From Jan. 20, 2009 To Today: More On Why The Fiat-Chrysler Merger Makes Sense

Sergio MarchionneSergio Marchionne, CEO of Fiat and Chrysler

Photo: Chrysler Group via flickr

On Friday, we reported that Fiat’s now-53.5% stake in Chrysler, and its plans for new management, is making for a healthy corporate marriage. There’s (an element of) equality, give-and-take, and both sides are optimistic about the future. What Fiat brings to the table: The company has the capital, new technologies to develop high-efficiency cars, and reverence from Ferrari and Maserati fans. 

What Chrysler brings to the table: The 3rd-largest U.S. auto company is a trusted brand with international appeal. 

We took a look at the brief history between the two auto companies, from when they agreed to an arranged marriage of sorts in 2009, to last week, when Fiat and Chrysler CEO Sergio Marchionne announced that Detroit would remain a key operational hub. 

Jan. 20, 2009: President Obama is inaugurated, and Fiat S.p.A. and Chrysler LLC announce a global alliance

'Fiat agreed to take a 35 per cent stake in Chrysler in a deal that would allow Chrysler to use Fiat's technology and vehicle platforms to build more fuel-efficient, small and midsize cars and sell them in North America,' reports the New York Times.

This deal, which finalised after Chrysler emerged from bankruptcy a few months later, ended Chrysler's ownership by Cerberus Capital Management, which bought the company from Germany's Daimler (which was considered one of the most disastrous transatlantic auto mergers in history).


April 30, 2009: Chrysler was forced into Chapter 11 bankruptcy

The last American automaker to restructure under bankruptcy was Studebaker, in 1933, which ultimately died in 1966. Chrysler went into bankruptcy for similar reasons.

But there's more reason to be optimistic about Chrysler's prospects. For one, Fiat itself was on the brink of bankruptcy in 2003 and 2004, and under Sergio Marchionne, underwent one of the most dramatic turnarounds in European auto history -- which made Fiat a top contender when the U.S. government determined Chrysler couldn't survive on its own.

June 10, 2009: the U.S. Supreme Court officially made Fiat an owner of Chrysler

Fall 2010: Fiat brings a newly-designed Jeep Grand Cherokee to the U.S. market

December 2010: U.S. Chrylser dealers begin selling the Fiat 500 -- a small, fuel-efficient car

'Chrysler has expressed interest in having a car that size for emerging markets,' especially South America and Asia, David Soya, editorial director for, told CNN.

But it's also important for Chrysler to introduce an efficient car in the U.S. market, which Fiat abandoned in 1984 because of the popularity of utility vehicles.

Dec. 16, 2010: Fiat announced it will built a new plant in Brazil -- a market where it dominates

Fiat is the dominant carmaker in Brazil, with a 25% market share. Marchionne 'made a hugely successful bet on Brazil, one of the world's best car markets in recent years,' reports the Times.

The new plant will cost $1.8 billion and turn out 200,000 cars annually.

With Fiat's stronghold in an emerging market, this puts Chrysler in a good position.

Jan. 3, 2011: Fiat Industrial broke off from Fiat, and was listed separately on the Milan Stock Exchange, Borsa Italiana

This allows Fiat's balance book not to be weighed down by the industrial side of its operations, which includes utility and farm vehicles.

Feb. 5, 2011: Marchionne upsets the Italian government when he says Fiat could potentially relocate to the U.S.

Marchionne upset Italians when he said that Fiat and Chrysler could merge into a single company, headquartered in the U.S., in just a few years.

Sergio Chiamparino, the mayor of Turin, where Fiat is headquartered, demanded 'immediate clarification' and said 'it's clear that an international group can have several offices but it would be different if the headquarters were in the United States.'

This is a testament to the power of the Fiat brand -- the company employs 180,000 Italians and is the country's largest private-sector employer -- and the saying: 'As Fiat goes, so does Italy.'

(Fiat is short for Fabbrica Italiana Automobili Torino.)

July 21, 2011: Fiat officially took over a 53.5% stake in Chrysler

This gives Fiat leverage to do what it wants. That includes moving more operations to Detroit.

'The common elements between Fiat and Chrysler are their core customer, who is looking for a good solid vehicle but not an exotic one,' Rebecca Lindland, an analyst at researcher IHS Automotive, told the Wall Street Journal. 'That is one of the reasons why they have been successful so far.'

With this new stake, it's now closer to its goal of competing with GM, Volkswagen and Toyota.

July 28, 2011: with the new majority stake, Marchionne announced that Chrysler and Fiat would combine operations -- and Detroit would be a major hub

He also said he'd stay on as CEO of Chrysler, and appointed a 22-person exec board, including many 9 execs from Chrysler. And as we reported on Friday:

According to the Detroit News, this 'global management structure, unveiled Thursday, affirms Chrysler's longsuffering employees and a Detroit auto industry struggling to regain credibility with customers, investors and competitors.'

The paper says this merger won't unfold like Daimler-Benz AG, which though at first was a 'merger of equals,' ultimately moved everything to Germany.

July 29, 2011: President Obama announced new fuel efficiency standards for U.S. automakers: 54 mi/gal. by 2025, from today's 27 mi/gal standard

According to the Times, this was the 'largest increase in mileage requirements since the government began regulating consumption of gasoline by cars in the 1970s.'

Since the auto companies no longer have the leverage to negotiate, it's fortunate for Chrysler that Fiat is already a pro at making small cars. In fact, Fiat's cars produce the lowest CO2 emissions in Europe.

'We're going to live with it,' Marchionne told the Detroit News about the new standard. 'I think we made a huge commitment today to get this thing done.'

So far, Marchionne has brought Fiat technology into 16 new Chrysler models, saving the U.S. company billions of dollars in R&D.

Chrysler is one of several U.S. auto companies making a comeback

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