Comments on: Editorial: Chrysler Suicide Watch 42: La Grande Bugia

By: agenthex

agenthex — Thu, 22 Jan 2009 14:26:47 +0000

if/once chrysler becomes profitable, fiat has the option of obtaining an additional 20% stake in the company for only $25m ….so under this scenario, fiat could end up with 55% of chrysler at a total cash outlay is only $25 million – while u.s. taxpayers contribute several billion but obtain no ownership whatsoever.

A pretty crummy deal for us. I guess the only consolation is it’ll never come to that since they’ll never be profitable.

By: davey49

davey49 — Wed, 21 Jan 2009 20:53:18 +0000

American factories are excellent, all problems lie in management and engineering

By: philipwitak

philipwitak — Wed, 21 Jan 2009 19:44:46 +0000

re: “So Fiat pays nothing for an option on Chrysler. One of a few things happen. 1. The new administration spends billions to keep Chrysler alive…2. Chrysler goes down the tubes immediately…3. Chrysler lingers on in sickly health and is parted out…Fiat makes out well under all scenarios…”
Rix / January 20th, 2009 at 7:34 pm

but this deal is a bad one for american taxpayers.

when this topic was discussed in some detail on cnbc within the last 24 hours, it was pointed out that, if/once chrysler becomes profitable, fiat has the option of obtaining an additional 20% stake in the company for only $25 million – but, the deal is contingent on chrysler getting an additional $3 billion in taxpayer funds from our government in the first place.

so under this scenario, fiat could end up with 55% of chrysler at a total cash outlay is only $25 million – while u.s. taxpayers contribute several billion but obtain no ownership whatsoever.

By: GoHuskers

GoHuskers — Wed, 21 Jan 2009 18:49:35 +0000

RF – excellent analysis as always.

What amazes me is why the intellectually bankrupt Bush administraton and the corrupt Congress did not compel Cerebus to ante up the money to save their own portfolio company. Perhaps I have just answered my own question…

By: jkross22

jkross22 — Wed, 21 Jan 2009 16:25:46 +0000

@scartooth:

Wagoner, is that you?

By: Bancho

Bancho — Wed, 21 Jan 2009 15:19:27 +0000

scartooth :

Chrysler’s lineup doesn’t back up your assertions.

By: Buckshot

Buckshot — Wed, 21 Jan 2009 11:44:03 +0000

Scartooth; Do you talk about ignorance????

“American factories utilize the highest quality and technology in the world.” :)

It doesn´t show in their cars.

“Fiat is a struggling company and has been for years.” :)

It used to be, but not now.

“Look at the French work rules. I am sure you dont even know what they are. Their rules make American workers look like slaves”

Tell me more about the French work rules.

By: Kurt.

Kurt. — Wed, 21 Jan 2009 11:17:13 +0000

What do French work rules and FIAT have to do with each other?

By: nudave

nudave — Wed, 21 Jan 2009 11:14:51 +0000

This “merger” seems to have as much going for it as the Graham-Paige/Hupmobile alliance.

Fiat is paying exactly the right price – 35% of nothing is still nothing.

By: Facebook User

Facebook User — Wed, 21 Jan 2009 10:36:14 +0000

Why is it that you people comment out of ignorance. American factories utilize the highest quality and technology in the world. Fiat is a struggling company and has been for years. GM lost billions when they bought Fiat and then severed the relationship. Look at the French work rules. I am sure you dont even know what they are. Their rules make American workers look like slaves.

By: LDMAN1

LDMAN1 — Wed, 21 Jan 2009 05:49:10 +0000

Hmmm. Very strange. There might be an ulterior motive to Fiat getting into the Cerberus mess.
Fiat mainly sells in Europe and Brazil. Both markets have collapsed in 2008 and are not expected to recover in 2009. Fiat is going through a bad time right now. First, Luca De Meo ex-CEO of Fiat and Alfa Romeo left the company and joined VW Group (this news brought the value of the Fiat stock down -3%), second Fiat is closing or idling factories and sending blue and white collars alike back home for weeks and some say for month. Morale was down, and press articles about Fiat had nothing good to report.
This new Chrysler PR stunt brings some upbeat news and while it is not widely understood in Italy or Europe serves to increase desirability of the company and its value on the stock market.
Then there is the possible Daimler Fiat merger angle to consider. Daimler will be hammered hard by EU Co2 regulation in the future and would need a brand like Fiat to bring its average Corporate Co2 emission down below the imposed threshold to avoid paying penalties or Co2 Taxes.
Is this the beginning of a Daimler Chrysler Fiat adventure?

By: MBella

MBella — Wed, 21 Jan 2009 03:52:45 +0000

I wouldn’t be so sure that the Alfa 159 and Brera aren’t ready, or very closely ready for US production. Before the bottom fell out of the market, FIAT was already trying to plan a way to distribute these cars here. There were talks about using Maserati dealerships. I’m sure Chrysler would be more than happy to take one of these and put a Chrysler badge on it.

By: windswords

windswords — Wed, 21 Jan 2009 03:30:53 +0000

Interesting take on this deal Robert. I can’t say I agree with it but you make some good points.

For another opinion to digest:
http://www.allpar.com/weblogs/2009/01/20/fiat-the-best-choice/#comments

This is really a fascinating study in how to look at something from two different angles.

By: akatsuki

akatsuki — Wed, 21 Jan 2009 02:32:49 +0000

The only problem with Cerebrus is that they got sucked in to doing it the Chrysler way. Instead of going for broke and swinging the axe, they just puttered along doing nothing with the company.

This Fiat deal sounds like crap too. Why wouldn’t Fiat just scoop up dealers desperate for any chance to sell a car by the handful?

Frankly, why don’t we just get rid of the dealer network anyway?

By: Rix

Rix — Wed, 21 Jan 2009 00:34:35 +0000

So Fiat pays nothing for an option on Chrysler. One of a few things happen.
1. The new administration spends billions to keep Chrysler alive for several years and then the market revives. In this case, Fiat sells designs and or parts to Chrysler. Meanwhile, the designs that are developed provide a contingency plan for the US market and Fiat makes money.

2. Chrysler goes down the tubes immediately and is liquidated. In this case, Fiat is out nothing, because they put in nothing.

3. Chrysler lingers on in sickly health and is parted out. In which case Fiat has a better view of which areas of the carcass to pick at. They also could sign up a few hundred Chrysler dealers, and perhaps buy Jeep, Mopar, and a minivan plant or two. When the market turns up, Fiat enters with a full lineup of Ram, Caravan, Challenger, Jeep, and a lineup of small cars from Europe like the 500.

So all in all, Fiat makes out well under all scenarios…

By: gogogodzilla

gogogodzilla — Wed, 21 Jan 2009 00:22:30 +0000

YES!

Fiat (and Alfa Romeo) now gets a large dealer network to sell their models.

I can now contemplate the ability to buy an Alfa Romeo state-side!

:-)

By: Joe ShpoilShport

Joe ShpoilShport — Wed, 21 Jan 2009 00:04:01 +0000

BTW, nicely done, Mr. Farago

By: Joe ShpoilShport

Joe ShpoilShport — Wed, 21 Jan 2009 00:00:29 +0000

Fiat owns 35% (for nothing), Daimler 20% (valued at nothing), Cerebus…

Are these people operating from the script of “The Producers”?

By: oldyak

oldyak — Tue, 20 Jan 2009 23:32:09 +0000

If this means we can buy a ‘500′,or a ALFA
What can It hurt?
Go for it!

By: GSlinger

GSlinger — Tue, 20 Jan 2009 23:22:52 +0000

I, for one, can’t wait for my Hemi Panda.

By: Andy D

Andy D — Tue, 20 Jan 2009 23:15:44 +0000

35% of nothing still equals nothing. Mebbe Chrysler could make a tribute car based on the 124, sorta like a Lada.
From what I read elsewhere, the deal is being brokered by the same guy weaseled 2 bil from GM back in ‘05.

By: Buckshot

Buckshot — Tue, 20 Jan 2009 23:14:50 +0000

Fiat have something very rare these days; A car that doesn´t collect dust in the showrooms.

http://www.fiat500.com/eng/

You may not think that this car could sell in the usa, but look at Mini.

By: mtypex

mtypex — Tue, 20 Jan 2009 23:06:31 +0000

This smells like Renault/AMC in the 1980s.

By: Dynamic88

Dynamic88 — Tue, 20 Jan 2009 22:59:14 +0000

The WSJ is reporting that Fiat has the option to increase it’s stake to 55%, that Fiat will take over operations (meaning car guys would be running things instead of finance guys), that Fiat’s contribution will be the retooling of a Chrysler plant to make small cars, and also providing engine/tranny technology.

By: OldandSlow

OldandSlow — Tue, 20 Jan 2009 22:57:30 +0000

If this is the best that Cerberus Chrysler can come up with, it is time to call in the liquidators.

They needed to trim back their line up to a bare minimum 3 months ago. That’s right – no more Commanders, Dakotas, Aspen/Durangos, Avenger/Sebrings or Compass/Calibers.