Chrysler completes sale to Fiat

Who would’ve thunk it? After a measly 42 days, Chrysler has emerged from bankruptcy by selling its ‘good’ assets to Fiat.

But it’s not all flowers and rainbows just yet.

There’s still a number of issues. For starters, Chrysler has to rely (for now and the foreseeable future) with the uncompetitive models that is currently produces. New products take time to produce, and time is a luxury that Chrysler does not necessarily have – discharged bankruptcy or not.

Secondly is Fiat. With the sale, a union trust owns 55% of the company, Fiat owns 20% (a stake that can grow to 35% in the future), and the US and Canadian governments owning the remaining pieces. I recently heard someone say that Fiat and Chrysler together is like tethering the Hinderberg to the Titanic – and I don’t think that’s too far from the truth. This situation still has a thousand hurdles to clear before it can be called a success.

Quick it may have been but painless it has not. There is a lot of carnage left in the wake of this bankruptcy – countless lives disrupted by evaporated pensions, lost investments, and the hundreds of car dealers who got the shaft as well.

The real question is, how will consumers treat Chrysler in the future? And will they continue to buy the aging product that is available now? More to the point, how long will Fiat bankroll them until they can get fresh metal out there? Will GM’s BK be just as quick and surgical? Their hometown rival, Ford, has been pouring out new product – again how will this affect Chrysler’s lineup.

Lots of unanswered questions – not much time to sort it all out. This is not the first time Chrysler has been knocked down. Let’s see how long they stand the next round.

No comments:

Custom Search