Chrysler / Fiat Deal Is Horrible for GM and Ford 16 comments
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Fiat’s and Chrysler’s new partnership is borderline good or, at a minimum, a non-event for Chrysler. It’s great for Fiat, but horrible for General Motors (GM) and Ford (F).
Chrysler gets access to Fiat’s technology and smaller cars. That’s good, but Fiat doesn’t appear to be willing to throw a lot of cash in Chrysler’s direction. What’s great for Fiat is that it gets overnight access to Chrysler’s distribution. Fiat will be able to sell and service its Fiat and Alfa Romeo brands nationwide. This is also a positive to Chrysler dealers ( at least for the ones that are still around by the time this deal is consummated).
But this is horrible news for GM and Ford. Horrible! Horrible! Horrible! The auto market in North America is already and will continue to shrink for a while as consumers drive an existing car for 6 or 7 years instead of 5. And that decision has gotten even easier in the last decade as overall car quality has improved. So now GM and Ford will need to split a shrinking market with a new competitor.
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First, why is it not also horrible for TM and HMC and NSANY and all of the other companies that rely on the North American market for a significant chunk of their income? Second, why do you think FIAT will be able to gain that kind of traction here so quickly?
FIAT has an awful lot of half-remembered bad brand mojo to overcome in the US. Their '70s cars were fun but unreliable in the extreme. It'll take time to get past that, and if and when they do they will be at best a big niche player in small cars. Alfa, marketed correctly, could be an intriguing alternative to BMW and Audi at the lower end but will never in a million years be a mass-volume brand here.
Long story short, it'll be a long time before a critical mass of Americans are prepared to consider, much less choose, a Bravo over a Focus or a Corolla. This downturn will be long past before FIAT becomes a factor here.
> jack
The fact is that Chrysler is impossibly behind both of the others. Ford has been in Europe for years. GM has been in Europe for years. Chrysler barely made a shadow before being sold off by Daimler.
Wait, is his last name Cerberus?
Fiat gets a major foothold in the US. If We fund Cerberus, Fiat gets a majority stake in Chrysler. Cerberus will prosper if Fiat does but now that a Hedge Fund is just a minority holder, "We the People" would give Chrysler more TARP money just because Cerberus is out of the picture and America wants the type of vehicles Fiat produces.
IMO
The premise is horrible, horrible, horrible!
1. GM and Ford do not compete in the Fiat 500 & Abarth class.
2. Chrysler can survive without taxpayer money. [It will get our money anyway, but I digress.]
3. The Fiat 500 line is to be produced in the USA and will displace some of the imported Versa-based Nissans that Chrysler has agreed to market.
4. Chrysler still gets to manufacture the high-margin Ram that Nissan will market as the next-generation Titan.
5. The suppliers that were about to be shafted by Chrysler's inevitable bankruptcy will not have to be supported. Again, less taxpayer bailouts.
6. GM avoids potential supply interruptions from supplier collapse.
The only entity that might have a problem with this is GM, because they had to pay Fiat $2 billion to get out of a forced acquisition. Now that money is going toward supporting a written-off-as-dead competitor.
In the long term, however, when Fiat reliability ratings come in, all the other manufacturers such as GM and Ford will look good in comparison.
On Jan 22 06:57 AM User 332328 wrote:
> This is a remarkably shallow analysis, even by Seeking Alpha standards.
>
>
> First, why is it not also horrible for TM and HMC and NSANY and all
> of the other companies that rely on the North American market for
> a significant chunk of their income? Second, why do you think FIAT
> will be able to gain that kind of traction here so quickly?
>
> FIAT has an awful lot of half-remembered bad brand mojo to overcome
> in the US. Their '70s cars were fun but unreliable in the extreme.
> It'll take time to get past that, and if and when they do they will
> be at best a big niche player in small cars. Alfa, marketed correctly,
> could be an intriguing alternative to BMW and Audi at the lower end
> but will never in a million years be a mass-volume brand here.<br/>
>
> Long story short, it'll be a long time before a critical mass of
> Americans are prepared to consider, much less choose, a Bravo over
> a Focus or a Corolla. This downturn will be long past before FIAT
> becomes a factor here.
Fiat will use Chrysler's technology for what it is worth but will not be a major player with Fiat tagging along. Fiat is looking at the distribution, and parts suppliers. I'dput money on it that R&D will be cut.
Fiat & Chrysler & Peugeot together;
Thus forming the two largest car entities in the world, bridging at long last the US & European markets...
And then, individual players (Toyota, Honda, BMW, Audi...) sooner than later, will also have to "merge" their operations one way or the other before China & India set in, with clean "0 emission" City Cars at 5K$ and hybrid Sedan at 15K max...
Logical evolution... Called Carwin, if my recollection is correct?:)
ummm.....no.
<b>Toyota</b&... - already the world's largest carmaker with a presence in every major market. Enough said
<b>Honda</b&g... - already a global car manufacturer and one of the most profitable. Views itself as an engine company first and foremost with forays into motorcycles, jet engines, lawn mowers, etc. Doesn't need a merger and wouldn't even contemplate one.
<b>BMW</b> - leading premium brand in the world. Currently owns MINI and Rolls-Royce.
<b>Audi</b>... - is owned by VW (who also owns VW, Lamborghini, Bugatti, and a handful of other brands) which is in turn being swallowed by Porsche and is already one of the largest global car companies.
US president said, he wants to reduce oil dependancy of US: is it realistic, that higher taxes for larger cars will be soon introduced in US?
In this case, a fast introduction of well known products could be a competitiveness factor for companies.
"31october" said Ford and GM don't compete with the FIAT 500:
But, Ford, for one, is planning to bring over small cars from Europe that would compete with the FIAT 500. Specifically their B-car Fiesta in 2010.
Several of you argue that FIAT will not be competitive in the US. I agree this is true after people see what crap they are after a couple of years. Were it not for the federal bailout money they would not even be able to come over here. But if you build a plant with what amounts to taxpayer - bailout money - a certain number of those cars WILL be sold, taking share from Ford and GM.
So the US taxpayers subsidize the further erosion of no-bailout-money Ford's market share. And this with third rate FIAT vehicles. This is beyond anything envisioned by the initial bailout.
I reluctantly supported the bailouts to date because we were told of dire consequences. I don't support the subsidy of a new, third rate, entry into the US market. I now think it is a zero sum (market share) game. If Chrysler losses auto jobs via bankruptcy, then Ford, GM and the transplants loose fewer jobs.