Newly Divorced Mercedes Talking with Fiat

Posted by: Gail Edmondson on October 11, 2007

Marchionne Fiat CEO Sergio Marchionne

Alliances have become the auto industry’s holy grail, following a slew of failed takeovers. Even Mercedes, fresh from its divorce with Chrysler, is on the prowl. Fiat Chief Executive Sergio Marchionne confirmed today that he is talking with Mercedes about a possible cooperation, among others.

Mercedes has said it is seeking alliances, but hasn’t mentioned the Italian automaker. Logically, Mercedes needs to team up with someone in small cars. Peugeot, Citroen and Toyota teamed up to produce micro-cars together in Europe, and the new Ford Ka will share a platform and production line with the Fiat 500 in Poland. Mercedes smaller models, the A-Class and B-Class, do not share a platform or parts with the rest of the Mercedes lineup, and therefore suffer a high cost base.

The Mercedes-Fiat talks come seven years after then Daimler-Benz
sought to take a major stake in Fiat Auto, losing out to General Motors. It’s unlikely a Daimler-Fiat tie-up would have fared any better than the GM-Fiat link, which included a put option for GM to takeover Fiat — and was terminated in 2005 after five years at a cost of $2.0 billion to GM. This time, if a deal comes to pass, Mercedes and Fiat are likely to be smarter about the scope and expectations of any collaboration.

Reader Comments

Badii Kechiche

October 12, 2007 10:19 AM

I understand a GM/Fiat tie up, but a Mercedes/Fiat will only benefit Fiat. Your statement that Mercedes' a high smaller line of cars are costly because they don't share a platform with the rest of the line up makes me think that Mercedes will be looking to share platforms for its smaller classes with Fiat. This would be catastrophic and counter productive to Mercedes' efforts to rebuild it's high end image after its troubled experience with Chrysler. I would think a Volkswagen or even a renault cooperation would be a better match.

Roberto Berardi

October 13, 2007 6:03 PM

With regards to Badii Kechiche comment on how mercedes would be better of teaming up with Renault, may I just ask in what way are Renault better than Fiat?

Also let us not forget Fiat Spa is a huge motor manufacturer producing top end luxury brands like Alfa Romeo, Lancia and the likes of Ferrari and Maserati. So in reality Mercedes and Fiat collaborating is a very smart move on both parts Mercedes will benefit massively from Fiats style and design and Fiat will benefit from Mercedes expertise in building reliable cars.

Noz

October 14, 2007 12:13 PM

Roberto Bernardi mentions 'reliability' and 'Mercedes' in the same sentence! Where has he been for the past half decade? MB has rated right down there with Land Rover, the all-time loser in terms of reliability.

Fiat certainly has no claims on reliability, the company is well known for building repair facility dwellers. Ye Olde F I A T starring Tony the fixer is not some competitor's slam. And as to Ferrari and Maserati being such winners, yes they take all the prizes for super-high cost/mile, not to mention 'resting time' awaiting yet another part to arrive from Italy. I would take the civilized Acura NSX any time in preference and be able to drive it in comfort day after day at a reasonable cost.

Badii Kechiche

October 15, 2007 9:34 AM

Mr. Berardi, your observation that Fiat has a luxurious line up is no news. I call on you though to indentify a luxurious and reliable Fiat model that can share a platform with MB's smaller lineup that we're talking about. Please let’s not forget, MB is looking for a partner to help with its smaller line up. Fiat will not share its Maserati and Ferrari platform with MB's smaller classes. So you made my point, wouldn’t you say that Lancia and Alfa Romeo will benefit more from a tie-up than MB?? Does MB really see itself in the same category as these two brands?? if so, I guarantee you it will be a huge surprise to MB's customers who will not tolerate paying a premium for the MB's brand to see it stand side by side with a Lancia or an Alfa Romeo. Also MB's line ups have always been attractive, and if MB has a design problem then I am totally surprised. Italian cars are great, aggressive and fun. German cars are about engineering, build and class. Peugeot and Volkswagen have a good sedan line up; Fiat has a good sporty and fashionable line up, the two brands have totally different appeals and market base.

bravo three

October 15, 2007 4:54 PM

Hi Roberto Berardi you say fiat "style and design" i say fiat stilo. A shed on wheels that iron curtain communisim would be embaressed by.

Mark Foster

November 13, 2007 12:32 PM

Dear Bravo Three,
the real answer to your comment is the name you bear: BRAVO. Have you seen it? It's a wondeful car! And it's Fiat.

Lia Nici

November 24, 2007 6:21 PM

Roberto

Are you the same Roberto Bernardi who had Aldo Nici in your Quartet in the 1960's?

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