The 2009 Chrysler-Fiat Strategic Alliance

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The 2009 Chrysler-Fiat Strategic Alliance
Christopher McCarthy
3/11/13

Table of Contents
Introduction.............................................................................................................................3

Summary of the Strategic Alliance................................................................................ .........4

Positives/Negatives..............................................................................................................4-5

Comparison to others in the industry......................................................................................6

Chrysler and Fiat's Future.......................................................................................................7

Conclusion..............................................................................................................................8

Works Cited............................................................................................................................9

The 2009 Chrysler-Fiat Strategic Alliance was formed in order to not only revive Chrysler back to the auto company it had been in the past, but also to better Fiat as a whole. The case study begins with a lengthy introduction introducing us to both Chrysler and Fiat from their inception to their current states. Following that is an introduction to the terms of the alliance. After some additional research I have here summarized the terms of what would become the Chrysler-Fiat Strategic Alliance: • Chrysler and Fiat have announced a non-binding strategic alliance to allow Chrysler access to Fiat vehicle and powertrain technologies for the North American market. Resolution of Daimler's 19.9 percent share of Chrysler Corporation is a prerequisite for this alliance.

• Fiat would at this point offer no cash for the opportunity for Chrysler to utilize Fiat technologies for future small and compact car products for Chrysler. Fiat receives a 35 percent equity stake of Chrysler Corporation as part of this arrangement. This is described an equity starting point for both companies.

• Fiat would gain access to Chrysler's North American distribution network while Chrysler could access Fiat's distribution capabilities in Europe, South America and parts of Asia.

• Chrysler is in dire need of new small/compact platforms to meet stiffening US CAFE regulations as well as an intensely competitive passenger car market focused on global scale economies.

• The fate of scale economies improvement with Chrysler's larger platforms is still uncertain.

While both companies originate and maintain the majority of their business in very different areas, (from an automotive perspective) they have glaring similarities:

Both companies have a higher focus on the lower-middle class spectrum of the market. Both have a tainted reputation for a weak quality control and reliability with their consumer. Both needed a vast revamping of their companies in order to stay competitive in the market.

Out of these points the last is the most critical. In 2004 Fiat was experiencing equivalent difficulties to that of Chrysler in 2008. Fiat accomplished this company turn around with the assistance of a well known turn around executive: Sergio Marchionne to become CEO. Under his leadership and the reintroduction of the Fiat 500 in 2007 led to a much stronger brand. Chrysler on the other hand did not fair so well on its own. With the bailout money from the US government and the required long term partnership with Fiat Chrysler is well on its way to reemerging back into the auto industry. This makes Fiat the perfect candidate to buy up Chrysler and fully reorganize their business, seeing as it mirrors Fiat's reconstruction of only a few years ago. During my research outside of the book I found a excellent...
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