The automotive world is agog at the news that Chrysler and Fiat are getting together. The latest news indicates that Fiat will get a 35% share of Chrysler, but stressed that it would not throw actual money at the venture.
This deal makes sense on so many levels. Firstly, and perhaps most importantly given the disastrous ChryDaimler affair, it is a meeting of the minds. Both Fiat and Chrysler are renowned for their design teams, and both have produced noteworthy designs in the last decade. The latest from Fiat, a remake of the Fiat 500 of the 60's and 70's (think Mini) is a popular success.
Chrysler gets access to Fiat's successful global distribution system. Fiat has made inroads into world markets by going local where it is able, and selling low cost vehicles to poorer countries, often assembled there. Chrysler gets to supply Fiat with upmarket vehicles in countries where Fiat has gained a foothold but has no "aspirational" or "halo" vehicles to its lineup. Fiat will also supply technology for small engines to Chrysler, which it badly needs.
Like any marriage, it is not a perfect union. Since we started on the "meeting of the minds" theme, there is one negative factor that both companies have to work hard to expel: Quality. Fiat owners have two moments of happiness, it is often quipped; one when they buy the car, and another when they sell it. Both Fiat and Chrysler have made steps in the direction of quality control, and certainly their vehicles are far superior to their ancestors of yester year. But the public memory is a long one, and the road back from the quality abyss is long and hard.
Then there is Nissan, the "Lady Camila" of the marriage. Nissan recently signed an accord with Chrysler to make it's light trucks and supply technology in other areas, including the development of a small vehicle for the US market. It happens that Nissan is also part of the Renault automotive family, and Renault is a direct competitor to Fiat in Europe and many developing markets as well. IF (and it is a big IF) Renault, Nissan, Fiat and Chrysler could be convinced to join forces, we would be talking about a global automotive powerhouse. But it would not come cheap, as the operations would have to be severely streamlined in order to eliminate model and market overlap. There is also the question of personalities, which includes some titans: Sergio Marchionne (of Fiat) does not suffer fools, and Carlos Ghosn (of Renault) makes fools suffer.
Still and all, this is the best deal Chrysler could get into. It breathes a bit of hope in an industry staggering under economic pressure. And for us car nuts, it means we will soon see Fiats back again in the US - however quirky they were, we always loved their Italian flair and they will make the automotive landscape a better place. Thanks Fiat! (And I never thought I would ever say that.....)
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