Posted by: David Kiley on April 15, 2008
First we find out that Chrysler is going to build pickup trucks for Nissan in Mexico and that Nissan is going to build a small car for Chrysler. Then, we learn that Chrysler is in advanced talks with Italian carmaker Fiat, a deal that could result in Chrysler building cars for Alfa-Romeo in North America.
The next call Chrysler LLC CEO Bob Nardelli is going to have to make to owner Cerberus Capital is to allocate more money for foreign language training for its engineers and product planners. They never did do a good job of learning German. Maybe they’ll do better with Japanese and Italian. Germans. Italians. Japanese. Hmmmm. What does this make me think of?
Seriously, these deals that are shaping up for Chrysler look smart, at least on paper. Chrysler has way too much manufacturing capacity for its own sagging market share. It makes a lot of sense for the companies. And as Center for Automotive Research executive director David Cole put it, it’s good for Chrysler to do a lot of dating with other manufacturers, one of whom may just want to buy Chrysler from Cerberus after it does some more of the heavy lifting on cleaning up what the Germans left behind.
One can’t help but grin at the prospect of a Chrysler-Fiat tie up. Chrysler making Alfas? My mind goes back to the 1980s when Lee Iacocca (maybe he’ll come out of retirement to run Fiat-Chrysler? Or at least let him throw out the first pitch, or pizza, in that game) struck an alliance with Maserati. That deal produced a Maserati designed Chrysler TC, which was more full of quality and production problems than the Clinton campaign.
I can also remember how Bob Lutz, then of Chrysler and now of GM, used to scoff at the idea of Chrysler linking up with Fiat as a potential black hole of cash and foolishness.
That was then. This is now. Today, Fiat is a comeback story if you believe Italian accounting standards. The Italian company is mounting a comeback to the U.S. for its Alfa-Romeo brand. And the Italian carmaker is considerably healthier than Chrysler. But one has to wonder where Chrysler would build Alfa Romeos. It’s not as if they are going to be grafted on top of Dodge Avenger platforms. And I wasn’t aware that Chrysler had that much flexible capacity.
How will potential Alfa buyers react to the Italian cars coming out of a North American Chrysler plant? It sounds a bit like buying Nebbiolo wine made in Pennsylvania. It doesn’t sound good on the ear. Part of the allure of the Alfa brand in a crowded premium car maarket is the whole Italian thing. Right? Alfa was thought to be also talking to BMW about getting some of its production space in South Carolina, but BMW is moving as much of its own production there as possible given the weak dollar. That would have been, I am guessing, an easier pignoli to swallow for would-be Alfa buyers.
How about Volkswagen’s Mexican plant? No dice. Fiat and VW are too much the rivals in Europe. Should be interesting to watch. Audi is looking to build capacity in North America? Might take too long for Fiat.
Memo to Fiat chairman Sergio Marchionne: In case you want to know what could possibly go wrong with this idea, go ahead and google “Chrysler TC.”