California Autos Examiner

Monday, May 18, 2009

Chrysler and Fiat: Can a quarter plus a half equal a whole?

While much hoopla has been made about Fiat injecting fresh product into Chrysler’s depleted portfolio, the problem for Chrysler remains that small cars currently only account for 14 percent of the entire U.S. light vehicle market. The bulk of sales are larger cars and Fiat cannot provide immediate assistance in this area. That means that Chrysler will have to find other ways to stay current in the largest market segments without any Fiat cash. To date we know that a new Jeep Grand Cherokee is coming and a refreshed 300C will follow, but how will Chrysler manage updates to its minivan and Ram pickup? The answer probably lies with our own government, big surprise, as it is the only entity willing to pony up the cash.

What will work in Chrysler’s favor is that it will have few dealers to feed and subsequently greater volume in each remaining store. Also, the development and tooling costs for the minivan and pickup with be amortized out shortly, in fact I would venture that the minivan is almost all the way there already, meaning great a greater profit per unit. Still I am afraid that we the people will be on the hook in the short term until Fiat and Chrysler can sync up. In my estimation, that means the earliest we can expect relief would be 2012, unless fuel prices skyrocket again and smaller cars take a larger piece of the pie.

For more info: Visit Chrysler's website or check out Fiat's current lineup.

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