elroy

Chrysler and Fiat's Latest Tiff: Not Unexpected, Not Good

Tony C is correct for the month of February, thanks to its strength in trucks and minivans. Looking at the top ten selling cars in Canada you won't see Chrysler -- which is rationale for the Fiat deal.

I'm just not convinced the Fiat deal is a good deal. Let the German government loan them 20%, the Italian government 35% and the US government the balance and I'll come onside.

With industry volumes running at approximately half of the normal volume, the last thing that this industry needs to get healthy is more vehicles coming into the US marketplace.

Even worse, our tax money is going to fund the importation of these vehicles. Since we already have overcapacity here and sales volumes are so limited, every imported vehicle displaces a domestically produced one. Thus we are going to be paying to put our own auto manufacturing people out of work.

At a macro level, I just don't understand how this makes sense for the US.

Chrysler and Fiat's Latest Tiff: Not Unexpected, Not Good

If you take the time to delve deeper into the proposed Fiat models that might (no promises) be built in North America, there's only two or three with any potential volume and they would be built in Chrysler's Mexico Touluca plant, not the US.

What will happen if we give them money is that Fiat will export their Fiats and Alfa Romeos to US, Chryslers's car plants will still close, and the best case scenario has the majority of the new Chrysler-Fiats built in Mexico.

If it does work, then the majority of the profits go back to Germany and Italy....

Tell me again why this is a good deal.

Chrysler does have some valuable assets and brands. They were supposed to build the next generation of Nissan trucks, so sell them the truck division. GM could use the minivans since it doesn't have any right now. Jeep/Hummer should be a viable joint venture -- two great off-roading names together.

Liquidate the rest and the US automotive marketplace gets stronger.