#Italy

Jack Baruth showed you the Alfa-based new Dodge Dart – but what does it mean? For Sergio Marchionne, the little car means a lot. It means the final five percent of Chrysler, to be exact.

Chrysler’s latest “Imported From Detroit” ad, which seems to be trying to convince itself to “see it through,” continues the brand’s recent tradition of associating itself (perhaps a bit too closely) with the trials and tribulations of the city of Detroit. That approach, like the 300 itself, might play well in parts of the US market… but Chrysler needs its cars (and ads) to do more. Imagine how this ad might go over in Berlin or Milan, and you might catch a glimpse of Chrysler’s larger challenge: making its cars relevant globally as both Chryslers and Lancias.

As the world struggles to come to grips with economic uncertainty, Bertel has been reporting that Japanese automakers are abandoning their homeland for lower-cost production centers overseas. Now, with economic turmoil shifting to Europe, it seems that Fiat could possibly be preparing for a pullback from Italy. Two basic factors are driving Fiat towards reconsidering its global manufacturing footprint: first, its struggles in the European market where margins are slim and dropping, second, its battles with Italian unions. Though Marchionne’s latest comments are ambiguous at best, some see these factors pushing the Italian automaker away from the market that gave it birth.

It’s no secret that Ferrari has been wrestling with the inevitable conflict between its bellowing V12s and European emission regulations, but that’s not the only challenge facing the Prancing Horse’s powertrain division. Sure, there’s the increasingly-tenuous link between the Scuderia’s Formula One technology and its road cars [sub], but in the short term that actually helps the emissions issue by creating a pretext for bringing KERS to the road (where it otherwise has little role). In fact, the real issue for Ferrari’s powertrain team is not even a “Ferrari issue” at all, but a Maserati issue.

Chrysler CEO Sergio Marchionne wants an end of what he called “two classes” of employees represented by the United Auto Workers union. The two-tiered system “creates the kind of environment that doesn’t appear to work in the same direction that we’ve been trying to use to establish the new basis of Chrysler,” Marchionne told Reuters. He continued:

How do you grow your business if you are allowed to sell only 7,000 cars a year? Ferrari is in that tough spot. Last year, they sold 6,500 cars with the prancing horse. To protect Ferrari from being mistaken for a brand that everybody drives, a ceiling of 7,000 has been established. (Don’t ask me why 7,000.) So how do you grow your business if you can’t sell more cars? Simple: Charge more. “Personal touches like cashmere-covered seats and gold-colored exteriors” can add 20 to 60 percent to the price, writes Bloomberg.

Chrysler-Fiat’s Sergio Marchionne is joining the chorus of doomsday CEOs. “2012 will not be a great year for the European market,” Marchionne told Reuters. He is looking to the U.S. and to Brazil for salvation – despite GM’s Akerson having made equally dire forecasts for America.

Fiat is doing so badly at home in Europe that the U.S. and Brazilian markets are now the biggest contributors to the combined group’s profit.

Considering the United Auto Workers’ VEBA fund is still Chrysler’s second-largest shareholder, CEO Sergio Marchionne is taking an amazingly hard line with the union. With a GM deal long done, and Ford’s deal moving towards approval, Chrysler is the last automaker on the UAW’s to-do list… and Marchionne tells Bloomberg he’s up for a fight if necessary, saying

I sincerely hope that we don’t have to get to arbitration. But if necessary, Chrysler will go there. We and GM are completely different

Marchionne is reportedly pushing the UAW for a number of tough concessions, including a mere $3,500 signing bonus (compared to $5k at GM and a reported $6k at Ford), and the elimination of a planned 2015 cap on entry-level “Tier Two” workers (at 25%). And though both of these are tough asks, he’s using UAW boss Bob King’s concept of union internationalism as a cudgel against the UAW, playing Italian unions off their American counterparts. And as a result, he could earn Chrysler a favored place among America’s unionized autoworkers.

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.

If Ferrari is known for one thing, it’s super-fast, good-looking cars. But if Ferrari is known for two things, that second thing would be its uncanny ability to separate the wealthy from their hard-earned (or not) cash. And apparently the brand is so good at extracting revenue from its super-wealthy clientele that it doesn’t mind a little competition. The Wall Street Journal reports that, when asked by the Italian paper Republica how governments should overcome their budget crises, Ferrari Chairman Luca DeMontezemolo replied

You have to begin by asking it of those who have most, because it is scandalous that it should be asked of the middle class

Class warfare, or just the natural perspective of a guy who regularly charges the super-rich $2,300 for Alcantara trunk liner and $1,800 for a spare wheel? We report, you decide…

I’ve never owned an Alfa, and every time I see one in the junkyard I feel a twinge of guilt for never having rescued some poor abandoned Spider project prior to the inevitable ride to the junkyard that all such Alfas take after a decade or two spent sitting under a tarp in the driveway. Here’s yet another rust-free Spider that’s going to get eaten by The Crusher because nobody was willing to save it.

Remember when we showed you this leaked Alfa Romeo product plan slide, looked straight into your eyes and swore Alfa Rome would be selling a junior supercar and a compact crossover in the US by the 2012 model year? We were lying. Automotive News [sub] let’s us down gently

Chrysler/Fiat CEO Sergio Marchionne still says Alfa, which is owned by Fiat, will make its comeback in late 2012 — which had been the plan since April 2010 — but only for a few units of the limited-edition 4C coupe.

A full return now isn’t scheduled to happen before mid-2013, starting with a compact crossover. The mid-sized Giulia sedan could follow by the end of 2013 at the earliest.

What caused the latest delay? Marchionne has rejected the proposed styling for the [Giulia] sedan three times in the past 18 months.

You decide which bit of news is the worst: that Alfa finds itself lost when it tries to design a D-segment car, or that the hot little 4C is going to be a limited edition deal instead of a 15k-25k units per year, semi-affordable ($60k-ish) little mostro. If forced to choose, I’d argue that the prior challenge is the more difficult and necessary, considering that brand’s past struggles selling larger cars… but of course reasonable minds can disagree. Meanwhile, on a more personal level, I find myself continually amazed at how Alfa’s product plans, like its products themselves, are able to completely attract and repel me from moment to moment. Like so many people who identify “emotion” as a core personality trait, Alfa just can’t seem to have a normal relationship with the people who care about it…

In what could possibly raise eyebrows in Wolfsburg, Suzuki is getting cozier with Fiat. According to The Nikkei [sub], Fiat will supply Suzuki with 20,000 to 30,000 1.6-liter diesel engines per year. The engines will be built in Europe. Suzuki plans to use the engines in the SX4, which was jointly developed with Fiat, at Suzuki’s assembly plant in Hungary.

Uh-oh: The UAW has reached out to unions representing workers of Chrysler and Fiat in other countries. They want to form a “global network.” The group will not collectively bargain with the companies, King told reporters from Reuters. The group will be just an innocuous clearing-house for information.

After the U.S. and Canadian government are out of the car business, at least as far as Chrysler is concerned, Fiat will own 52 percent. Who owns the rest? A large chunk, 45.7 percent, is owned by the UAW. By the UAW’s VEBA healthcare fund, to be exact. And the union is in no great hurry to change that. The UAW has a big “HOLD” on their share of Chrysler, hoping that the value goes up. That’s what “two people familiar with the fund’s strategy” told Reuters today.