By on September 21, 2011

Today, credit rating agency Moody’s cut the rating on Fiat’s bonds down two notches from Ba1 to Ba3. Merrill Lynch wrote  in a letter to customers that it is ”worth remembering that Fiat debt is already junk rated so there will not be a change in the credit investor base for Fiat, but cost of refinancing goes up.”

Officially, bonds in the Ba family are regarded to be of “questionable credit quality”. In the business, “Ba1” is known as junk, B3 as “bad junk”. It is interesting what got Fiat the demerits: Chrysler.

“Today’s rating action reflects Moody’s expectation that the creditworthiness of Fiat and Chrysler will become more closely aligned over time as the strategy and operations of the two groups becomes progressively more intertwined,” Falk Frey, Moody’s lead analyst for Fiat, told Reuters. A lot of Fiat’s doubtful debt is  imported from Detroit.

Fiat’s Marchionne himself said a few days ago and again that “the future of this industry is bound to lead to the elimination of marginal players,” and that excluding China, there will eventually be only five large car makers in the developed world. Of course, Fiat-Chrysler wants to be one of the Five and not a marginal player who is doomed to extinction.

The trouble is that membership in the Group of Five increasingly depends on success in the emerging markets. That’s where the growth is. Especially in hotbed Asia, Fiat is weak to nonexistent.  Brazil, where Fiat has been traditionally strong, is slowing down. Fiat’s home market Italy is in trouble. In the first eight months of the year, Fiat’s European market share dropped from  8.3 percent to 7.4 percent.

Fiat’s ailing Alfa is getting paler around the nose by the day. Contacts in Frankfurt report that Alfa reduced its target for 2014 from 500k units to 400k units. A lot of things fell by the wayside:  The mid-sized SUV due in 2014 has been scrapped. The compact SUV promised for 2012 is delayed until 2013. The Giulia won’t come in 2012, but in 2014. The launch of the new Spider has been moved from 2013 to 2014. And the list goes on.

Ferdinand Piech, who covets Alfa, would be grinning his trademark sardonic grin, would he not have other problems.

Speaking of Piech: Marchionne is being increasingly fingered as the Italian gigolo who has wrecked the German-Nipponese marriage between Volkswagen and Suzuki.  Piech’s vindictiveness is legendary. Piech and Marchionne hold each other in mutually low regard.

The love affair of the stock market with Fiat turned into a tragedy: After shooting up to 8 Euro in January, and maintaining the 7 to 8 Euro level through most of the year, the stock crashed in August and lost half of its value. Moody’s isn’t the only one with a bleak outlook for Fiat.

Get the latest TTAC e-Newsletter!

103 Comments on “Moody’s: Fiat Is Junk. Bad Junk...”


  • avatar
    mike978

    Interesting that Marchionne wrecked the VW-Suzuki relationship. I expect VW and Piech will have the last laugh since a) VW is very profitable, b) has a A-/A2 credit rating, c) has consistent product development planned and d) is strong is many emerging markets (India the exception).

    I would rather be in VW’s shoes than Fiat’s (or Suzuki’s).

    • 0 avatar
      TonyJZX

      VW intended to backdoor into India (so to speak) by using Suzuki who are possibly #1 in India (Maruti-Suzuki).

      Germany has been weak in India (do not know why) however the Japanese and Koreans have big inroads there.

      GM and Ford aren’t in India either since they don’t seem to be as serious as the Asians about microcars.

      I love the car industry. It really is a high stakes soap opera for men. We love our Piechs and Ghosns and Sergios. And Saab. And China. And Muller. And all the GM yes men. Why bother with Days of Our Lives?

      • 0 avatar
        geozinger

        @Tony: “I love the car industry. It really is a high stakes soap opera for men. We love our Piechs and Ghosns and Sergios. And Saab. And China. And Muller. And all the GM yes men. Why bother with Days of Our Lives?”

        You are correct, sir. +1!

    • 0 avatar
      SALVATIER

      I worked on Fix It Again Tony in the late 70 and early 80 what a waste of time and money I scrapped over 1000 fiat 128 and fiat 124 due to rust problems and the cars did not have over 10,000 miles…
      The Automatic transmissions were made by GM .The engines were great but the carburetors always had problems even the fuel injection was sub standard. I have worked on a lot of cars but Fiat wrote the book on JUNK
      I was so glad to see them exit the country and just wait and see you will see that again remember anything that is made by Fiat,Renault,Lancia,Bertone or any company that produces Junk ………………

  • avatar
    GS650G

    FIAT bought a bankrupt auto maker with huge liabilities. A Union to contend with. Small market share. Haphazard products with no small car, hybrid, or even top rated seller, the Jeep being possible exception.

    This isn’t news, it’s fate.

    • 0 avatar
      mike978

      FIAT knew that before they bought. Also FIAT (and many other automakers) have unionised workers.

      • 0 avatar
        PintoFan

        But I thought all foreign car plants were union-free paradises where workers unencumbered by organization happily built perfect cars for $3 an hour?!?!

      • 0 avatar
        piffpaff

        Western European unionisation is not as lethal for productivity as the North American closed-shop version that the auto industry suffers from. Add to that the fact that the second cost problem – health care – is more rationally and cost-efficiently dealt with through mandatory non-employer specific programs (“socialized medicine”) and it becomes obvious that at least part of the failure of the Big Three is related to a flawed regulatory and political environment. The managerial excellence or lack thereof then explains the differences between the Big Three.

    • 0 avatar
      Joe McKinney

      The curious thing about the Fiat/Chrysler merger is that Fiat jumped at an opportunity no other car company wanted. Daimler was glad to be rid of Chrysler. GM and Nissan-Renault had already said no thanks to Chrysler. Even the Chinese weren’t biting. As far as we know, Fiat was the only taker.

      • 0 avatar
        Pch101

        As far as we know, Fiat was the only taker.

        One of the challenges faced by the automotive task force was a general lack of interest in these companies. Excluding anyone from nations that we’d want to keep out (PRC, Russia, etc.), likely candidates could have likely been counted on one hand, with fingers remaining.

        Fiat did this because Marchionne saw this as a choice between growing and dying. From his vantage point, it was worth the risk, as he needs to build sales volume in order to be competitive. He would have been better off with GM.

      • 0 avatar
        AMC_CJ

        There are other reasons why a company might decide to disregard the taking on another brand. In this case, a lot of it had to do with the product. Chrysler-corporate makes big cars, trucks, and suv’s well. Fiat-corporate makes smaller cars and some higher-end stuff.

        It was a good product merger. The FIAT 500 in Dodge dealers, the Jeep GC as the new Maserati SUV.

        There is a lot of potential between the two companies, and frankly, I think the sweater loving Fiat CEO is probably the brightest one doing business in Detroit right now. Problem is, so many others are working against him, starting with the entire UAW.

      • 0 avatar
        Scoutdude

        Daimler had tried to sell parts of Chrysler and the whole mess for years before finding someone outside of the industry, who didn’t have a clue, to unload it on. Of course at the new price of “we will pay you to take it” it’s another story.

    • 0 avatar
      Pch101

      FIAT bought a bankrupt auto maker with huge liabilities.

      On the contrary, Chrysler had a pretty clean balance sheet as a result of the bankruptcy…which of course was the whole point of filing the bankruptcy.

      Fiat has a challenge of needing to build both margin and market share, simultaneously — they need a base of volume over which to amortize their fixed costs. This is particularly difficult for a company like this, given Chrysler’s general branding weakness, lack of pricing power, and its absence of market leadership in any one space.

      This differs from GM, which could easily afford to sacrifice market share if the loss in volume were to contribute to margin. It’s easier to pull oneself out of the quagmire if the solution doesn’t call for contradictory solutions.

      This doesn’t mean that Fiat necessarily has to fail. But I would expect its profit margins to be below the industry norm, which means that its stock isn’t going to be very exciting to own, at least not over the short run. Not that auto stocks are usually very exciting, but Fiat is less exciting than most.

      • 0 avatar
        GS650G

        Liabilities include far more than financial. FIAT was desperate to get back in NA, Cry-sler didn’t have a small car, it has some synergy.
        Fiat’s are what people in Europe buy because they can’t afford something better, sounds harsh but think about it.

      • 0 avatar
        Pch101

        Liabilities include far more than financial.

        Chrysler was a weak company. If it hadn’t been, it wouldn’t have been up on the auction block. Had it been worth more, more would have been paid for it.

        Fiat’s are what people in Europe buy because they can’t afford something better

        That would be true irrespective of whether Fiat acquired Chrysler.

        Fiat exists today because Europe maintained protected car markets for a long time. Fiat had a near-monopoly in Italy, thanks to government regulations.

        Those regulations are gone. Now, Fiat has to stay in business by doing what everyone else is doing: going global. Fiat had few options, and this was one of their better ones. Not fantastic, just better.

    • 0 avatar
      George B

      When can FIAT sell Jeep and Ram to raise cash? I assume there will be pressure to wait until after November 2012 for FIAT to sell the good stuff and euthanize the rest. Just visited the Walter P Chrysler museum last week and respect the past accomplishments of Chrysler, but I can’t see how they succeed in the future.

      • 0 avatar
        PintoFan

        Fiat has no interest in “euthanizing” Chrysler because Chrysler is the only way Fiat will:
        A. Be able to re-enter the American market
        B. Become large enough to survive in a global market.
        All this talk of putting Chrysler to bed sounds increasingly self-serving.

    • 0 avatar
      geeber

      From what I’ve read, the Italian auto workers’ union is much more militant than the UAW. Regarding the recent controversies, I get the distinct impression that, based on this, Mr. Marchionne thought that the UAW would be a pushover in negotiations, and he could therefore impose his will on the company without much resistance.

      He therefore proves that many Europeans are just as clueless about the nuances of American life and politics as many Europeans claim that Americans are about their respective countries.

    • 0 avatar
      Robert Schwartz

      “FIAT bought a bankrupt auto maker with huge liabilities.”

      FIAT was given the assets of a bankrupt automaker without any of the liabilities. And, as near as I can tell, it was worth every penny they paid for it — i.e. nothing.

      • 0 avatar
        GS650G

        Again, wiping the books doesn’t remove all liabilities. FIAT owns the problems and responsibilities of Cry-sler and is just starting to realize what they got themselves into. There are good reasons M-B took a 30B hit getting rid of them.

      • 0 avatar
        PintoFan

        MB took a hit getting rid of Chrysler because Daimler has no idea how to manage a brand that isn’t Mercedes Benz, and it increasingly looks like they have no idea how to manage that brand either if MB’s loss of pricing power is any indication. They are going to get destroyed by the combined forces of BMW and Audi. I could see them getting absorbed into the VAG empire in 2 decades or so.

      • 0 avatar
        Robert.Walter

        Kind of ironic when IIRC DB sold Audi to VW.

      • 0 avatar
        th009

        Yes, VW bought Auto Union from DB, almost 50 years ago — one factor was to get extra assembly capacity for the Beetle. DB only owned Auto Union for a few years, though, having bought it in 1958.

  • avatar
    V572625694

    Who doesn’t believe everything Moody’s says, particularly after they gave AAA ratings to collateralized debt obligation bonds that–what was it again?–oh yeah: crashed the whole world economy.

    Although in this case they’re probably right, proving once again that even a blind pig finds an acorn once in a while.

  • avatar
    eldard

    Fiat should stick to making real ovens and not ovens with wheels. Maybe then they’ll get a AAA rating.

  • avatar
    Volt 230

    A junk company making junk cars, I think this is very fitting.

  • avatar
    Zackman

    I’m afraid the only good thing to come out of the FIAT-Chrysler marriage will be Jeep – when it is sold to someone who knows what Jeep means, and builds them accordingly. Fiatsler is dead, eventually.

  • avatar
    Pch101

    I’m afraid the only good thing to come out of the FIAT-Chrysler marriage will be Jeep

    The car market doesn’t just consist of the United States. And as time goes on, markets outside the US are becoming more important.

    Fiat needs to become a truly global player, or else it’s toast. Acquiring Chrysler has given it access to one of the world’s largest markets and an opportunity to amortize R&D across a broader base. I would guess that Marchionne looks at the landscape and figures that his best odds are in Europe and the Americas — not just the United States of America, but the continents of North and South America.

    Their challenge is to develop platforms that can be sold in a variety of markets. For their sake, one would hope that the US truck division creates enough margin to pay for developing the rest of it.

    • 0 avatar
      geeber

      Spinning off Dodge trucks as the Ram brand isn’t going to do the company any good over the long haul. There was no problem with the Dodge brand – it just needed some better products. Everyone I know still calls them Dodge trucks, just as they always called Imperials “Chrysler Imperials” up until the bitter end. Why spend precious dollars to build awareness of a new brand that will not make one bit of difference to buyers?

      The Durango and spruced-up Charger are steps in the right direction. The company does need credible entries in the Corolla-Civic-Elantra-Focus-Cruze class and Camry-Accord-Sonata-Fusion-Malibu class. I would imagine that is where the global platforms would be the most useful. I’m just not sure we need both Dodge and Fiat versions of these cars. It seems smarter to go with the Dodge nameplate, which already has a decent dealer network and broader public recognition.

      The Dodge nameplate has a better public image, too. This past weekend I was watching an NFL game with relatives and saw an ad for the Fiat 500. My one cousin, who does not follow the auto industry, turned to his son, who is named Tony, and said, “Do you know what Fiat stands for? Fix it Again, Tony!”. Ouch…

      • 0 avatar
        Pch101

        Spinning off Dodge trucks as the Ram brand isn’t going to do the company any good over the long haul.

        No, it certainly wouldn’t. Even though Chrysler is the perpetual third-place runner-up in the segment, I would presume that the margins on the trucks are what help to carry the rest of the company. A high volume, low R&D product should be a winner for generating returns.

        There was no problem with the Dodge brand – it just needed some better products.

        The volumes are too low. As the automakers become larger, fixed cost amortization becomes more of a challenge, which puts the squeeze on the smaller players to increase their volumes. In a mature market like the US, that requires conquest sales, and conquest sales aren’t easy.

        I’m just not sure we need both Dodge and Fiat versions of these cars.

        My guess is that these would be branded as Fiats if the 500 proved to be successful. At the rate that they’re going, though, they may end up being badged as Dodges or Chryslers. The branding strategy seems to be a bit incoherent, and one of the weaker aspects of their plan.

      • 0 avatar
        GS650G

        “Fehler in aller Teile”, which means “Fault in every part”

        The Germans and Austrians discovered this saying years ago.

      • 0 avatar
        geeber

        Pch101: The volumes are too low. As the automakers become larger, fixed cost amortization becomes more of a challenge, which puts the squeeze on the smaller players to increase their volumes.

        But isn’t this where the shared platforms and/or models will help both companies…if Fiat and Chrysler can sell the same basic vehicle as a Dodge in North America and a Fiat everywhere else, it will boost the volume of that particular model. Its success thus won’t necessarily tied to volume in Europe or North America. This will enable the company to offer more up-to-date vehicles in the critical compact and family sedan segments.

        I don’t see the value of branding these models as Fiats. Brand them as Dodges, give them styling cues to tie them to the Charger, Durango and Ram pickup, and they have more of a chance of succeeding. Make the styling more aggressive than anything else in the field.

        Fiat should take a page from the development of the 1994 Ram. Chrysler found that 25 percent of the clinic participants loved it, but 75 percent hated it. Since Chrysler’s share of the full-size pickup market was well below 25 percent, it went with the design, and was rewarded with a huge sales increase.

      • 0 avatar
        Pch101

        But isn’t this where the shared platforms and/or models will help both companies

        Sure, that’s obviously the goal. Fiat acquired Chrysler because it gave Fiat an opportunity to grow very quickly, and in a large market where it barely plays.

        I don’t see the value of branding these models as Fiats.

        But Marchionne does. He doesn’t just want to sell cars, he wants to sell cars with a Fiat marque attached to them.

        Personally, I agree with you. When I opine that I find the branding strategy to be incoherent, I say that in large part because Marchionne’s branding choices seem to be driven by an insatiable desire to create a space for Fiat in the North American lineup, at the expense of whatever value that the Chrysler-Dodge brands may have.

        If I were in his shoes, I would treat North America as its own animal, and just try to sell the cars to Americans that Americans want to buy. There is no compelling reason to sell a complete lineup of Fiat-badged cars to Americans, just so long as they can be persuaded to buy something else. But obviously, nobody asked me, and they seem to be taking a different approach.

  • avatar
    lilpoindexter

    FIAT-Chrysler, a Merger of Equals…oh wait..that was MBZ…So will
    FIAT bring down Chrysler, or will Chrysler bring down FIAT?

  • avatar
    Mullholland

    Sure this downgrade doesn’t have something to do with the junk in J-Lo’s trunk? I kid.
    In other news, at 9:07 a.m. this morning, I had my first “shoulder sighting” of a 500. Confidently taking up space on the shoulder of the Newport Freeway (CA55) in beautiful Bianco—emergency flashers all aglow in the early morning mist. Reminded me of love-hate relationship I had with a 128SL at an earlier point in my life.

    • 0 avatar
      tankinbeans

      That’s just sad. I saw the one and only 500, outside of the autoshow, about 2 weeks ago. The person driving it must have bought outside of the state because I don’t think there’s a big network, or even medium network, in MN yet.

  • avatar

    Peter DeLorenzo notes the botched launch of the Fiat 500 here…along with setbacks to a full-line Fiat/Alfa US launch:

    http://www.autoextremist.com/

    The Jennifer Lopez 500 TV ad is an epic fail made worse by its placement in NFL games. But if you go watch the “Papi” video on which the ad is based, there’s a cute, romantic concept that probably was too much to execute in :30 but might have made a great :60. Be patient, an ad precedes the actual video…

    http://www.youtube.com/watch?v=6XbIuSLaCnk&ob=av2e

    Placing a :60 version of this video on more female-leaning programming might have given the 500 a proper launch. But even so, the co-worker who brought “Papi” to my attention mentioned her father had seen it too…and proceeded to share the story of the Fiat he’d bought new – that caught fire. She laughed when I explained Fiat stood for “Fix It Again, Tony”.

    I think if Fiat fails in North America, it will kill Chrysler along with it. Then Sergio will simply retreat to Europe, someone else will buy Jeep and the other marques will be history.

  • avatar
    CJinSD

    It seems to me that past Chrysler bond holders were robbed in bankruptcy court by the Obama regime. Only now is Fiat being demoted to bad junk? Odd.

    • 0 avatar
      getacargetacheck

      Baloney. The bond-holders were lucky to get anything.

    • 0 avatar
      Pch101

      It seems to me that past Chrysler bond holders were robbed in bankruptcy court by the Obama regime.

      I’m sure that it would seem that way to a political dogmatist with no knowledge of bankruptcy law.

      I’d like to see folks like yourself tell us who was willing to pay more to acquire Chrysler or its parts. I don’t recall a line up out the door of buyers ready to hand over large amounts of cash for the company. If you are aware of some super-secret buyer who wanted to pony up all of this additional money, I’d like to hear more about them, as you seem to be the only one who knows anything about them.

      • 0 avatar
        GS650G

        Since it was handled politically we’ll never know how differently it might have turned out. OTOH we know that future investors will be wary about investing in companies deemed too big/connected/political to fail.

      • 0 avatar
        Pch101

        Since it was handled politically we’ll never know how differently it might have turned out

        You should work on the consistency of your arguments. One minute, you’re describing all of the ways that Chrysler was sucking wind. The next, you’re claiming that there was all of this hidden value that the court ignored.

        You need to make up your mind. Chrysler could not have been the wreck that you claim it was, yet been worth a fortune at the same time.

        Again, I’d like to see the folks in your camp present some numbers that support all of this supposed value. So far, the evidence for your position has been sorely lacking.

        Chrysler was a dog.

        – Toyota didn’t want it.
        – Honda didn’t want it.
        – General Motors had enough troubles of its own and couldn’t have acquired it.
        – Daimler certainly didn’t want it.
        – BMW didn’t want it.
        – I never heard anything about PSA buying it.
        – VW didn’t want it.
        – Porsche didn’t want it
        – The Indians (Tata, etc.) didn’t show any interest in it.
        – It’s disappointing that Renault-Nissan, who would have been the most likely candidate, wasn’t interested in either GM or Chrysler.
        – Suzuki didn’t want it.

        Again, I’d like someone to name these buyers, and what they were willing to pay. So far, this list of buyers aside from Fiat appears to be completely blank.

      • 0 avatar
        CJinSD

        “I’m sure that it would seem that way to a political dogmatist with no knowledge of bankruptcy law.”

        Funny stuff. What part of bankruptcy law involves pumping tax dollars into dead ventures and granting equity stakes to people who don’t have creditor status or contribute capital?

        If nobody wanted to step up and buy Chrysler as a going concern, and I know I didn’t want to, then assets should have been disbursed and creditors should have been paid. The parties responsible for the failure should not have been the ones to get paid off, and nobody smart enough to avoid Chrysler should have had their money grafted to political cronies of our corrupt regime.

      • 0 avatar
        Pch101

        What part of bankruptcy law involves pumping tax dollars into dead ventures and granting equity stakes to people who don’t have creditor status or contribute capital?

        So now you’re switching arguments. (I can’t blame you — your first one sucked.)

        Above, you claimed the following: “It seems to me that past Chrysler bond holders were robbed in bankruptcy court by the Obama regime.” So what you are claiming is that the bondholders made less from the Chapter 11 than they would have from liquidation.

        I want to see some evidence of that. Of course, you don’t have any.

      • 0 avatar
        CJinSD

        I do have evidence that the law was violated. Whether the sale of the Jeep brand, the transmission business, the real estate, the intellectual property, various physical assets would have totaled more than 2.25 billion is a case that creditors made in court repeatedly. What the US Supreme Court decided on December 14, 2009 was that the lower court(2nd Circuit CoA) decision upholding the lawlessness of the Obama regime was vacated so as not to set precedent. Perhaps they just see this as opposite administration, and we’ll magically revert to being a nation of laws when it is over. Vacate the precedent set by the dictator and 1129(a)(7) goes back to being a law. I doubt it, and that’s why Chrysler bonds are Bad Junk.

      • 0 avatar
        Pch101

        I do have evidence that the law was violated.

        In that case, don’t keep it a secret.

        Whether the sale of the Jeep brand, the transmission business, the real estate, the intellectual property, various physical assets would have totaled more than 2.25 billion is a case that creditors made in court repeatedly.

        And the buyers of these assets were who exactly?

      • 0 avatar
        CJinSD

        The US Supreme Court vacated the decision upholding Obama’s theft of Chrysler assets so it wouldn’t become a precedent, meaning that it wasn’t based on a defensible interpretation of the law. It was outside the law. I don’t think I can make it easy enough for you to understand. Sorry.

        Nobody got to buy Chrysler’s assets because Obama stole them for the UAW. Your attempt to defend this travesty is getting risible. Obviously, there was no sound business case for buying the company, saddled by the UAW as it was and still is. The question is would anyone buy the assets. Absolutely.

      • 0 avatar
        Pch101

        Nobody got to buy Chrysler’s assets because Obama stole them for the UAW.

        That’s hilarious. You have no facts of any kind, you’re just a cliche generator.

        I know that you’ll fail to understand the significance of this, but the bondholders were paid about 50% more for their debt interest than what Cerberus paid net-net for the entire company in 2007.

        http://money.cnn.com/2007/05/14/news/companies/chrysler_sale/index.htm

        If you earnestly want to argue that Chrysler had actually increased in value over the two years that Cerberus operated it, then you’ll have to forgive me for believing that you’re more than just a little insane.

        The bondholders weren’t cheated; the government overpaid them. Had the government paid them what they were worth, then they probably would have received less than half of what they got.

      • 0 avatar
        CJinSD

        Chrysler as a company was less than worthless. They had huge debt and the liability of UAW infestation. Chrysler had assets that were plenty valuable free of Chrysler’s ‘legacy costs.’ You don’t get it because you won’t get it. Maybe you can’t, as it would ding your fragile world view.

      • 0 avatar
        Pch101

        Chrysler as a company was less than worthless.

        Well, in that case, it sounds as if the bondholders should have been paid about zero cents on the dollar, since according to you, their collateral wasn’t worth anything.

        If you want to argue for breakup value, then support your number. I’ve supported mine, while all you’ve done is spew a bunch of empty rhetoric.

        You might want to actually learn something about this stuff prior to venting about it. So far, you’ve contradicted yourself a few times in just a few posts, while failing to get the facts straight. I prefer to focus on facts, but unfortunately, you seem to be happy having no facts at all.

      • 0 avatar
        PintoFan

        My theory: CJ is a burned vulture investor who hoped to get full value for some GM and Chrysler bonds that he scooped up at the last minute, praying that Obama would give secured creditors a free lunch. After which he would wire all the money to his associates in the Caribbean and then funnel it back into his Honda dealership franchise via purchases of unwanted 2012 Civics and Crosstours, which would then be conveniently dumped in the Gulf of Mexico and recorded as sales transactions to boost Honda corporate’s sagging volume numbers.

        All true facts.

      • 0 avatar
        CJinSD

        PCH101,

        You are insisting that you don’t understand that Chrysler couldn’t continue making cars because they were crushed by debt and unable to meet their obligations but they still possessed valuable assets. I’m not sure how I can describe your position without violating the rules of conduct here. You should understand. A highschool sophomore should understand. Suppose a carpenter has a heart condition that won’t allow him to continue to ply his trade. Does that make his hammer worth less at a yard sale, even if his S-corporation goes broke? No. It is still a hammer even if the carpenter is out of business. So it was for Chrysler’s real estate, tooling, IP, the Jeep brand name,…

        The secured bond holders should have been at the head of the line when those assets should have been sold. Once the secured bond holders were compensated as close to the value of their bonds as possible, anything left would go to unsecured creditors, then to equity holders, then to whoever else was involved in this mess. Obama turned the order upside down. Secured bond holders got 29 cents on the dollar while the UAW and Fiat got Chrysler’s assets.

      • 0 avatar
        Pch101

        You are insisting that you don’t understand that Chrysler couldn’t continue making cars because they were crushed by debt and unable to meet their obligations but they still possessed valuable assets.

        You are horribly, horribly confused. I have said exactly the opposite of these things.

        The assets of Chrysler had minimal value, which explains why you are wrong to claim that the bondholders were cheated.

        There is absolutely no reason on earth to think that the breakup value exceeded the enterprise value. Yet that’s what you keep arguing.

        Get back to me when you’ve learned something about this. Until you do, it’s a waste of time dealing with positions about which you are so woefully uninformed.

      • 0 avatar
        GS650G

        @PCH101
        “You should work on the consistency of your arguments. One minute, you’re describing all of the ways that Chrysler was sucking wind. The next, you’re claiming that there was all of this hidden value that the court ignored.”

        Ok, how about Chrysler should have been auctioned off and whatever recovered handled by a bankruptcy judge. The UAW should have waited in line like everybody else.

        They were sucking wind, of no value as a going concern, and should have folded. If not for billions in tax dollars, they would be gone.

        I hope this meets your tough standards. If not, too bad.

      • 0 avatar
        Pch101

        Ok, how about Chrysler should have been auctioned off and whatever recovered handled by a bankruptcy judge.

        Because the judge approved the reorganization plan.

        And because the creditors got paid at least what they would have been paid in a liquidation, they didn’t have any reason to block it.

        The UAW should have waited in line like everybody else.

        They did. That’s why the VEBA took equity instead of cash — because there wasn’t any cash left to take once Chrysler’s secureds were paid.

        If not for billions in tax dollars, they would be gone.

        That is accurate.

        But you need to extend that fact to its logical conclusion: Without Uncle providing the DIP funds, the bondholders would have gotten next to squat. The bondholders not only didn’t get cheated, but they were overpaid.

        Meanwhile, had Chrysler failed, the taxpayer would have inherited the retirement plan burden. At the time, Chrysler’s pensions were underfunded by more than $9 billion: http://www.businessweek.com/bwdaily/dnflash/content/may2009/db2009055_118848.htm That would have put the government on the hook for a least a couple of billion dollars worth of obligations.

        If you think that it would have made sense to let that happen, then you need to run that through a calculator. The bailout of Chrysler will end up costing less than that.

        You can blame Chrysler management for that. Had the pensions been adequately funded, we could have afforded to have them fail. But because they weren’t, allowing Chrysler to tank would have been a classic case of cutting of one’s nose to spite one’s face. On the whole, not a very logical thing to expect from your government.

      • 0 avatar
        Monty

        Question: Even if the break-up value exceeded the enterprise value, and a bankruptcy court had proceeded to sell off assets to pay secured creditors, wouldn’t the pension funds (underfunded as they were/are) be the first secured creditor, ahead of the bond holders?

        I’m not asking in a rhetorical sense, either. I just want to know the proper order of secured creditors.

        Another question: If Chrysler had gone to bankruptcy, prior to any liquidation sale could the Court entertain offers in the best interests of recouping as much value as possible for the IP, and tooling and such?

      • 0 avatar
        Pch101

        Even if the break-up value exceeded the enterprise value, and a bankruptcy court had proceeded to sell off assets to pay secured creditors, wouldn’t the pension funds (underfunded as they were/are) be the first secured creditor, ahead of the bond holders?

        The creditors are entitled to receive in a reorganization (Chapter 11) what they would have received in a liquidation (Chapter 7).

        Unlike GM, many of Chrysler’s creditors were secured. Secureds have priority over unsecureds. Included among the secureds were the initial federal loans provided prior to the bankruptcy, with the government taking a first position over the parts inventory and a third position over everything else.

        The VEBA was an unsecured creditor, so it was toward the back of the line. But the VEBA settled its claims by accepting equity in a new company, which left more assets in the old company for the remaining creditors to get. So this move by the VEBA helped the other creditors, not harmed them, since it resulted in fewer parties being there to fight over the scraps.

        Had GM or Chrysler gone into liquidation, the pension obligations would have been transferred to the PBGC. Since the PBGC itself was underfunded, it would have required billions in taxpayer funds in order to pay at least some benefits to the automaker retirees. And unlike the bailouts of the companies themselves, there would have been zero chance to recover any of that benefit money.

        The only way to argue that the secureds were ripped off is to prove that the liquidation value exceeded the enterprise value. And that argument is a load of crap.

        As anyone in the Rust Belt knows, the value of a used factory is often zero or even less than zero if there are environmental liabilities that run with it. Anyone who thinks that Chrysler was sitting on some gold mine of plant and equipment is kidding themselves.

        There was inventory on the books, but that, too, had minimal value, particularly with the need to use incentives to sell it and a lack of credit available that would allow dealers to floorplan it.

        At the time of the bankruptcy, the only cash in Chrysler’s bank accounts was there because of the federal loans, so there was nothing there, either.

        So really, there was a whole lot of nothing. Hell, GM couldn’t give away Saturn and got only eight figures for Saab; why would anyone expect a company to pay billions to buy anything in the Chrysler stable?

      • 0 avatar
        Monty

        PCH101:Thank you for the answers.

        I don’t have another question, except in the rhetorical sense: If, as so many claim, the bankruptcies of both GM and Chrysler were illegal, why haven’t there been any follow-up lawsuits in the most litigous society on the planet?

  • avatar
    getacargetacheck

    Sure, Chrysler does pretty well with pickups, Jeeps and minivans. And Fiat does pretty well with small cars. But there’s no synergy where it counts in the US car market: mid-sized and compact sedans. Chrysler hasn’t had a winner in these segments in decades and Fiat doesn’t play in that space. Are we really supposed to believe that CUSW (the wide version of the Fiat compact) is going to be a Focus/Corolla/Civic/Elantra-buster? Further, are we also supposed to believe that a few extra inches will produce a Camry-buster from the same stretched Fiat cloth? Sounds a lot like what got them into trouble with the Avenger/Sebring (take a Lancer, stretch it and add some Chrysler know-how). I’ll believe it when I see it. There’s not as much synergy between these two companies as we’ve been told.

    • 0 avatar
      windswords

      Neon was considered a compact (I always thought of it as a sub-compact but then I’m not the EPA) and it was a great success until ex GM exec Bob Eaton cut corners with it. The “cloud cars” (Stratus, Cirrus, and Breeze) were also quite successful. One of the buff mags rated it better than the Contour/Mystique. And Chrysler only spent 1.5 billion to bring it to market as opposed to Ford’s 4 billion or so for the combined Contour/Mystique/Mondeo. But they dropped the ball on the second generation just as Dumbler got their grimy little hands on Mopar’s money.

      • 0 avatar
        getacargetacheck

        The Neon and cloud cars might have been pretty good, but they didn’t sell nearly as many as the competition. Worse, Chrysler has a history of dropping nameplates so that there’s never any continuity for buyers. In the compact space there was Dart, then Aspen, then Omni, then Shadow, then Neon, then Caliber, then…In the mid-sized space there was Coronet, then Monaco, then Diplomat, then Aries, then Spirit, then Stratus, then Avenger, then…When was the last time Chrysler fielded a top-10 selling car? Satellite, maybe?

      • 0 avatar
        Bryce

        And it showed the Neon was crap poorlydesigned gas hungry with dismal performance just another Chrysler tombstone

      • 0 avatar
        windswords

        the Neon gas hungry? Let me know when you come back to reality.

  • avatar
    mjz

    I have a feeling that Sergio may have decided to sell Alfa to VW afterall, hence the “delay” in the U.S. launch, plus the unclear product intro schedule. As far as the Fiat 500 launch which was slammed by PMD in the autoextremist.com, it should be noted that in August, the 500 sold 3,106 units vs. Mini sales of 3,109 only THREE units more despite Mini offering a slew of model variations. Both have about 100 dealerships in operation. The 500 convertible is just now hitting the market and the Abarth versions are just around the corner. Fiat will soon be outselling Mini in the U.S.

    • 0 avatar
      Lampredi

      I have a feeling that Sergio may have decided to sell Alfa to VW afterall, hence the “delay” in the U.S. launch, plus the unclear product intro schedule.

      I have had the same fears. (As an Alfista I truly hope that it isn’t the case, as a VW takeover would be the de facto death of Alfa.)

      Still, if Alfa is now owned by VW, what would be the purpose of pretending that it wasn’t? The only explanation I can think of is that it would give Wolfsburg some time to develop new so-called “Alfas” that could be launched at the same time as the sale is eventually officially announced. But is that really likely? And what about the 4C “halo” model that Fiat is developing?

  • avatar
    windswords

    “It is interesting what got Fiat the demerits: Chrysler.”

    So Chrysler is the cause of the FIAT downgrade but then Bertel goes on to say that Fiat is weak to nonexistent in Asia, Brazil is slowing down, Italy is in trouble, the market share in Europe dropped from 8.3 percent to 7.4 percent, ALFA is “getting paler around the nose by the day”, but the cause of the downgrade is Chrysler?

    The same Chrysler that outsold Toyota last month, whose market share has been climbing, who’s cars and trucks are getting much better reviews than the losers they were forced to put out under Dumbler? That Chrysler?

    • 0 avatar
      srogers

      It’s not hard for Chrysler to increase marketshare when you consider how much it dropped during the bankruptcy and onset of the recession. I recall 2-for-one sales on some Chrysler products to keep them moving.

      • 0 avatar
        PenguinBoy

        Agreed – when you are starting from the bottom it is relatively easy to show big percentage increases, like Hyundai and more recently Chrysler have done.

        That alone doesn’t explain “outsold Toyota last month” though…

    • 0 avatar
      eldard

      Yes. Crapsler outsold Toyota last month. By a whopping 985 units. Whoopee!!!

      • 0 avatar
        mike978

        Eldard – don`t you think it is noteworthy that Chrysler outsold Toyota? I recall not that long ago 40-50% sales drops month after month for Chrysler.

      • 0 avatar
        eldard

        I find it noteworthy people cheering a lead of several hundred units as if it’s the greatest thing since a UAW pay bump.

      • 0 avatar
        geozinger

        @eldard: “Or what I like to think they were really doing: use the tsunami as legitimate cause to move production to cheaper countries such as Thailand. See? it pays to be paranoid.”

        We have a saying in the US that goes: “Just because you’re paranoid, it doesn’t that they’re still not out to get you…”

        You could be right. There’s all kinds of machinations that go on in all kinds of businesses.

    • 0 avatar
      jimboy

      +1-the only sensible comment here! You can always tell when the readership falls off at TTAC- they go on a rant about Chrysler,(or Fiat), and all of the wannabes come rushing to comment. Good job, Bertel and Edward, hope the numbers are back up!

      • 0 avatar
        wmba

        So, jimboy, you want to blame TTAC for reporting that Moody’s downgraded Chrysler? Perhaps this site should just self-censor itself and strew laurel leaves in front of Fiat instead. That would suit you, I guess.

        Typical example of shooting the messenger.

        Ridiculous. But that’s one of the reasons I keep coming back to TTAC. I love to read comments like this. It reminds me, over and over again, to my gleeful delight, that you can lead a horse to water, but you can’t make him drink. Why believe in facts, when fantasy will do nicely instead?

      • 0 avatar
        Pch101

        I have to admit that I find it completely bizarre that the Detroit fan club is completely unwilling to admit that the combined effects of the tsunami/ nuclear meltdown/ earthquake/ electricity shortage that hit Japan may have just a wee bit to do with Toyota’s sales in the last several months.

        Being a fan is one thing, but being completely blinded to reality is something else entirely. It shouldn’t surprise anyone that Toyota’s inability to make product would have a genuine impact on sales. It’s not exactly a mystery that factories that can’t operate and that don’t have parts are going to have a bit of trouble assembling cars, right?

      • 0 avatar
        jimboy

        Hey @wmba. Perhaps you need a remedial reading lesson. I didn’t blame TTAC for anything but shilling for readers, which they do. Even those like you that read, but don’t comprehend, felt a need to comment, not about the credit downgrade, but about my (true) remarks. If you think I am wrong, perhaps you should count the # of comments here; most having nothing to do with the credit downgrade, yours and mine included. If this had been a story about some euro junk or japanese appliance it wouldn’t have generated 3 comments.

      • 0 avatar
        wmba

        Jimboy, I can read perfectly well, thank you. I stand behind my remarks.

        You say TTAC is shilling for readers. You say this is the truth.

        Rubbish. If you had googled the story, you would have seen dozens, if not hundreds of reports on the matter. It was general news everywhere. But since TTAC reported it, you say they are shilling for readers. Were all the other news outlets just shilling for readers as well? If you think so, warm up your typing fingers and tell them off in your superior tone as well.

        Why you would rebut my remarks by repeating your bias and claiming I don’t understand what you’re saying leads me to doubt your comprehension of what I said.

      • 0 avatar

        Please maintain a civil discussion style, or find yourself waiting indefinitely for your comments to appear.

      • 0 avatar
        geozinger

        @PCH: Not to jack this thread, but just how many of Toyota’s cars are really coming from Japan these days?

        The bread and butter sedans are made in North America, as are a lot of the trucks. I wouldn’t think there would be a disruption for these. I could imagine that the Prius/other Lexus hybrids might be held up, but those would be the only ones that I can think of quickly…

        Could it only be that all other companies (Chrysler included) are just selling more cars?

      • 0 avatar
        Pch101

        The bread and butter sedans are made in North America, as are a lot of the trucks. I wouldn’t think there would be a disruption for these.

        Toyota uses some Japanese-sourced parts in its US-assembled vehicles, including vehicles with high domestic content.

        Cars can’t be built without 100% of the parts. So naturally, one should expect there to be production disruptions for a company like Toyota that relies upon Japanese suppliers in its US supply chain.

        And to the extent that those Japanese-sourced parts are common to vehicles sold globally, the US assemblers have to get in line for parts along with other plants outside of the US in order to obtain those parts. It’s not as if TMC doesn’t sell vehicles outside of Japan and the US; it has to maintain all of its markets, not just ours.

      • 0 avatar
        eldard

        Or what I like to think they were really doing: use the tsunami as legitimate cause to move production to cheaper countries such as Thailand. See? it pays to be paranoid.

      • 0 avatar
        geozinger

        @PCH: “And to the extent that those Japanese-sourced parts are common to vehicles sold globally, the US assemblers have to get in line for parts along with other plants outside of the US in order to obtain those parts. It’s not as if TMC doesn’t sell vehicles outside of Japan and the US; it has to maintain all of its markets, not just ours.”

        I get all that. But, beyond a paint color for Ford, I have not seen where US production (of US based cars) has been held up due to parts not available from Japan. Nor have I seen anywhere that Toyota is scaling back production of Camrys (Camries?) and Corollas due to parts shortages in North America.

        If it has been reported, it’s been really well buried. The car plants in my neck of the woods are still up and running.

      • 0 avatar
        Pch101

        If it has been reported, it’s been really well buried.

        You can’t be serious. TMC even released press releases about it, such as this: http://pressroom.toyota.com/releases/toyota-adjusts-may-production-north-america.htm

        You can see from that they had cut production completely two days of the week, and by 50% another three days of week, reductions that were not trivial. They’ve made it very clear that US production remained below full capacity until mid-September.

        Honestly, this seems to be a “secret” only to those who don’t want to believe it. Put some search terms into Google, and you’ll get half a million hits on the subject. Here’s just one of them: https://www.thetruthaboutcars.com/2011/06/tsunami-aftereffects-toyota%E2%80%99s-production-drops-44-7-percent-in-may/

      • 0 avatar
        geozinger

        @PCH: Maybe I didn’t phrase that correctly. I did jump around in that paragraph a bit. (I knew about the Japanese Toyota production cuts. And, I do remember seeing those articles just after the natural disasters. But they’ve rebounded remarkably quickly and IIRC in July said they’d be at normal capacity in some cases as soon as August. http://tinyurl.com/3vfzdfs)

        I was referring to any domestic production cuts due to Japanese parts supply constraints.

        I wrote: “I have not seen where US production (of US based cars) has been held up due to parts not available from Japan…”

        I maybe should have termed it like this: “I have not seen where US production (of domestic cars) has been held up due to parts not available from Japan…”

      • 0 avatar
        Pch101

        I was referring to any domestic production cuts due to Japanese parts supply constraints.

        You didn’t even bother to open the links that I provide to you.
        ____________

        Toyota Adjusts May Production in North America

        ERLANGER, Ky. (April 19, 2011) – Toyota Motor Engineering & Manufacturing North America, Inc. (TEMA) plans to adjust production in May due to parts availability following the March 11 Japan earthquake and tsunami.

        Previously, TEMA had announced production suspensions on Mondays and Fridays during the period April 15 through April 25. TEMA will continue the Monday and Friday production suspension pattern during the period April 26-June 3. During the same period, production will run at 50 percent on Tuesday, Wednesday and Thursday.

        Additionally, Canadian production will be suspended the week of May 23 (in conjunction with the scheduled Victoria Day holiday) and U.S. production will be suspended the week of May 30 (in conjunction with the scheduled Memorial Day holiday).
        _______________

        Again, this information is readily available. You’re just in denial of it.

        Production of certain models wasn’t restored until June, while others didn’t hit full capacity until September. I didn’t make it up.

      • 0 avatar
        geozinger

        @PCH: Clearly, you’re not reading MY posts. Nor my links.

        One last time: I’m not referring to US production of Japanese cars. I’m referring to US production of domestic cars, i.e., GM, Ford, Chrysler.

        The only production constraint that I’ve read about is the red paint that Ford uses on some trucks. That’s the only one.

        Check the link in my last post. Unless you think I made that up, too.

      • 0 avatar
        Pch101

        I’m not referring to US production of Japanese cars. I’m referring to US production of domestic cars, i.e., GM, Ford, Chrysler.

        Honestly, I don’t think that anyone was expecting that the Detroit automakers would be forced to cut production due to a Japanese tsunami.

        The point remains is that Toyota and other Japanese automakers had no choice but to cut production. The resulting reduction in inventory is not part of some vast conspiracy, nor is the decline in their sales since the tsunami completely unrelated to this lack of inventory. Companies can’t sell product that they don’t have.

  • avatar
    Dimwit

    Everybody is very quick to write off FIAT. With Chrysler’s better numbers, I wouldn’t be so eager to say ciao just yet. FIAT got Chrysler for a song. They haven’t had to invest much and will reap a ton even just using the Chryco platforms. While the FIAT name is damaged, they can easily rebrand models under the Chrysler/Dodge/Plymouth brands if there’s no traction from the 500.

    I see a lot of upside without a lot of liabilities that came from Chryco in N/A. Whether any of the major economies will recover to allow for profitable growth is another thing. Don’t forget that Italy is part of PIIGS. Not good.

    And another thing… everyone is holding up India as this glorious emerging market that several majors are totally missing the boat on. Really? China is a legitimate target but has too much competition. India has some competition but it’s all at the low end because even though there’s a ton of people, there’s no money. India is at least 10 years away from anything like a true world market and there’s plenty of time to get in.

    • 0 avatar
      PintoFan

      +1. India should not be ignored but as an emerging market it is getting far too much overplay. Besides the lack of wealth as you mentioned, the problem of congestion is already starting to put the brakes on development of automotive infrastructure, a natural consequence of the incredible population density.

    • 0 avatar
      highdesertcat

      I really can’t see Fiatsler doing better in the future because the deck is stacked against this alliance. The economies of Europe and, to a certain extent, the US are pretty shaky right now and not conducive to people running out and buying Fiat and/or Chrysler products in the US or Europe. Right now the motto for everyone is “Retrench”.

      Why would Fiat want to rebrand their products under the Chrysler name? The Fiat brand is much better known worldwide than Chrysler and Chrysler needs Fiat to stay alive. Whatever else Fiat may or may not be, Chrysler is a subsidiary of Fiat, not the other way around.

      What would make much more sense is to put the much more advanced Fiat Corporate engines into Chrysler products while the new Chrysler 8-speed automatic could be used in Fiat’s luxury brands.

      I would not look to India to be any auto maker’s salvation unless it is with el-cheapo cars like the Tata Nano, et al.

      • 0 avatar
        windswords

        Kinda like Nissan is subsidiary of Renault eh?

      • 0 avatar
        mike978

        I agree with most of what you said but the new Chrysler V6 is an equal for anything comparable in FIAT products. Even with US and European economies going sideways there is still profit to be made in a combined 25-30 million unit market.

      • 0 avatar
        highdesertcat

        Mike978, I have been told by people who sell Fiatsler cars that the new Chrysler V6 is indeed a world-class engine because it is an almost exact copy of an earlier Euro-spec Mercedes V6.

        Another Chrysler world-class engine was the VW-built I-4 that was used in the K-cars of the past. You could run the piss out of that engine all day and all night and many people did.

        How they got there doesn’t matter. That they got there at all is what matters. And now the all-important question becomes: “Will they sell?” And will they sell enough of them to make money and become self-sustaining? I remain doubtful based on sales data and labor expenses.

        Windswords, if Renault were to suddenly die and cease to exist so would Nissan. But if Nissan were to suddenly die and cease to exist Renault would continue as before.

        If Fiat were to suddenly die and cease to exist so would the subdivision formerly known as Chrysler. But if Chrysler were to suddenly die and cease to exist Fiat’s credit rating would suddenly leap upwards according to Moody’s.

      • 0 avatar
        ajla

        Mike978, I have been told by people who sell Fiatsler cars that the new Chrysler V6 is indeed a world-class engine because it is an almost exact copy of an earlier Euro-spec Mercedes V6.

        IIRC, the Pentastar shares a bit with the new (released in 2010) Mercedes M276 V6. A few internet sources also claim this to be the case.

        I highly doubt that the 60-degee Pentastar could be “almost an exact copy” of an old 90-degree Mercedes V6 design.

      • 0 avatar
        highdesertcat

        ajla, I think you are right. It wasn’t based on a 90-degree design. It was based on a narrower 60-degree design.

        Someone else told me today that the new Pentastar V6 is actually more akin to the VW V6 in concept and measurement, but to be honest, I’ve never been a Chrysler, Mercedes or VW fan, so I didn’t do any further research on it.

        In any case, it is a good engine according to the believers. Certainly better than the previous line of V6s.

  • avatar
    ciddyguy

    One thing to remember here is this, we have a GLOBAL economy here and that is, for better or worse what we ALL have to work with, be it the USA, Canada or Europe or whomever, ALL economies just about are tied to this global economy and many, many countries are in dire straits due to this sagging economy and that isn’t helping things AT ALL. Right now, it seems that if one country sneezes, all the rest sneeze too and that’s not what I’d hope for in a global economy. When an economy failed, it didn’t necessarily dragged down everyone else before the global economy came about.

    That said, Daimler ran Chrysler into the ground, plain and simple and who in the hell is Cirrus? Never heard of them (and yes, I COULD Google them) but in my mind they are insignificant as they didn’t hold onto Chrysler long enough to do anything either way.

    Then Chrysler was left high and dry, so to speak and Fiat stepped in, the only company that would and it seems that they are using each others strengths to help the other out and that could bode well for them both in the long run.

    I think personally that two weak companies who play their cards right may WELL survive for the long haul, but in this economy, it may take a couple of years at least of difficulties to begin with before things improve, especially now with this recession most countries are in right now.

    I have my misgivings over whether this global economy is really all its cracked up to be for ALL concerned. It may well be what ails us in SOME fashion, but not the end all, be all as envisioned.

    I think what we see now are the growing pains, so to speak of 2 companies finding their strengths and balance to survive and it may WELL be that it takes a couple of years before anything improves so don’t write them off just yet.

  • avatar
    obruni

    While VW has been preoccupied with India & empire building, GM and Renault-Nissan have been moving on Russia in a big way, and Toyota has taken over the Indonesian market (60% share!)

    Fiat is in a bad spot, other than its city cars its lineup is not competitive at all. The Punto Evo and Bravo are jokes, and the Sedici, Idea and Multipla are way past their expiration dates.

    Alfa has ended production of the 159 without an immediate replacement, not to mention that there are no more Breras, Spiders, or GT coupes as well.

    Fiat’s response has been to relaunch rebadged Dodge and Chrysler models which didn’t sell well in Europe in the first place, except for maybe the Voyager.

    It looks like Fiat will be forced to sell Ferrari in order buy it time.

    http://www.asiaone.com/Motoring/News/Story/A1Story20110901-297280.html

  • avatar
    fred schumacher

    Moody’s? Hm, that name sounds familiar. Oh, yeah. They’re one of the rating agencies that completely blew it on credit default swaps that resulted in the world’s economy crashing and is why we’re still in recession four years later.

    When Moody’s talks, is anybody still listening? I would think they’re credibility would be right up there with Kim Jong-il.

    • 0 avatar
      aristurtle

      You are implying that there are ratings agencies that did not “completely blow it”. Moody’s, S&P, and Finch were all in the same boat, and there aren’t really any other players in that space (other than the internal analysis people at each actual investment firm). Some people still listen to them because there’s nobody else to listen to.

  • avatar
    Pch101

    You are implying that there are ratings agencies that did not “completely blow it”.

    No, he isn’t. He’s actually making an opposing claim — he doesn’t believe that the rating agencies have any credibility.

    To an extent, I don’t blame him. Their underlying mission is to get paid by those who package up deals to slap a marketable brand (the AAA rating) onto marketable securities. They know who butters their bread, and it isn’t the investors.

    Some people still listen to them because there’s nobody else to listen to.

    The lesson: If you want trustworthy due diligence, do it yourself.

Read all comments

Back to TopLeave a Reply

You must be logged in to post a comment.

Recent Comments

  • conundrum: Darned if I get this Sakurai fellow. Tortured English that barely gets the idea across, and obviously...
  • Tstag: It’s about the same as a Defender I think.
  • 2ACL: @brn Quite likely. This generation debuted the new 6AT, which suffered some premature failure(s) early in the...
  • conundrum: All tHis rubbish was available when I got my new car in Jan 2008, a Subaru Legacy GT which I kept for a...
  • 28-Cars-Later: “So the race is on, and which manufacturer do you think will be the first to electrify...

New Car Research

Get a Free Dealer Quote

Who We Are

  • Adam Tonge
  • Bozi Tatarevic
  • Corey Lewis
  • Mark Baruth
  • Ronnie Schreiber