edited by lauren abuouf
On the lookout for a partner, Fiat is getting into bed with Chrysler. Because the risks are low, the U.S. gamble could pay off.
They’re nuts over there in Turin. That was the reaction many had to the news that Fiat planned to partner with the moribund Chrysler corporation. Anyone looking to hook up with the most seriously threatened American auto manufacturer after Daimler’s experience in Detroit has to have faith in a lot of friendly spirits. But from the Italian point of view, the planned alliance with the Americans is by no means an act of desperation.
As long as eleven months ago, Fiat boss Sergio Marchionne began negotiations with Chrysler CEO Robert Nardelli. The salient points of the agreement now made public: the Italians aren’t marching into Detroit as big shots. They’re offering Chrysler their technology and keeping their own risk to a mninmum. Not one single Euro will flow from Turin into Nardelli’s empty cash register. The danger of failure for Fiat, then, has been largely avoided.
It’s impossible, however, to assess this as a “milestone” in the automobile industry, as Fiat and Chrysler are selling this marriage.
Fiat was desperate to get back into the U.S. auto market and after a 25 year absence, that may be about to happen. The timing is right. Fiat, which had become a joke in the American market because of the poor quality of its products, has had a strong rebirth with an attractive model palette under Marchionne’s new direction.
Access to Chrysler’s production facilities and distribution network in the United States again makes the sale of the Italian cars in America an interesting proposition for Fiat because of lower production costs. One can even foresee the cult half-pint Fiat 500 catching on there. But unlike a true alliance with, for example, Peugeot, the free ride with Chrysler won’t be a solution to all of Fiat’s short-term problems.
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