Marchionne: Chrysler Saved Fiat's Bacon

by Bertel Schmitt

April 4th, 2012 3:14 PM

That was an easy call: Car sales in Europe will decline again this year, Fiat CEO Sergio Marchionne told his assembled shareholders at a meeting in Turin. Fiat, caught with pants and sales down in Europe’s teetering south, would be in much worse shape without Chrysler, Marchionne thinks:

“This was the only way to preserve Fiat’s future. It does not make sense anymore to talk about Fiat as an Italian or European company… With Chrysler we have fixed our excessive dependence on Europe and have the tranquility to overcome the market’s fluctuations.”

Chrysler surprised again in March with a 34 percent gain and the best monthly result in four years. Back home in Italy, Marchionne already preannounced “horrible sales” for Fiat and March.

Reuters says that the shareholder meeting approved the conversion of Fiat’s preference and savings shares into ordinary shares, which makes it easier for Fiat to buy the 41.5 percent of Chrysler it does not yet own.

#BertelSchmitt #Chrysler #Fiat #Marchionne

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AlmostThere on Apr 04, 2012

I seemed like Chrysler is always saving its LBO counterparts' a$$ in the beginning - Daimler in the late 90's and early 2000's, now FIAT. Hope FIAT is not running it to the ground like the Germans did.

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- Herb on Apr 04, 2012
  
  How did Chrysler saved Daimler? From What? Could you elaborate on that?
  
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- Hildy Johnson on Apr 04, 2012
  
  @herb I suppose he means that Chrysler saved Daimler from overly rude health and excessive profitability.
  
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- Bienville on Apr 04, 2012
  
  @herb Chrysler was the most profitable car company in the world in the '90's, while Nickel-and-Daimler had a very high cost structure and was barely profitable at the time. In less than three years, Daimler stole all of Chrysler's billions of free cash (which Kirk Kerkorian tried and failed to take in an LBO), and killed their earnings and market share. If there was any justice in this world, Nickel-and-Daimler would be well on their way to bankruptcy court already. I do take small solace in the fact that the SLS is based on the Viper architecture.
  
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- Hildy Johnson on Apr 04, 2012
  
  @herb It is true that Daimler's results in the 90s were mixed, and Chrysler was doing well pre-merger. However, the 2000s were very unkind to all of the D3, while the luxury makers all thrived. Daimler and Chrysler would likely both have been better off without each other, but Daimler would have been on the right side of the above divide, and Chrysler on the wrong side.
  
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Dadude53 on Apr 04, 2012

This seems to be another first in history where the US taxpayer saved a European carmaker.

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- CJinSD on Apr 04, 2012
  
  I'm pretty sure we did the same thing following WWII and we're going to wind up drawing out Peugeot's disintegration this summer.
  
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- Highdesertcat on Apr 04, 2012
  
  @CJinSD Bailing out the world after WWII is one thing. Bailing out failed companies in America quite another. But now that the precedent has been set for bail outs, handouts and nationalization, you can bet the farm that it will happen again and again and again and again. Those of us still working will reluctantly foot the bill. And they will pay dearly! There's lots of empty talk about how bail outs and 'too big to fail' will never happen again, but it will happen again. As of this moment there are millions of Americans sweating the next wave of foreclosures. Look for more businesses to close or outsource as a reaction to the April tax increase. And then there's Europe. Those problems will spill over into the US and affect our economy as well. When GM is threatened with failure once again because of its European operations and alliances, Congress will once again throw money at the problem rather than allow GM to die from plain old business failure. Plan your finances accordingly! Many people already have.
  
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GoFaster58 on Apr 04, 2012

If Fiat is doing so poorly how can they afford to buy more of Chrysler?

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Jimboy on Apr 05, 2012

Honestly Bertel, between you and Edward and your anti Chrysler bias! "Chrysler surprised again with..." The only ones surprised here ARE you and Edward. Despite all the pooh you guys have dumped on Fiat/Chrysler in the last couple of years, they seem to be struggling along okay without benefit of your fine advice/commentary. Now that Chrysler is on its way to profitability, I'm pretty sure Mr. Marchionne will turn his hand to Fiat's problems. Almost everyone here understands that a merger of this size will take time(to do properly), and that there will be bumps along the road. almost.

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