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Will Fiat rescue GM, too?

Posted by: David Welch on April 20, 2009

It’s ironic enough that Italy’s Fiat Auto could end up being the savior for Chrysler. After all, former Chrysler President Bob Lutz once likened Fiat to a dead bride when his old boss, Lee Iacocca, wanted the company to join up with the Italian carmaker. Now, Lutz is at General Motors until he retires in December, and Fiat may help his current employer.

Yes, the Italian carmaker is reportedly in talks with GM about forming a partnership with its European and South American businesses, says Automotive News. How ironic is that? Well, in 2000, GM bought 20% of Fiat Auto for $2.4 billion. Back then, GM was healthy and Fiat was in serious financial trouble. The Italian company was wracked by quality issues. It was so bad that GM actually paid another $2 billion a few years later just to avoid a put option that would have made GM the sole owner of Fiat. GM’s board didn’t want that kind of headache.

But now, after Fiat CEO Sergio Marchionne has fixed the company, he could help save Chrysler in the U.S. and GM in Europe. GM lost $1.5 billion in the Olde World last year, with its Opel and Vauxhaul brands suffering mightily with too many factories. GM is actually doing very well in Latin America, where the auto giant earned $1.3 billion last year. Fiat is pretty strong there, too, so they could make a powerful pair down there. The only catch is that Fiat doesn’t have any cash either. But the alliances will help be getting each company jointly-engineered vehicles and sharing parts.

The bottom line: Fiat is not a great carmaker by any stretch. But Chrysler and GM are in so much trouble that anyone could help at this point. Even Fiat.

Reader Comments


April 20, 2009 8:09 PM

"The bottom line: Fiat is not a great carmaker by any stretch. But Chrysler and GM are in so much trouble that anyone could help at this point. Even Fiat."

First Fiat is a great carmaker, second I don't think that anyone could help Chrysler and GM. Not an american carmaker anyway.


April 20, 2009 11:39 PM

Liked the article but a little harsh a judgment on Fiat. Fiat has contributed a lot to the automotive world. They've pioneered twin cam engines, 5 speed gearboxes, modern transverse front wheel drive layouts, etc. They hold the record in European Car of the Year Awards (that's not the cheesy car mag car of the year awards we have here in the USA). They've also owned Ferrari for the last 40 years. Although they specialize in small, low cost cars, they've had some brilliant, innovative designs over the last 110 years. Easily the equal to Chrysler or GM. You can read more about Fiat on my blog


April 21, 2009 12:32 AM

if Ford seems able to keep afloat with effective management, then why cant G.M. and Chrysler. no doubt, painfull
restructuring has to take place but to
diminish the ability by mergers of either does not make sense as well. in my opinion, Fed,
U.S. and Canada should buy into both with a 50% plus ownership now that the
market worth of both is so low. both have a restructure plan and it would have to be implimented.
Feds would have to keep arms length but could appoint members to managements and boards. in time the Feds would sell shares to recoup investment..
providing there is success in either company.
despite those who dont care where ownership resides or the need to support essential domestic industries, failure to do so will have serious negative consequences in the future.
manufacturing is just as important as financial services because it creates jobs that pay taxes, that spend and invest and is the root of formation of capital. financial services without real assets that have real worth is in effect a 'Ponzi' scheme. finance is the 'lubricant' but manufacturing is still the 'engine'.
time to effect a successful solution is important but delay compounds the problem.
just my opinion.

Tom Willer

April 21, 2009 5:16 AM

Fiat is pretty stable company that's why the news that the Chrysler and fiat merging becomes popular. Maybe they will if they have the financial stability. :D




April 21, 2009 6:04 AM

"Fiat is not a great carmaker by any stretch." ? A slight injection of personal bias (why?)? What exactly is a great car maker by your definition? Chrysler/GM/Ford? I've driven several Fiats while in Europe and find them worthy competitors to any other European car in their class. At least their cars incorporate 21st century technology, unlike their "great carmaker" US counterparts who are STILL re-hashing 1950's engine and suspension technology (can you say leaf-springs!!!).

Paul (Vw)

April 21, 2009 7:09 AM

Perhaps before domestic car companies run blindly into the embrace of Fiat, we should have a congressional inquiry.

Haul in the executives of Fiat in dramatic fashion and grill them over, and over because...

For years I have wondered how in the heck a viewer of the original "Italian Job" (an excellent movie by the way) is supposed to believe that a car chase somehow (at one point) ended up on the roof of the Fiat Lingotto building in Turin?

Carlo Di Paolo

April 21, 2009 6:24 PM

Fiat produces a fairly large range of very nice cars. Their new product line up is impressive. From great driving little Pandas and 500s to Luxury smooth Lancia Deltas, and don't forget the Alfa Romeos, the Maserrati, and Ferrari lines.

They have formula 1 technology and advanced low emission passenger car diesel engine technology.

Back in the mid 70's GM tore Fiats apart to learn how to build compact front drive cars but it took GM a long time to get it right.

Fiat has been foolish for stepping out of the U.S. market and staying out of it for so long. When they return many will discover how impressive the driving dynamics of a car can be.


April 21, 2009 8:27 PM

Fiat has long been a world leader in paint technology. Even my Porsche dealer acknowledges that!

Dave Finn

April 22, 2009 7:58 AM

Fiat is not a great carmaker by any stretch” As we say in England “You’re having a laugh"
Invented the electronic common rail diesel injection system. This has transformed diesel engines and made them super efficient. This has had much more of an impact than hybrid cars.
Although Fiat have been working on hybrid technology for more than 10 years. These models are due to be released in Europe 2011.Plus they are the world leader in natural gas cars.
Fiat brands are very successful, in the extremes of use.
Alfa Romeo has competed successfully in many different categories of motorsport, including Grand Prix motor racing, Formula One, sports car racing, touring car racing and rallies. This includes 17 European Touring Car Championships
Ferrari is the most successful manufacturer in Formula One racing: the team holds nearly every Formula One record. As of 2008, the team's records include 16 World Constructors Championship titles
Lancia remain the most statistically successful marquee in the World Rally Championship. The Delta is also the most successful individual model designation ever to compete in rallying


April 22, 2009 4:15 PM

Fiat not a great carmaker? Specious comment indeed. Fiat is a legendary car maker and pay attention with their work on next generation cars. Marchionne is an interesting CEO who helped bring profits back to the company.

Typical stereotypical nonsense.

I'm glad readers are more informed.


April 23, 2009 5:24 AM


Fuel-Efficiency Technology Gives Fiat a Boost in Bargaining to Acquire Chrysler Stake


April 23, 2009 8:40 AM

Job 1 for Ford of Europe's second generation Ka has rolled off the production line at the Fiat Group plant in Tychy. The new model is a rebodied version of Fiat's 14-month-old 500. The first generation Ka was built at Ford's own Valencia plant. The Spanish factory is currently preparing to build the new Fiesta.


April 24, 2009 2:47 PM

Chrysler should be flattered to have Fiat as a partner. Fiat has led the world in many innovative designs and workings of the powertrain. Chrysler is very experience in the design of the auto body. Chrysler has built a lot of very cool looking vehicles, the only problem ever was that they would all sound like their trucks within a year. Fiat and Chrysler together can make a beautiful vehicle.


April 27, 2009 1:37 AM

fiats history is mixed at best with no success in past attempts in north america yes they have some technology
and great driving cars but reliablity
and reputation falls way way way behind
japan and german auto makers for import
car buyers in north america. hyundai and kia are still working to break that stigma good luck fiat.or should I say lada with a new badge.
a new badge.


April 28, 2009 11:41 AM

I've commented about the Fiat Fiasco on my blog...thought you might be interested.


May 3, 2009 1:44 AM

For those thinkig that Fiat will save Chrysler and move it forward are in living in LA LA LAND. If Daimler-Benz the Parent Company of Mercedes Benz with all of its Financial and Engineering Might could not save the day for Chrysler what makes you think that Fiat (which is MUCH less known brand in the U.S. than Mercedes Benz and their reliabily and durabilty record is Pathetic) can.

Ulisse Di Bartolomei

October 15, 2010 5:21 PM

Speaking about the Fiat hybrids, the technology double clutch with electric motor between has been borrowed by a patent that Fiat Company has never wanted to purchase, but only shamelessly to copy. I invite to visit my blog where her "vitality" of the Fiat planners it appears in all of evidence:

Whoever appreciates an honest industrial ethics in defence of intellectual ownership should spread out my blog. If the industries can afford unpunished to copy the ideas and defending it need very expensive causes, to which target need the patents? How our young people (especially in Italy) can find intellectual courage if the economic potentates crush the rights of the single ones?

Ulisse Di Bartolomei

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