How Will Fiat’s Strength Push Chrysler to the Top

Fiat

Just recently Sergio Marchionne, who is the CEO of both Fiat and Chrysler, announced the final acquisition of the remainder of Chrysler.  Fiat already owned 58.5% of Chrysler and an agreement was recently reached to purchase the remainder for $4.35 billion.  What does this mean for both Fiat and Chrysler?

What this means is Chrysler is on the rise and fast.  In the fourth quarter alone, Chrysler recorded an increase in profits of $659 million without the tax break they were granted which is valued at $962 million brining their actual quarterly profits to $1.62 billion, an increase in more than $1 billion in profits.  Couple this with the manufacturing advancements Fiat has put in place and Chrysler is going to own the market and fast.

A Little History

How did these two companies even get together?  In 2009 when the automotive industry was failing badly and all three major US brands were seeking bankruptcy help, Fiat’s CEO, Marchionne struck a deal at the White House to purchase a major shareholding of Chrysler and help rebuild the Chrysler brand.

Since then, Fiat has implemented advanced manufacturing systems and started making Italian themed cars in the US to counter the strength Chrysler already has in manufacturing with the Jeep and Ram truck lines.  With the sleeker sports cars and the beefy, durable trucks, it seems like a perfect marriage.

What’s the Future Hold?

With the new merger in place, allowing Fiat to own 100% of Chrysler, the company announced they will operate their headquarters going forward out of the Netherlands.  This is primarily a tax break for the company and the name will become Fiat Chrysler Automobiles.  The current plan is to be able to trade under the new name on the New York Stock Exchange as early as October 2014.

With operations set in the Netherlands, and a full merger in place, there really is no limit to what Fiat Chrysler can accomplish.  They will now have a globally recognized brand and the ability to take full advantage of both the European market, which unfortunately has been down lately, as well as the US market, which for Chrysler has been booming as of late.

While the market in Europe might be down, Chrysler, under Fiat’s guidance and even before the new merger takes place, has grown its profits in 2012 and 2013.  Reportedly, in 2012 Chrysler had $66 billion in revenues and currently holds $12 billion in cash value.  This allows the flexibility to benefit from either market with the one company without going bankrupt.

Can you even imagine if both markets were strong at the same time?  Fiat Chrysler will make a mint in that case.  There is no doubt this marriage, while still young has been a tremendous benefit for both companies.  For Chrysler, pulling them out of bankruptcy; for Fiat, growing their brand in the US marketplace to allow a global presence, this has become a company to be reckoned with.  No doubt we will see Fiat Chrysler take a foothold in other markets of the world very soon.

Sources:

  1. Time Business and Money
  2. Fox Business
  3. The Detroit News
About Michio Hasai

+Michio Hasai is a social strategist and car guy. Find him on Facebook, Twitter, and Pinterest.

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