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If The Fiat Deal Flounders, Does Chrysler Have Other Options?

Posted on November 27, 2022

The news for Chrysler the first few days of 2009 was especially bleak: despite getting three billion dollars in federal funding, the automaker would have a tough time surviving beyond the first quarter without a second injection of cash. Even though a new Congress has been seated and a new president has taken office, there isn’t any guarantee that politicians will want to help Chrysler out beyond the initial loan amount. Constituents are angry as they see private businesses and public corporations bailed out while struggling to make their own mortgage payments, hold down a job, and pay the bills.

Chrysler recently announced a strategic alliance with Fiat, a deal which could bring as many as seven Fiat and Alfa Romeo models to the US market in exchange for giving Fiat 35% ownership of Chrysler LLC. But it is that foreign ownership of Chrysler which has some unhinged, wondering aloud whether it is right for Congress to support a foreign owned entity as another 19.9% of Chrysler is owned by the German auto firm, Daimler AG.

If Congress doesn’t approve of the Fiat business arrangement, then Chrysler will not be able to count on new cars to supplement its fleet from the Italian car company. Without these new cars, Chrysler doesn’t have the funds to develop new models on its own. Without new models, Chrysler will continue to lose sales and probably find itself going out of business.

But, Chrysler may still have several options available to it even if the Fiat deal unravels. These include:

Expanding its relationship with Volkswagen. At present, Chrysler supplies a minivan for Volkswagen to sell in the North American market. When Volkswagen’s new Tennessee assembly plant opens up in 2011, perhaps VW could supply a model for Chrysler?

Stay hitched to Nissan. Little known to most people is that Chrysler and Nissan forged several agreements in 2008. These include Chrysler supplying the underpinnings for the next generation Nissan Titan truck (using the Dodge Ram platform) while Nissan builds two different models for Chrysler. Nissan and Renault are essentially one company (both are managed by Carlos Ghosn), could Chrysler be pulled in as the third leg on that stool?

Revisiting China. Chrysler had a business agreement with China’s Chery Automotive Group, but that deal was canceled last year as Chrysler’s financial plight worsened. Whether it is with Chery or some other manufacturer, Chrysler could certainly look at tapping yet another company to provide cars for its Dodge, Chrysler and Jeep dealers.

Ultimately, Chrysler’s survival will depend much on internal restructuring ahead of external relationships. Still, in this world of global consolidation, working with other car companies around the world is something that could benefit Chrysler as well as its potential partners.

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