President Obama announced on thursday (4/30) that he has single handedly saved millions of American jobs by pressuring Chrysler to enter bankruptcy so that the decks could be swept clean for a merger with FIAT of Italy. Keep in mind that this is the same Chrysler that was, not so long ago, partnered with Daimler (Mercedes) of Germany. Mercedes is at least a recognizable name in the US. The last thing FIAT made for the American market was the Yugo, which has was rated by TIME as one of the 50 worst cars of all time.
In recent years, FIAT has been looking for an opportunity to get back into the American market. There was a time, of course, when FIAT made and sold some pretty interesting (albeit, not so reliable) cars in the US. Most notably was the 124 Spyder. But you really have to ask, What has FIAT done lately? And what are they bringing to the table in this deal with Chrysler?
To answer the first question, nothing really. Although FIAT has a rich history that dates back to 1899, and has been an automotive pioneer throughout that rich history, the bread they spread their jam on today is economical cars designed primarily for the European market. In addition, FIAT has problem's of it's own. According to independent automotve industry analyst, Rob Golding, “Fiat is easily the weakest of all the major automotive companies. It does not even generate enough revenue to fund its own investment.”
Chrysler, on the other hand, makes some big, fast and heavy vehicles for Americans. Cars and trucks American love—cars and trucks Americans buy, in better times. So why FIAT? Wouldn’t a GM/Chrysler merger have made more sense? You bet. That’s exactly why it didn’t happen. As I have said before, Obama’s vision is to remake the US into Europe. With this new deal we'll now have two of the big three making cars nobody wants.
Noodle on this. What is FIAT bringing to the table in this deal? Technology. No money, just knowledge and experience. According to the BBC (you won’t hear this from the US press corps) “Fiat will not pay anything for its stake in Chrysler, but will instead bring its small engines and small-car platforms to the table. This will enable the new American company (Fysler or Chryat?) to produce re-skinned, own-brand Fiat models in its US and Canadian factories, thus providing employment—an important consideration given that the union will own a major stake in Chrysler. Fiat's input should also help reduce the group's average fleet emissions, but in spite of much reporting on how US drivers are switching to more efficient cars, there are few reasons to expect them to queue up to buy these home-built small Fiats.” Prexactly.
In return for their knowledge and experience, FIAT gets 20% ownership AND THEIR guy (Sergio Marchione) gets to sit in the driver’s seat. Meanwhile, current Chrysler chief, Bob Nardelli has been Wagonered. So what can Chrysler possibly learn from FIAT? How to make a faster Dodge Charger? How to make a RAM pick-up that pull an even bigger trailer and carry more? How to make Jeep that’s more capable than the current one? Nope.
All Chrysler can learn from FIAT is how to make little cars with little engines. The probably could have gotten the same R&D expertise by merging with Cub Cadet. America doesn’t want more little vehicles with little motors. Especially those of us that live and work in what many elitists call “the fly-over” country. We like having trucks and SUVs that can get us from point A to point B regardless of the snow cover. When the price of fuel goes up, we do what we did last summer and just drive less.
So once again the Obama administration has got it all bass-ackward. You can’t save American jobs by producing a product that American’s won’t buy, unless, of course, the government intends to subsidize it—which will probably be the case.
