Summary
The U.S. Government in cooperation with the Senior Management of Fiat is going to appoint a new board of directors for this new joint company. Fiat is for all practical purposes a two market auto manufacturer; the home country…Italy (62%), and South America (38%). Chrysler LLC is a one market manufacturer in North America (72%) (Recognizing Graz, Austria (28%) for Minivans & Jeep). Respectively in those markets both companies loose money.
Analysis
Let’s speculate on the specifics of that proposal for a moment. Maybe the U.S. Government will request that Mr. Henderson run both GM and Fiat/Chrysler as he appears to be the prototypical CEO of chose, alongside an Italian named counterpart selected by Mr. Marchionne. Chrysler has already indicated such a joint venture will save the company in excess of a billion dollars on small engine technology, I wonder if this is the same billion dollar savings GM-Europe proposed in a GM-Europe/Fiat JV in 2000. History tells us that the savings was never realized and the JV subsequently failed. But, the Italian named expert will certainly bring North American Market knowledge for a market that Fiat has never effectively been able to penetrate or sustain a viable presence.
Analyst of the potential joint venture have indicated that both parties gain from this marriage; Fiat gains North American market share, operations and Dealer infrastructure, While Chrysler gains a much needed financial partner…Fiat?
I wonder what the historical performance and long-term ROI would like in that company prospectus.
