Chrysler may survive by FIAT
By J.S. Smith
Thus far, reports have not used the term merger—and certainly not “merger of equals.” These days, FIAT, once enfeebled and towered over by the colossal American pentastar, is clearly more equal than others, to steal a phrase from Eric Blair. Reuters used the term “strategic partnership.” According to the Canadian Press, FIAT is interested in “creating a partnership that would allow the Italian auto company to build and sell its small cars in the United States.”
Although early, this certainly seems like a good partnership. FIAT makes some of the best small cars in the world and has a global presence—except in the USA. It also makes great sporty executive cars—Alfa Romeo and Lancia are in its stable. It lacks full size cars, trucks and SUVs. And it lacks dealers in North America.
Chrysler, on the other hand, lacks small cars and has no competitive small or mid-size vehicles. Only its rear-drive cars are competitive, and even the hallowed 300/Charger are getting a bit hoary. What it has is a fine stable of trucks and SUVs, among the best in the world. And it has excess plant capacity that FIAT could use to build stuff in the NAFTA zone, insulating it from exchange-rate worries—a problem that may not affect its Maseratis, but which could make selling 500s at a profit quite problematic. Chrysler also has dealers—too many, to be certain—that are in desperate need of good small cars.
As an enthusiast, I am tentatively excited about this prospect. I like FIAT’s small cars and cut-rate Pandas, and cutesy 500s would be very welcome. As a Michigander, I would love to be able to buy a made-in-Michigan Panda-clone or 500. Furthermore, Chrysler could either make Lancias and Alfas, or use their designs as the basis for good compact and mid-size models.
Aside from financing, I am curious as to how the partnership would work in terms of branding. Some models have to be FIATs—the 500, for instance. But what about the Panda? If it’s sold here, it would have to be built here. Otherwise, the Euro exchange rate would make it too costly, even factoring in cheap Polish labor. But would it be a FIAT?
Perhaps it would be best to use the FIAT name for the superminis and sub-compacts, which are what FIAT specializes in. Although the FIAT brand means nothing to most Americans—and those for whom it has meaning remember it as a “Fix it again, Tony” quality-control nightmare—Dodge and Chrysler don’t have any cache at marketing truly small cars. FIAT may, like the Koreans, find initial acceptance with small, affordable cars.
But what about Lancia and Alfa-Romeo? Outside of a small number of gearheads, Lancia and Alfa-Romeo mean nothing to American buyers. Their offerings, if built here, could be used to rejuvenate the moribund Mopar car line-up. Dodge could be used for compacts and low-trim mid-size cars, Chrysler for upscale mid-size cars. It may make sense to market Alfa’s sports cars—which have a good reputation among the enthusiasts who would comprise their main market—under their own name and their sedans under American names. This is particularly true for Lancia, which hasn’t been sold in the US for 27 years, and was never sole in other than miniscule numbers.
At this point, little is known. What we do know is that it seems like a good fit in terms of product. We also know that Chrysler cannot survive long without a foreign benefactor. I hope this works out.
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