jg95z28

I knew Fiat was in the driver's seat...

http://usnews.rankingsandreviews.com...on-Cuts-Costs/
With only two-weeks left to go, does anyone see this deal getting done? Is Fiat ready to walk away, or is Merchionne just posturing to get the best deal for Fiat?

R377

I personally don't think Fiat's bluffing. Merchionne is a very smart man, and aside from just wanting to get the best deal possible, I think he's seeing how weak Chrysler really is and knows it can't survive with its current cost structure.

If he does get the concessions he wants, it'll be interesting to see if the unions give GM and Ford the same deals.

It's definitely going to be an interesting few weeks.

jg95z28

GM is in a better position with the unions if they use bankruptcy to restructure the company as essentially all existing contracts will become null and void.

Chrysler is in trouble and Fiat knows this. I guess we'll learn just how bad Chrysler is financially if this deal doesn't go through.

SharpShooter_SS

I dunno, could be a big fight. The CAW says publicly it isn't reopening the GM deal and expects Chrysler to honour the pattern that has been set. They are scheduled to start talks with Chrysler on Monday. They offer to creatively help the makers shed costs to bring them more in line with offshore manufacturers but not at their memberships expense.

The CAW did extend an offer to have Fiat people visit and tour Chrysler's Canadian plants in order to make a more informed decision on the demands being asked of the unions.

Z284ever

I heard today, that Fiat is considering buying Saturn if the unions don't play ball with the Chrysler deal.

And I agree, Marchionne does not have a history of bluffing.

guionM

I believe it's the Canadian union that's being the PIA with Chrysler.

I was going to start a thread on why I don't see Chrysler making it, but I'm going to have an extremely busy week so I'm not going to have time to sit down and write (and research the details). But in short, these are the points:

1. Unlike GM, Chrysler's debt is backed up with collateral. While GM's unsecured debt allows them to essentially walk away from bondholders without payting a cent via bankruptcy, if Chrysler goes bankrupt, it's debtholders are the 1st to get parts of the company. In short, Chrysler gets dismantled.

2. Daimler has valued out Chrysler to $0 on their balence sheets, so to them they have already "Totaled" Chrysler.

3. Cerberus bought Chrysler to get Chrysler Financial. With that, cerberus is willing to simply give Chrysler away. They firewalled themselves against Chrysler, so they neither put money into it, or have their value adversely affected by any problems with Chrysler's losses or demise.

4. The best deal Fiat will get, they will get after Chrysler goes bankrupt. They will have alot of investors now owning Jeep, factories, powertrains, even a couple of newly designed cars that need to unload it on the cheap.

5. Finally, if Fiat does hook up with Chrysler before May 1st, they are restricted in how much of Chrysler they can own and what they can do (must benefit US workers 1st). If they step in after May 1st, they can do pretty much what they want (perhaps ramp up manufacturing parts in their own plants in Europe and use the US plants for just assembly). They can even cherry pick the best Chrysler dealers to distribute their vehicles.



Fiat wants to get back into the US, so I strongly believe they will wind up with parts of Chrysler. Mitsubishi will also wind up with parts of Chrysler as well. But at this moment, unless something unexpected happens, I don't expect Chrysler to remain intact.



While we're on the subject, it now appears that GM is turning into the company I predicted it would of Chevrolet and Cadillac. If Buick survives, I expect it's distribution to move to Cadillac and it's network.

If we are still destined to get Holden Commodores from Australia, I fully expect them to wind up in Chevrolet Showrooms.

Curiously, the current Impala is being left to whither on the vine, having it's replacement moved away at least a year or more. Plenty of time to move buyers who might have considered a car like Impala into much better Malibus.

The Impala replacement's introduction now coincides with the timeframe of the revised, restyled, RWD, Zeta based Holden Commodore-Chevrolet Lumina, and it's lighter weight and slightly improved fuel economy.

Now isn't that something?

jg95z28

That's exactly who I was thinking of when I wrote this:
If Fiat still plans to build cars overseas and import them here, Saturn would be a great way to do this.

Which is why a combination of Saturn and Chrysler bits might be the best fit for Fiat. Many consumers already think Saturn is an import brand, so it doesn't have the stigma Chrysler has of being an "American" brand. Fiat could quickly bring their cars to NA through Saturn and then eventually faze out the GM flavored models and replace them with their own. Should they decide to start assembling cars here, they'll need bits of Chrysler's manufacturing facilities to do this. I doubt they'd want the truck division, so someone else would need to buy that up (Mitsubishi? Nissan?).

Honestly, if Chrysler does get sold off in parts, do you think there's a chance that the new GM might try to buy Jeep? What about Ford?

Z28Wilson

Maybe Ford, but GM? Really? Everyone and their brother is saying GM has too many brands as it is and needs to cut down to their core (Chevy & Caddy). Buying Jeep while slashing Pontiac, GMC, and Saturn makes little sense and invites more scrutiny.

I agree that Fiat's next best move would be to buy Saturn. It would seem to make perfect sense for them to make a North American return.

guionM

I think Jeep will be the first thing sold.

Chrysler was in a partnership with Mitsiubishi and Hyundai on the new 4 cylinder engine all 3 share (which is actually made here in the USA!). Chrysler also has a joint plant with Mitsubishi, and Chrysler has been sitting on a Lancer based replacement for the Neon for nearly half a decade (Caliber was never planned as a direct Neon replacement).

Chrysler was doing the next full sized trucks (Titan) for Nissan, and was supposed to start making them next year.

Nissan was slated to build the Dodge Hornet starting next year.

Chrysler has been building Routan minivans for Volkswagen for over a year.

I suspect those companies will end up with those bits.

Eric77TA

I don't see Volkswagen picking up the minivans. I doubt they have interest in 100,000 unit a year capacity when they've only sold something like 3,000 Routans since the thing was introduced. It's a sales disaster. They're practically giving them away.

jg95z28

But the commercials with Brooke Shields have been hilarious.

Jason E

There's a couple things here to consider...

1) Marchionne in an interview Wednesday with the Globe and Mail said, and I quote, "we have no interest in buying Saturn." Period. If they WERE, you'd think that he would say that to help leverage himself even further against the CAW with Chrysler.

2) GM would never buy Jeep, and Ford has already publicly said they do not want, or are they in any position to buy, assets of Chrysler. Mark Fields was quoted at NYIAS as saying this.

3) One good thing Chrysler, as an entity, adds to Fiat is that there is no product overlap, allowing them to sell things such as Jeep products overseas.

I wouldn't count Chrysler out yet...GM scares me more than Chrysler does, to be honest.

guionM

Chrysler as a company, I don't count out yet... not by a LONG shot!

But I know how militant the CAW can be. Alot of members here slam the UAW, but the UAW is more brinksmanship and showmanship than hard core, burn the world if we don't get what we want, group of people like the CAW is. They have the potential to sink Chrysler since their best vehicles (the LX cars) are made there.

Then you have the debt holders. Unlike GM who can use bankruptcy to force them to renegotiate their holdings since the only value they have is paper, Chrysler's debtholders actually have parts of the company as collateral. In any bankruptcy, they get the 1st pieces of the company, and can sell it off to buyers... perhaps for even more than what Chrysler is demanding that they take.

I fully believe that Chrysler can find a way to survive even if they do not get federal funds. But it's the forces outside of Chrysler that can sink the boat.

routesixtysixer

Why wouldn't Fiat just wait till Chrysler collapses into Chapter 7 and buy up only the parts they really want?

HAZ-Matt

That is the million dollar question. The only downside is that they wouldn't be gauranteed to not be outbid by anyone else, but then again I don't think there is a long line of people waiting to get pieces of Chrysler.