Much is being written about the Fiat/Chrysler linkup. Many times the the writer will drop in the statement "...Fiat didn't pay anything for Chrysler". It's a sensational statement that adds some bite to the article (hey, how could they give away a company for free and where can I get mine?), however, the author neglects to mention what Fiat did exchange for their stake in Chrysler (if someone thinks you can get a multi-billion dollar company for nothing, I've got a bridge in Brooklyn I want to show you).
Here's my take on the Fiat/Chrysler deal. I've posted my opinion on the subject on a few different news sites and I thought I would post them here for posterity;)
It's true that Fiat didn't give cash for its stake in Chrysler (and all of its troubles), but it is giving them many billions (estimated to be up to 10 billion) of dollars in cutting edge technology.
Now this estimated $10 billion in technology isn't my estimate, but industry experts. This technology so impressed the US and Canadian governments, they gave the go ahead for the Fiat/Chrysler deal.
Here's just some of the technology Fiat brings to the table:
1. MultiAir engine technology- A major revision to the internal combustion engine, MultiAir offers more power, reduced fuel consumption, and lower exhaust emissions compared to conventional gas engines. It's been called "variable valve timing on steroids" and is basically a bolt on application.
Fiat MultiJet II Benefits (click to enlarge)
2. MultiJet II- Fiat is a leader in diesel engine technology. They invented the Common Rail diesel, an advancement that improved refinement in passenger car diesels. This technological breakthrough boosted sales of diesel cars from 15% to 50% in Europe. Now, with MultiJet II technology, diesels will offer even more refinement, power and fuel economy.
Fiat C-Evo platform is adaptable(click to enlarge)
3) C-Evo chassis- A completed, modern platform, already engineered, ready to go for Chrysler. Developing a new automotive platform can cost at least $1 billion.
4) A new dual, dry clutch transmission that reduces fuel consumption as compared with traditional automatic transmissions. Fiat has invested approximately $750 million in this transmission.
5) Fiat is a leader in small car design. This is what Ford said about Fiat: "...they are acknowledged as having been for many years one of the world's leading manufacturers of small cars". Even BMW is actively pursuing Fiat for help in designing their new small BMW.
The list of what Fiat brings to Chrysler could fill a website;)
Sergio Marchionne, the architect of this deal, summed this up best with "...You're getting a whole pile of assets that produce cash, which is as good or probably better than cash." and " ...Cash runs out; assets that produce cash don't."
Currently, Fiat doesn't own Chrysler but they effectively run it, and after sitting through the five year plan they outlined November 4th (an eight hour presentation), you can see the monumental work they have done on behalf of the American company and its employees.
Part of the plan is for Chrysler to pay back the government loans by 2014, and profits generated here in this country stay in this country (by the way, Fiat hasn't received a penny for any of the considerable work it has done).
If the plan succeeds, they have earned their 35% stake in the company. Remember, nobody was interested in saving Chrysler or their American/Canadian workers.