5.17.2009

Fiat and the New Automotive Order


Until recently I haven't thought much about Fiat automobiles. The Italian firm's management takeover of Chrysler and maybe even some of GM's European operations has the company in the news here in the States. Remember, Fiat hasn't sold cars in the US since...oh, since a long time ago--about 25 years. Pulled out. Couldn't make it. Something about adverse dollar/lira exchange. And rust. And a weak dealer network. And...overall quality.

I know all about the dollar/lira and turn-on-a-dime marketing attitude of the Italian industrialists, having worked for Pirelli Tire for 10 years. I remember when the US tire operation would slide from the most important market to the least on what seemed like a weekly basis. But that's another story.

Really, I have thought a lot about Fiat Group automobiles--I just didn't stop to realize it. You see, I'm a softie for Lancia rally and race cars of the 80's which was my time at Pirelli and a great time for Lancia Motorsports. Part of Fiat. And who doesn't melt at the sight of a Ferrari? Part of Fiat. Like the rad styling of the Alfa Romeo? Yep, part of Fiat. Add in my often-remembered ownership of a 1974 Fiat 124 Sport Spider (my first new car) and I guess my brain is almost constantly oozing Fiat.

As recently as 2005 Fiat was in dire straits, much like GM and Chrysler today. Three billion Euro bailout from government. During this period GM actually had a limited partnership of sorts with Fiat, sharing some parts manufacturing in Europe and teaming on engineering projects. Fiat was so unstable then that GM paid Fiat two billion dollars and returned the 10% ownership stake to get out of the deal, afraid Fiat would topple right into their hands. How the tables have turned.

I have my doubts about all this. The Italians, God love 'em, hold themselves in high esteem. But at this point they have not invested a dime of their own money in these "takeovers". A gift from the Obama Administration. It is expected Fiat will obtain a 20% stake in Chrysler over some period of time. I hope they are going to pay for that. If the going gets too rough for Fiat down the road or if the infamous Italian political system comes to dislike the possiblity or reality of Fiat cutting jobs at home because of the new deal, there will be trouble.
In reality, for Fiat making all this work is a gamble they must take. Grow or die. Hopefully that's a reality that will spur a great outcome for all.

Here's a new name to remember as someone who now has a significant role in our industrial and overall economy: Sergio Marchionne, the head of Fiat Group. He's the fellow who turned Fiat profitable since taking the helm. So maybe...
Oh, and while we are remembering things...why is it that the Obama Administration and others believe Fiat is up to the task of restoring Chrysler when Daimler Mercedes couldn't?
LD

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