May 4th, 2009
05:47 PM GMT
LONDON, England – Before we get excited about the auto industry transforming under the Fiat flag, remember that the Italian automaker hasn't bought anything yet.
Its "alliance" with Chrysler is now before a bankruptcy judge and involves sharing technology. Fiat is not buying its proposed 20 per cent stake in Chrysler and will still have to deal with the unions, which will have the biggest stake in the U.S. automaker.
Still, one day it may mean small fuel efficient Fiat cars being sold as a re-badged Chrysler or Dodge car. Maybe.
One day, Jeeps and Dodge trucks may be sold through the Fiat supply chain to countries where it has strong links. Maybe.
Before that, Chrysler has to survive its bankruptcy protection process. Now Fiat's CEO Sergio Marchionne wants to negotiate with General Motors to potentially buy a majority stake in GM Europe - read Germany's Opel. But Fiat is billions of dollars in debt and Opel will need a cash infusion ($6 to $9 billion) probably from the German government as a short term loan. That has yet to happen.
Then there are the unions, the factories, political interference... It's all a massive task for Marchionne. On Monday he met with the German government. It's far from clear Berlin will back a deal with Fiat while there are other suitors out there. In fact, GM says it's in talks with a number of parties and it's clear GM wants to keep a foot in Europe for when things turn around.
So while Fiat may be the only automaker willing to take all this on, it is all talk for now.
Fiat has been transformed by Marchionne, that's for sure. Whether he can take all this on is certainly not a given. Some analysts believe his Plan B is to take on Chrysler or GM Europe. Until one or both of them is sewn up, a combination of the two leads to speculation that Fiat will transform the auto landscape.
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