Your next Chrysler will be a Fiat
Filed under: Company News, Economy, General Motors
Fiat never managed to sell many cars in the U.S. when it was competing with The Big Three and the Japanese makers, and in 1981 it pulled out of the American market altogether. That makes Chrysler's decision to use Fiat models to pull itself out of one of the worst sales slumps in its history all the more puzzling. Chrysler's sales have been down more than other car companies operating in the domestic market. In many months, Chrysler sales have been off over 40 percent this year compared to 2008.
An exclusive report in The Wall Street Journal says that Fiat chief Sergio Marchionne, who is also CEO of Chrysler, will begin to import Fiat models, modified for the U.S. market, in 2012. In the meantime, according to the paper, "Chrysler is preparing to phase out many current models, including a number of Dodge cars, the Dodge Grand Caravan minivan and several Jeeps."
Fiat owns 20 percent of Chrysler now, and based on certain triggers in its agreement with the American company, that could go as high as 35 percent. Fiat has put no money into Chrysler, but has agreed to manage the American company and provide it with technology.
The strategy is dangerous and the odds against it are great. Chrysler cannot wait until 2012 for new models. Its market share is eroding quickly and it does not have large sales overseas in places like China to help offset its drop in U.S. sales. It is possible that Chrysler's U.S. market share could fall below that of niche players like Hyundai before the first Fiat model hits American shores.
The other problem with Marchionne's plan is that there is absolutely no evidence that Americans will buy Fiat models. At least Jeep and Dodge are brands that have been built over decades and have some substantial residual value. The U.S. market may reject Fiat vehicles completely, leaving Chrysler nearly defenseless in its battle against larger rivals like GM and Nissan.
Chrysler will still maintain some of its current cars, and they will eventually be updated, but that is not enough of a brand base to pull the firm back to profitability.
Douglas A. McIntyre is an editor at 24/7 Wall St.
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Reader Comments (Page 1 of 7)
10-27-2009 @ 8:21AM
Tech said...
No-one wants cheap cars made by the mafia.My old Fiat128 hydroplaned in the rain and was too small for American driving conditions and the mobsters here prefer Lincolns and Cadillacs. Oh and they rusted out in two years and the mechanics were awful. The Yugo was a Fiat made in Yugoslavia! It the end of Chrysler.
Tony Soprano
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10-27-2009 @ 9:57AM
Kevin said...
Tony, You obviously didn't take care of your 128. I have a 1972 850 Spyder which is 371/2 years old. It has no problems except a carb problem which the Weber 30 DIC is known for. A German carb at that. As for rust, virtually none. The hydroplaning was probably from the wrong size tire or Michelins which have been known for that. I loved the Crysler Corp. muscle cars but today I doubt any could beat my Fiat, which gets from 40 to 60 miles per gallon!
10-27-2009 @ 1:28PM
thec2u said...
Buy a FIAT (fix it alll the time) and YUGO nowhere.
10-27-2009 @ 8:53AM
DelMarVa said...
Fiat = Fiasco .. plain and simple
R. I. .P to Chrysler
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10-27-2009 @ 9:22AM
Donny Custard said...
Looking at the comments so far it is obvious that the contributers have not been outside the U.S.
Fiat has an excellent range of cars and I am sure that they will sell well in the modern U.S. market. Take the sales of the Mini as an example. Fiat have just introduced a retro design of their own to compete with it.
As a matter of fact Ford and GM also have (or had) European operations. Ford of Europe have had much better designs on the market since the 1970's than in the U.S.
GM presently owns Vauxhall / Opel & Saab (they are being sold off to raise capital to save their U.S. operations). Their European designs are the only decent cars in the GM line-up.
Maybe they should have closed their U.S.design offices and let the Europeans / Japanese do all of their design work. Instead they marketed gas guzzling crap like the Hummer.
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10-27-2009 @ 10:43AM
svrdhd said...
You are correct, I travel in Europe frequently, the GM cars there, particularly the Opel, are faster and more fuel efficient than the vehicles sold here. The roads in western Europe are in better condition than the interstate hwys, and if you are doing 80 mph, you'll get ran over. 110-120 mph is cruising speed for these small cars. 160-200 kmh is pretty normal. Efficient 6-speed diesels with lots of top end are the future, and Europe has been doing it for some time.
10-27-2009 @ 5:03PM
had 2 fiats said...
i have been outside the USA several times -- i think you should stay out since eveything outside USA is better according to you
10-27-2009 @ 9:37AM
PG49 said...
Did the author of this article read the Wall Street Journal? The WSJ's article specifically say that all Alfa Romeos will be built in North America and Fiat imports would be costly, in light of the deflated dollar, and difficult.
Please re-write this article correctly!
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10-27-2009 @ 9:41AM
Chief said...
My next Chrysler will be ... a Ford.
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10-28-2009 @ 7:35AM
John said...
I have a Chysler 300c, my first and last Chrysler, It has been in the shop over 40 times since 2005 when I bought it. I have owned ten Fords with no issues. I am going back also. Plus you have the added advantage of no goverenment intervention in Ford's business plan. The new Taurus with ecoboost gets 30 mpg and over 330 HP. Beat that with Jap crap.
10-27-2009 @ 9:43AM
mac 8 said...
Fiat- means Ferrari maybe the viper like will vanish also, the De Sota, Plymouth, Dodge, & Chrysler, puff like a fiart in a wind storm.
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10-27-2009 @ 9:48AM
bill said...
Could it be that we Americans have been swindled out of the money advanced to Chysler for reconstruction out of bankruptcy?
I have only read that Mr. Marchionne is going to import the Fiats rather then manufacturing the vehicles here.
What does the UAW have to say about this? What does the Government have to say about this?
All the players are quiet. Please speak up and don't let our money be taken by some carpet-bagger.
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10-27-2009 @ 10:13AM
gleeminghope said...
What do you think the Unions say when Ford sold about 2,500 vehicles in Korea last year compared to nearly 330,000 Hyundai and Kia vehicles imported to the U.S. And Chevrolet sold one vehicle for every 1,300 Toyotas sold in the United States. Also parts content, Among 58 models with ratings of 75 percent or higher of U.S. content, foreign based automakers only produced 8. We are killing ourselves..by buying all that foreign crap. If we didn't have all these idiots buying foreign cars, the Big 3 wouldn't be in the position that they are in today. Yes, we need competition..but not this bad of an trade in balance. For years the Big 3 heavily recruited from all of our universites, they gave us a middle class unmatched that of any country..they pulled us out of the Depression. Not today, this is the thanks we give them and now because of it, we have record numbers of unemployment..thank every foreign car driver for that one. It has a huge ripple effect in the economy. It effects waitresses, bank teller, police officers, teachers, etc. This has to stop. Fiat only owns 20% of Chrysler, we need to get Chrysler back and kick Fiat out, support GM and Ford. We desparately need the Big 3 to get the economy back. If inot, we will end up just like England, a service country with no industry..and no jobs.
10-27-2009 @ 11:16AM
reed said...
UAW plans to sell their shares to FIAT when FIAT has the money to buy them out.
UAW has sold out America when they force american companies in bankruptcy, leech off American tax payers and sell off American companies.
10-27-2009 @ 10:02AM
Allen said...
FIAT =
fehlt im alle teile
Why would anyone buy one when almost any other car - except the Yugo - oooops that was a Fiat - is better?
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10-27-2009 @ 11:49AM
Manni said...
It's a shame, the narrow mindess of the ingnorant american public/comsumer. Maybe a trip overseas might help. Please take this as constructive critism. A little culture and worldiness will go a long way. If the american auto industry wasn't also narrow minded, they wouldn't be in the mess they're in now. European manufactures are chrurning out well made, well designed autos. It's the major reason they don't buy american.
Even GM in their infinite wisdom(sarcasm) just killed off Saturn, their GM of Europe division. Take a trip to Europe and drive an Opel or Vaxuall, you will see what GM really is capable of. Instead, the big three enjoyed years or raping the american consumer with overpriced, underdeveloped and cheap cars at premium prices.
Now is theri time to suffer, disappear even. It's called survival of the fittest my friends.
Bring in the new blood I say, can't be worse than the junk we're buying now!
BTW, I have owned alot of american cars, but ever since finding their european counterparts, I have never looked back, nor will I ever drive an american car again. Sorry
10-27-2009 @ 10:09AM
Sommy said...
I came to the USA 25 years ago,made a promise I kept ever since!
I will only buy amercan cars!
now, back in switzerland I have driven plenty of cars, from fiat/alfas/bmw/even my bosses ferrari, well my first car here was a full size station wagon just loved it and still think about it.
currently driving my 16th jeep(!) and think american cars are very good. hell, its the driver not the car.
its rare, that all these german cars here(hailed as sooooooooooo good) even get a look at me driving past them in a SUV!!
anyway, I cant wait for fiat to sell the new 500 hopefully the abarth version, it will be my first non amercan car I buy here!!!
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10-27-2009 @ 10:14AM
Tom said...
The FIAT is an okay car for puttering around in Europe, but can't handle the performance needs of American roads.
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10-27-2009 @ 10:33AM
Rick C. said...
And what exactly are the performance needs of American roads? Definitely not a car guy...
Also, the article is rewriting history a little. FIAT started selling cars here in the US in great numbers starting in the late 50's. There was no Japanese competition, only the Big Three. By the mid-60's, they were the largest FULL LINE foreign seller in the US. So large in fact that FDR Jr. (yes, the President's son) took the franchise for the East Coast.
10-27-2009 @ 10:19AM
gleeminghope said...
American people have to wake up. Some think they are so cool because they buy foreign..why? It is so un-American and most of us look at these people as idiots and traitors. I will refus anyone a job that drives to the interview with a foreign car. I will not allow a foreign car in my driveway. I will not give foreign cars cuts in traffic. I will not pull over to help a driver with a foreign car. I refuse foreign cars when I rent cars. I hope all foreign car drivers are driving their so called status cars to the unemployment line..that is where they belong. They don't get it. Where will we get jobs...to pay for these cars?? dummies..you are selling out America and putting millions of people out of work. Americans are mad..and I wouldn't want to be driving anything foreign right now..
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