Turning Aqua Into Vino: Chrysler Creative Accounting Gone Wild
Chrysler has a non-binding deal with Italian automaker Fiat, which has agreed to take a 35 percent stake in Chrysler in exchange for access to technology and overseas markets, and not a single dime.
But wait! It’s a miracle! Just as Jesus Christ turned water into wine, Bob Nardelli turned the no-cash-at-all deal into a bonanza.
The deal with Fiat is worth up to $10B for Chrysler and could preserve 5,000 North American manufacturing jobs, Chief Executive Bob Nardelli said on Monday in a missive to his minions.
“We estimate the cash value of Fiat’s contribution to be between $8 and $10 billion considering the cost to develop these vehicles, platforms and powertrains from scratch,” Nardelli said in a email to employees, which Reuters intercepted.
The value of the proposed deal would come from synergies in the areas of purchasing, engineering and contribution of technology, Nardelli said.
“Production of vehicles for Fiat in North America will allow Chrysler to increase its plant utilization, helping to preserve and create in excess of 5,000 manufacturing jobs,” Nardelli said. “The overall contributions from Fiat and the synergies we realize will far exceed the value of the government loans.”
Chrysler, has already received $4 billion in emergency US government loans. They want another $5 billion. So if the cash value of Fiat’s contribution to be between $8 and $10 billion (and that’s a very big if), how does it far exceed $9 billion?
Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.
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Fiat stands for "Fix It Again, Tony" here in Australia. I must admit to having much experience with Fiats as they departed these fair shores for lack of sales due to their dire reputation way back when. However, they've just come back and are now selling the 500. Very cute car. I just wonder how reliable could it be? Here's an idea though - Chyrsler could get the tooling for the old Multiplia's. They are an awesome MPV -Three abreast, two rows. Awesome. We had a ride in one in Rome to the airport that I will never forget due to our crazy Italian taxi driver. Road rules are for pussies, and our driver was most certainly not a pussy, going down one way streets the wrong way, through lanes that were at least 10 cm too narrow for the car, etc. The Multiplia could slot in under their T&C offerings.
http://en.wikipedia.org/wiki/Fiat_Multipla
The low quality low price leader of Europe comes to America to bail out the low qauality low price leader here. This is called synergy. If you look at the European stats, Volkswagen and others are soundly trouncing Fiat in Europe. No wonder, they want to take excess capacity to the States. But if you think the Japanese and Koreans will be muscled out of the low end market that they created here in America by Fiat you are delusional. I can see the consumer reports not recommended listings now. "the fiat can do most of what the honda can do, but we cannot recommend it due to it's far worse than average repair costs and it's non-existant resale value". A couple of those reviews and yes we have chrysler all over again. This is synergy. Hell, the mercedes label wrapped around chrysler didn't mean a thing, the fiat label will mean nothing either.