President Obama wanted a fuel efficient small car from the future Chrysler. He’ll get it too: but it might be much more a car from Mexico, South Korea and China then from Detroit. The new Chrysler mainstay made in America will be a luxury Alfa Romeo.
Said Steve Mooney, an auto industry analyst, “The American auto unions are committing suicide with their pay and compensation systems. The jobs will go overseas…”
Chrysler LLC, as part of its planned alliance with Fiat SpA, plans to build new cars in the U.S. based on engineering of an Alfa Romeo model under development in Italy.
Chrysler, seeking a sale of most of its assets through bankruptcy to a company controlled by Fiat, reached agreement with the Turin, Italy-based automaker to use the platform of the Alfa Romeo 149 in the U.S., according to a court filing.
Fiat Chief Executive Officer Sergio Marchionne’s vision as Chrysler’s new CEO includes building many cars from existing platforms to pare costs. He has said a carmaker needs to sell at least 5.5 million vehicles a year globally to survive, and he said in a May 6 interview that he wants to add General Motors Corp.’s brands Opel, Vauxhall and Saab to reach the target.
“It means that they will increase their profitability per vehicle, but just because you’ve got a good base below doesn’t mean anything if you don’t execute above,” said Wes Brown, an automotive analyst at Iceology in Los Angeles. “Putting a Chrysler badge on something hot doesn’t mean people will come in the door and buy it.”
By Jerry Flint
The sale of Chrysler to Fiat seems to be moving forward in the bankruptcy court. Whether it eventually happens, though, is still unclear to me. Agreements come and go. But if it does happen, what are the chances of success? Take a look at the failure rate:
Right now Chrysler has an agreement with Nissan ( NSANY – news – people ) in which Nissan will build a small car for Chrysler in Japan and Chrysler will build Nissan a version of its Dodge Ram pickup. The deal is falling apart as I write this and likely will never happen.
It never made sense anyway: With the yen at 100 to the dollar, building a small car in Japan for export to the U.S. is loss proposition. And Nissan and Fiat ( FIA – news – people ), Chrysler’s new partner, are not exactly sweethearts.
But that’s just the latest mishap of companies merging: We all know that Daimler-Chrysler was a disaster for both companies and nearly destroyed Chrysler.
Before that, there was a Chrysler/Mitsubishi combine called Diamond Star. They even had a joint venture factory. Didn’t work.
Before that, Chrysler owned a French carmaker called Simca and a British carmaker named Rootes. Didn’t work.
And did you know Chrysler once owned Lamborghini? They never made it work but did make money selling it. And then here was Beijing Jeep, the first foreign car assembler in China. Gone.
Indeed, the whole Fiat/Chrysler idea is strange despite President Obama’s enthusiasm.
By Peter Whoriskey
The Washington Post
The U.S. government is pouring billions into General Motors in hopes of reviving the domestic economy, but when the automaker completes its restructuring plan, many of the company’s new jobs will be filled by workers overseas.
According to an outline the company has been sharing privately with Washington legislators, the number of cars that GM sells in the United States and builds in Mexico, China and South Korea will roughly double.
Read the rest:
Under Restructuring, GM To Build More Cars Overseas