Saturday, May 16, 2009

Fiat is going to save Chrysler, eh?

The Obama-directed bailout/bankruptcy of Chrysler has a problem: what is this company supposed to sell that consumers will want to buy? So that, you know, the billions of taxpayer dollars put into Chrysler won't be a total waste, and the members of the UAW will happily keep their jobs.

The Obama Administration has an answer: Fiat cars. It told Chrysler, make a deal with Fiat or else. And of necessity it did. Without putting any money into Chrysler, Fiat becomes a 20% owner of it, with options to take its ownership to 55%. Because Fiat has the kind of cars to sell here that the American consumer Obama Administration wants.
"For too long, Chrysler moved too slowly to adapt to the future, designing and building cars that were less popular, less reliable, and less fuel-efficient than foreign competitors ..." Obama said Thursday, announcing both the Chrysler partnership with Fiat and what is hoped to be a surgical bankruptcy for Chrysler. [McClatchy]
And who better to provide a line of more popular, more reliable and more fuel efficient cars than Fiat? As one of those very foreign competitors, it must be good at delivering that type of high-quality car that Chrysler failed to compete with.

Maybe ... The question is considered by Consumer Reports....

For those Americans who recall when Fiat cars were sold here, the brand made a less-than-stellar impression ... Fiat was sometimes referred to as “Fix It Again, Tony.” A lot can happen in 30 years, but don’t get your hopes up.

For insights, I turned to the 2008 Brand Reliability Index from Which? Car. The annual Which? Car survey is the largest survey of its kind in the U.K., and it is conducted by a publication that, like Consumer Reports, does not accept advertising and delivers the straight facts from its findings ...

For its reliability study, Which? Car looks at models up to eight years old, thereby often reporting on years of experience with a given vehicle. Their survey tallies serious breakdowns, unscheduled repairs, and minor problems...

Among the 38 brands featured in Which? Car, Fiat ranked 35th, followed by Renault, Land Rover, and Chrysler/Dodge ... Fiat, Chrysler, and Dodge are categorized as “Very poor.”

In total, Fiat, Chrysler, and Dodge provide similar reliability, and it isn’t good ...

When Daimler-Benz bought Chrysler in 1997, it was billed as “merger of equals.” The Chrysler and Fiat deal seems to fit that description better.

Or maybe not.

Whatever the quality of the cars that finally get here, Obama has made it a priority in this deal for Fiat to produce a 40-mile-per-gallon car for Chrysler to sell in the US. "Small, fuel efficient, low emission" ... I suppose that's all well and good.

But considering the $12 billion the government is providing to Chrysler, personally I'd be much happier if Obama said his goal for the new Chrysler is to produce cars "that are popular with the public and profitable to manufacture", with all the other adjectives set aside.

". . . at some point, some [Obama auto] task force members acknowledge, the drive for profitability is likely to collide with Mr. Obama's fuel-efficiency and low-emission goals." [NY Times]
OK, I suppose any cost is worth it to save the real American-owned auto industry.
"If you are considering buying a car, I hope it will be an American car," the president said, not mentioning that Chrysler aspires to become a foreign-owned U.S. manufacturer like Toyota, Nissan and Honda ... [McClatchy]