Fiat arrives and Chrysler is quietly born again

Marchionne moved fast to start his effort to make Chrysler a lean, hard car company. He changed the management structure Wednesday, naming a CEO for of each brand and operation — and making each CEO entirely responsible for that unit's profitability. No more losing money in one place and covering it with profits elsewhere. The new bosses mainly are Chrysler hands, but there are a few Fiat veterans.

"It certainly means that there will be a lot of pressure to perform and meet targets," says Rebecca Lindland, director of the auto group at consultant IHS Global Insight.

As Marchionne bluntly put it in an interview with trade magazine Automotive News last December: "The world of today will not give (automakers) a single inch of room. Time is up."

What didn't happen immediately Wednesday was restarting factories. All production was shut down April 30 with the bankruptcy filing.

"It could be a staggered restart," says Dianna Gutierrez, Chrysler manufacturing spokeswoman. "If we're running low on minivans or (Jeep) Wranglers, obviously those would come back up" soonest.

In fact, restarting might be difficult. Some suppliers, struggling in the industry's decline, might not have the cash to restart operations. "The next couple of months are going to be crucial for them holding their supply base intact," Coulter says. "The supply base is very, very fragile."

Other hurdles remain:

•Size. By Marchionne's own standards, Fiat/Chrysler is only two-thirds of a viable car company.

"An automotive group needs to produce 5.5 million to 6 million vehicles per year to achieve the critical mass necessary to have any chance of making an economic profit," he told bankers in Switzerland on March 24, according to a text from Fiat.

Chrysler and Fiat combined produced about 4.3 million in 2007, before the recessionary collapse.

Marchionne's strategy included acquiring General Motors' European and South American operations, but Canadian parts maker Magna seems to have the inside track.

•Products. Chrysler Group has to survive on its own models, mainly trucks, vans and large cars, for about two years, until Fiat-designed small cars arrive in Chrysler showrooms.

"It's going to be tough, there's no doubt," says Lindland. If surviving for two years "means making money, then not likely. If it means keeping losses to a tolerable level, then probably."

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