Of course. It’s all subject to negotiation.

This happens all the time. The company gets cut into pieces, and they buy the pieces that they want. In circumstances like this, this would be the norm.

I don’t see why allowing interested dealers to apply for and build new dealerships will take longer than culling the existing over-large Chrysler, Dodge, and Jeep dealers to a sustainable number.

That said, I think Fiat leadership has shown themselves to be very savvy businesspeople… and in the case of GM, 2 billion examples of such. They must know more about this deal than we do. Then again, there was that Mercedes merger of equals…

Hyundai and Kia have propped up sales by unloading a high percentage on fleets and using hefty incentives (including the promise to buy back the vehicle if the buyer loses his or her job).

John Horner: The ignominious retreat Fiat beat from the US market in the 1980s has minimal bearing upon it’s prospects today. Ferrari and Maserati are doing just fine in their niche, and they made some horrifically unreliable cars back in those days as well.

Ferrari and Maserati build cars for buyers with entirely different expectations. Reliability isn’t their number-one expectation, because most Ferrari and Maserati buyers aren’t expecting their toys to run every day in all types of weather and in all kinds of traffic.

Anyone who can afford a brand-new Ferrari or Maserati can afford to take a chance on a vehicle that offers more performance and sex appeal than reliability.

Fiat will be competing with Honda, Toyota, Ford, Hyundai and Nissan, all of which offer vehicles with at least average reliability (most actually score better). They will be competing with these brands for buyers who cannot afford to make a costly mistake on their new vehicle purchase. These buyers aren’t about to view spending time in the dealer’s lounge for the latest repair as a worthwhile exchange for “charm” or the urge to drive something different or unique.

What you are missing is that acquiring an existing company provides a known brand and a faster time to market.

The primary issue for a company in Fiat’s position is not the cost per se, but the timing. If buying Chrysler provides market share quickly, that alone could be a reason to buy it. This is why companies often acquire existing rivals at a premium even though they could theoretically build their own units and compete against them.

But, most of that money will be going to clean up the mess the old Chrysler/Cerberus has left behind.

I wouldn’t assume that. A buyer can pick and choose what pieces that they buy.

It’s not as if Fiat or anyone else is obliged to buy every piece of the business. That’s a matter of negotiation.

Buying “Chrysler” may just be a matter of buying the name, the existing inventory, intellectual property (designs, R&D) and whatever factories that it may want. If the feds create a Good Chrysler that is sold while bankrupting the remaining Bad Chrysler, a lot of the existing baggage goes away and won’t be Fiat’s to own.

Buying a business does not have to be an all-or-nothing affair. Under these circumstances, it’s almost certain that it won’t be. They’d be buying the pieces of the company that they want, not the whole thing.

A fresh dealer set up would be very costly. Where could Fiat start from zero essentially with little to no cost with a car maker that is already established [and until only just recently]
had a 10% market share and sales of a million units.

Now whether they would be better served picking through the remains for $$$$ or getting in before the final flag for free, essentially, is the question.

Importing leaves a lot to be desired when a central location in NA [and Canada and Mexico] would benefit both makes. Fiat is already in S. America. Cars are backing up on docks everywhere.

Chrysler still has some strong products that don’t overlap and the brands wouldn’t be in danger of cannibalizing each other.

My point is essentially that Mr Horner’s post was even handed and level headed and not blurred by the sort of flaming contempt that a lot of people seem to have toward both makes, justified or not.

To just dismiss it out of hand because of the participants is to deny that there is some sort to activity going on whether any of us thinks it’s smart or not. And because of that, the story will get lost.

I disagree. Everything Horner said is insightful about why a Fiat return to the U.S. could work. Nothing here, however, explains why a tie-up with Chrysler makes this return any more likely to succeed.

Given the market here, they could just as easily re-enter without Chrysler and probably be better off for it with the exception of the Federal bailout money. But, most of that money will be going to clean up the mess the old Chrysler/Cerberus has left behind.

If the U.S. market is more open to European-sized vehicles and U.S. and Euro regulations are now more closely matched, then these factors could also point to Fiat entering the market with a fresh group of dealers and products imported from existing (undercapacity) factories around the world, no?

The original Mini was a flop in the US, but has enjoyed a good revival. Whether or not Fiat can successfully bring its modern products into this market is certainly an open question, but the answer does not hinge on the prior efforts. One piece of the puzzle people forget is that the US was far ahead of the curve on emissions standards, wholesale adoption of unleaded fuels and safety standards throughout the 1970s and 80s. Heck, the UK didn’t ban leaded motor fuels until 1999. The need to engineer significantly different vehicles for the US vs. Europe has narrowed significantly over the past two decades. Further unification of regulations between the continents would be most helpful, but the gap is much smaller today than it once was.

Also, today’s US buyer population is more open to European sized vehicles than it has been since the oil embargoes of the 70s. This is yet another reason that common development for both markets is much more doable today than in the past.

Dismissing a Fiat-Chrysler tie-up out of hand is, IMO, short sighted.

Rather, if it’s factories they want why not simply cherrypick a factory or two here post Chrysler CH11 in the U.S. or build a greenfield site and probably get hundreds of millions of dollars in subisidies fro Sen. Shelby’s constituents directly. It seems easier to let Chrysler go through the cost and pain of closing all of the redundant plants as in any scenario, most of Chrysler’s product lineup will be euthanized.

If it’s a dealer network they are looking for, not only do Chrylser’s dealers seem poorly matched to the sale of quirky European cars to quirky European car shoppers, it’s much too large for the future lineup of remaining Chrysler/Jeep and Fiat/Alfa cars the market will bear. Again, it’s not like there isn’t a glut of experienced but struggling or bankrupt dealers to pick from to create a new network. Saturn’s dealer network comes to mind. A Chrysler CH11 first would free Fiat from the cost of telling 2/3rds of Chrysler’s dealers to take a hike.

Let’s not forget, when Alfa Romeos were last sold in the States in the early 1990s they were sold through a small number of Chrysler dealers who could have barely been bothered to talk to customers about them. The last cars sold here were the still cool (IMHO) but woefully aged and overpriced Spiders and the 164, which was a fantastic modern FWD sedan. If I remember correctly, the last few years that dealer network couldn’t move more than a few hundred 164s a year. Putting FIATs in showrooms next to crew-cab Dodge pickups or, perish the thought, Sebrings, seems like a recipe for disaster.

http://eweiss.files.wordpress.com/2008/03/ferrari-f430-6-big.jpg

Chrysler is strong in SUVs, large trucks and large cars. Where it is absolutely uncompetitive is small cars and midsizes.

That’s where Fiat is strong.

So, if the plan is to build Fiats restyled to American tastes in Chrysler plants, it makes perfect sense to me. Chrysler gets the products it needs, and Fiat gets access to the American market.

And let’s talk about “Fiat built lousy cars,” shall we? Yes, they were unreliable…but they were also unsuited for this market. Same problem that plagued Peugeot, Citroen, Alfa Romeo and a host of other European brands. They weren’t necessarily bad cars – they were just not engineered well enough to handle the extremes of the North American market, and their dealer organizations were a Keystone Kops affair.

(The exception: the English cars, which sucked on BOTH sides of the pond)

Chrysler, with an established dealer network, would help solve that problem.

If Fiat cars performed as badly in Europe as they did here, the company wouldn’t have survived. Lord knows a ton of brands have failed there.

I think this might be a good idea if they can do it right.

I had a Peugeot 406 coupe before my Jaguar X-Type and it was a stunning car.

It was the only (modern) French car which I liked.

It was achingly pretty, the fuel economy wasn’t that bad and the reliability was OK.

But, Peugeot had naff all to do with it. It was styled and built by Pinifarina. That was what made it different from the rest of the Peugeot range.

That wouldn’t be a problem. I’d be getting it to save money over the Jeep.

Keep your eyes on PSA (Peugeot-Citroen) and Tata Motors. There might be a Chrysler-Fiat-PSA-Tata alliance in the making.

Peugeot is the other Euro Brand I’ve been impressed with. Their 2-series and 4-series cars are sharp. They also made a Pininfarina-bodied 406 Coupe a few years back that was beautiful.

As far as the quality issues regarding Fiat, from everything I’ve read, they’re currently equal/better than VW/Audi – faint praise, I know.

They may surprise us, but I don’t think it will be quick and easy for them. I suspect most Americans would prefer that their neighbor be the first on the block to own a new Fiat. Then, after 10 years, if the Fiats are still going toe to toe with the Toyotas and Hondas, then we may start to buy Fiats in appreciable numbers.

My crystal ball is showing 3 or more years of dismal car sales in the US. So Fiat will be coming to our shores, again, when the market is shrinking and people are value conscious. People will feel better about buying cars from makers with good reps. The time to take a flier is when all is going well and one can afford a mistake. Fiat’s past reputation haunts them, however unfair that may be, and it will take years and years for them to prove themselves in this market.

But I still wonder if Jeep and trucks only could be profitable in the US. Lots of dealers would have to go away, of course. The remaining dealers could eventually get US versions of select Fiat cars. Not sure if it will work, but its fascinating, nonetheless.

And there are still plenty of Americans who know that Fiat stands for “Fix It Again Tony.” A big problem to overcome. The new Malibu is a good car but the perception of chevy stinks.

It sounds like something out of a sitcom. “Hey crazy enough to work.”

IMO They can sell the cars with drip pans and spare fan belts

Then again let’s see if the Alfa MiTo makes it here

Put yourself in Fiat’s position. By global standards, you’re a global player, but fairly small player compared to your rivals. (To put things in perspective, Fiat’s global revenues from selling cars is similar to what Honda generates from vehicle sales just in North America alone. And Honda itself is not the biggest dog on the block.)

You used to enjoy the protection of trade barriers and intense national loyalty, but now you don’t have either. Most of your car sales are in one region — Europe — where competition is intense and growth prospects are limited. Meanwhile, you have major competitors that are both strong and growing, and that have a head start in what looks like may be the future of the auto industry in Asia. All of your competitors understand that growth isn’t just about selling more vehicles, but about taking away sales from their competitors, which means you have a big bounty on your head.

In that environment, Fiat is vulnerable and its future is questionable. Car companies have three basic options: (1) Pick a strong niche, do well with it, and stick with it, (2) grow, or (3) die. Fiat is fearful of #3, and is going for #2.

The American domestic blowout may be Fiat’s only opportunity to grab a lot of market share very quickly. A chance like this is likely to never happen again, anywhere on earth. Put yourself up against that wall, and suddenly, Chrysler is starting to look like a terrific idea.

That doesn’t mean that it’s going to work. But it makes sense for Fiat to make a radical move to make it work. If they have strong management and a viable product plan, they have a shot. In their circumstances, they have to take it.

Because we have witnessed what has happened to Chrysler as a result of the Daimler merger. And that was in good times. What makes anyone believe that this merger will work now? It will not be an overnight success and time is something Chrysler has very little.

Right now, my 95 VW is falling apart. To be fair, it has 225,000 miles on it.

And I’m pretty sure that Fiat could sell cars here. Their cars are modern, well made, and best of all the new 500 and Abarth are cool.