Summary
With fewer than 30 days now to cement a partnership with Italy's Fiat S. p. A. or else, Chrysler's prospects for survival are slimmer than the lapels on Fiat President Luca Cordero di Montezemolo's suit.
Analysis
Thirty days to structure a complex, transcontinental and cross-cultural manufacturing and product-development alliance when both companies are in financial distress, auto markets on their home continents are dangerously depressed - and their respective top management as recently as last week wasn't even on the same page regarding the most basic elements of the deal?
Auto-industry alliances often do not turn out well, and can be assumed not to begin any better when devised under the condition that one party has a date in bankruptcy court if the deal doesn't happen.
Even the framework of the deal changed last week, with Fiat's initial stake, for which it will not pay a dime in cash but instead will barter engineering and vehicle platforms, would be lowered to 20% from the originally planned 35%.
Earlier last month, the companies that supposedly are working diligently on a complicated industrial alliance appeared confused on a basic point. Chrysler president Nardelli told the press Fiat would assume an amount of Chrysler's debt equal to Fiat's ownership stake in Chrysler.
Not true, Fiat quickly replied. Nardelli took haste to clarify as well.
Unless the companies' plan includes something on the order of a miracle of manufacturing agility - that might be possible if they were Japanese auto makers - it will be a likely minimum of 18-24 months before the alliance could generate showroom-ready product for sale on either side of the Atlantic. And unless auto sales in Europe and the U.S. make a quick and extraordinary recovery, at typical rates of domestic-auto maker cash burn, the U.S. Treasury's next $6 billion loan to Chrysler might not see the company through the summer.
