s leveraging social media as a brand-building tool! You don’t spend a lot of time on social media? Apparently, neither do most car buyers, but those social media movers and shakers who don’t buy cars are mightily impressed.

      • 0 avatar
        highdesertcat

        Every site I hit has a barrage of auto ads, many of them from Chrysler, Fiat, Jeep and RAM — and I haven’t done anything to warrant such target-marketing on any site, or any social media. I’m not looking to buy. So the CMO’s tactics are out there. I have seen them.

        But in order for such a strategy to work, the targeted potential buyers must have the propensity to want to buy in the first place.

        And with the current generation, I don’t see that happening.

        It’s one thing to saturate social media with interactive messaging like Obama did during his successful campaigns (they were selling hot air and empty promises), but quite another when it comes to selling cars where there is real money involved for a very long time.

  • avatar
    billfrombuckhead

    Fiat did huge upgrades on the 2013 Ram and 2014 Grand Cherokee that are showing big gains in recent sales. Did a hell of an upgrade on the 200 back in 2011. The Dart will get an upgrade when the drivetrain from the Cherokee becomes available. These new ZF transmission are a big deal and advance any vehicle they go in to become contenders for best in class.

    It looks more and more like the Alfa launch will be successful with a lot of help from Maserati, Jeep, Mazda, Fiat, SRT and eventually even Dodge but Fiat will need the money to launch it right.

    300 sales are down since they quit making base models and only sell premium versions but 200, Charger and Challenger sales are pretty good.

    • 0 avatar
      highdesertcat

      They still make the base model 300s but most of those go to rental fleets.

      I rented one in the Oceanside/Camp Pendleton/Fallbrook, CA, area a couple of weeks ago so I wouldn’t have to unhitch my trailer from my Tundra when I was there helping my grandson transition from the Marines to civilian life.

      The one I got was Dark Cherry Red, had the V6 and the 8-speed, black cloth interior, satellite radio, power everything, and was an excellent rental.

  • avatar
    MoDo

    A merged Chrysler-Fiat will look very similar to VW Group. All the platforms will be shared across brands (save Ferrari). No more “the Chrysler 300 is just an old E-class” it’ll be “the Chrysler 300 is THAT SAME as a Maserati Ghibli for 50% the cost”.

    Ram will sell Iveco trucks branded as Rams, Dodge is to become the American platform / performance partner for Alfa and Maserati. Chrysler will share FWD stuff with Fiat.

  • avatar
    pgcooldad

    So much misinformed members here.
    Fiat is run by an American born in New York, John Alkann, who is the grandson of Gianni Agnelli (Who happened to be a very good friend of Henry Ford)

    http://en.wikipedia.org/wiki/John_Elkann

    Chrysler is actually owned by an Italian conglomerate who just sold interest in one of their holdings to the tune of several billion dollars in order to continue buying more of Chrysler. The money is not coming from FIAT’s pocketbook.

    http://en.wikipedia.org/wiki/Exor_(company)

    Fiat will be an American Company when the shares for the Fiat-Chrysler Group are listed in the NYSE.

    Mr Elkann was in Auburn Hills a couple of months ago for several award ceremonies and mingling with his employees. He’s a really nice guy, normal and down to earth.

    • 0 avatar
      Lorenzo

      John Elkann is the representative of the founding family that still controls the conglomerate. He’s got a big title, but he’s not actually running anything, and may need family consensus to make any significant move, like tell Sergio what to do. Organization charts can be very deceiving.

      • 0 avatar
        pgcooldad

        True. I should have said Sergio’s boss is an American … Sergio worries about FIAT-Chrysler’s day-to-day operations. But Exor is the conglomerate behind the scenes that not many know about.

        • 0 avatar
          highdesertcat

          People affiliated with the industry know this but it isn’t germane to the day-to-day operations of who runs the company and who calls the shots that set policy where the rubber meets the road.

  • avatar
    schmitt trigger

    Someone should tell Sergio Marchionne that the the casual, unemployed-engineer-look worked for Steve Jobs, but it doesn’t work for him.

  • avatar
    Lorenzo

    Okay, the salt and pepper stubble goes, but not the sweater! It’s his trademark!

  • avatar
    Morea

    Very soon they will own it all:

    http://www.detroitnews.com/article/20140101/AUTO0101/301010062/Fiat-agrees-buy-remaining-Chrysler-stake

    Now bring on the Alfas!


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