Marchionne: Equity Beats Strategy

Edward Niedermeyer
by Edward Niedermeyer

Almost exactly a month ago we asked:

Fiatsler is bringing Fiat back to the US as a one-model-brand (500) with a dedicated sales and support staff just to meet one of these government benchmarks… will they be crazy enough to build an engine in Michigan and ship them to Mexico to meet another?

The short answer: of course. Fiat gets five percent of Chrysler’s equity for building the engine in the states, but unless there are unrevealed US-market applications for an engine with 92 lb-ft of torque, they’ll all be shipped to Mexico and installed in Fiat 500s. According to Marchionne, half of the Toluca, Mexico Fiat 500 production will be sold in the US with the other half going to Brazil. For a guy who regularly bemoans the poor strategic positioning of Fiat’s factory sites, Marchionne is surprisingly willing to bend a few principles for five percent of Chrysler’s equity. Will it work? Sergio is still asking for time, telling reporters “by the end of 2011 and in early 2012, you should be able to tell how our plan is working.”

Edward Niedermeyer
Edward Niedermeyer

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  • Dan Dan on Dec 20, 2009

    The Italians are very smart people and so far they have been able to out smart the clueless Americans to giving a FREE COMPANY for smoke and mirrors which many dumb American will eat . Italians are the smartest people in the world and can build a better car then Americans?

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    • Wheeljack Wheeljack on Dec 21, 2009

      Another tired tirade from someone who seems to wish misery upon others. Are we perhaps a fired/laid-off Chrysler worker Dan?

  • Caraholica Caraholica on Dec 20, 2009

    If there's anyone left to ask.

  • Conslaw Conslaw on Dec 20, 2009

    In reply to DAN Yes, the Chrysler/Fiat deal was a product of smoke and mirrors, but I don't think the Americans were dumb. PTFOA has always known that Chrysler was/is a basket case. The smoke and mirrors were designed to hide an economic life support system that was/is designed to last long enough so that the economy can better absorb the Chrysler collapse. It was also a bit of political cover, because the party in power would have been dead in Chrysler towns if no effort was made to save the company. The pretense of the Chrysler/Fiat reorganization will be lucky to last past the first quarter of 2010. GM will get most of the salvagable bits of Chrysler. Fiat will get some form of a distribution deal as a consolation gift.

  • Midelectric Midelectric on Dec 21, 2009

    It's truly a sad day when a new engine plant in the US building a modern, fuel efficient and hybridizeable four cylinder power plant suitable for export is slated to come on-line. When will this country reclaim its roots and go back to building products completely irrelevant and unsaleable outside of the domestic market?