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The Chrysler Fiat-sco

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Chrysler and Fiat logos

Chrysler and Fiat logos

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Believe it or not, there was some news yesterday that didn't involve swearings-in or motorcades or figuring out whose dress Michelle Obama was wearing. For car folks, the biggest of those stories had to be the merging of America's troubled Chrysler with spunky Italian automaker Fiat.

Maybe it was the suddenness of the announcement, or a tinge of euphoria that bled over from the inaugural festivities, but the merger seemed like a great idea at the time. Now that we've had a few hours to process it, though, there are some downsides to this arranged marriage.

On the upside, Fiat's an established company with a history of overcoming adversity. In fact, over the past five years, it's overcome a situation very similar to the once Chrysler is now facing: limited product offerings, limited financial means, and limited global market share. Maybe Chrysler can learn something from all that.

Also good news: the UAW is delighted by the deal. That's not only important for PR reasons, but also for very practical ones--namely, the UAW will play a key role in Chrysler's restructuring. (You know, the restructuring required by the U.S. government in exchange for that $17.4 billion bailout package?) If the UAW is happy, things should go a bit smoother.

Which brings us to the bad news:  that restructuring has to happen fast. Very fast. In fact, there are a lot of people who think Chrysler (and GM) may not be able to pull it off by the February 17 deadline required by Congress. (Heck, the UAW's Ron Gettelfinger said as much himself yesterday.) Bringing Fiat into the discussions could slow down the process even further.

Two more points of concern: (1) Daimler is looking to get off the Chrysler ride, and (2) the merger news hasn't done anything to make Moody's any less moody about Chrysler's future. (The financial research firm insists that Chrysler will very likely go into default or file for bankruptcy.) The former sets up Chrysler for another partnership--one that may be less ideal than the one with Fiat--and the latter inhibits Chrysler from scoring more cash for operations.

All we can do, I suppose, is wait and see what tomorrow brings.

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Comment (1)
  1. "Deadlines most times are flexible"

    Don't think the Chrysler/Fiat deal will be KOed because of a deadline when viable and essential negotiations are ongoing. Chrysler is NOT going out of business. I repeat CHRYSLER IS NOT GOING ANYWHERE! Trust me folks, Chrysler is comming back like a re-badged Ferrari on steroids. I'm Italian,take my word,Fiat's going to make a deal that the "car czar" can't refuse, BUDDA BING,BUDDA BOO!!!
     
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