North American drivers are not as familiar with Fiat, an Italian automaker that hasn’t sold Fiat cars on this continent in more than two decades. The automaker sells two of its high-end lines here, Ferrari and Maserati, but you can hardly find Fiat, Alfa Romeo and Lancia vehicles.
In April, Fiat signed an agreement with Chrysler to take over the company’s business and will now have Chrysler, Dodge and Jeep vehicles under its belt. Several Chrysler LLC models will not make the cut, but for the most part everything Chrysler sells will continue under Fiat Management.
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Fiat is also making a play for Opel, which is General Motors’ main European entity and has its eyes on Saab and Vauxhall, two more GM-owned brands. Should Fiat own Chrysler and a significant part of GM’s European business, the automaker will suddenly be pushed to the top tier of companies that sell cars globally.
Fiat’s ancestry is interesting because little to no cash is exchanged to expand its operations. Instead, Fiat gave small-car technology to Chrysler, who will build several compact Fiat cars in the US that will likely carry Dodge or Chrysler names. For Opel, Fiat may make another trade, perhaps opening some of its own operations to sell GM vehicles in exchange for acquiring the German brand. Vauxhall is a British brand, a virtual copy of Opel, while Saab is the Swedish automaker whose own fortune has been declining for many years.
Global relevance, not domain
Fiat’s quest for global relevance builds on a speech its CEO, Sergio Marchionne, delivered last fall, where he mentioned that only a handful of automakers could survive in the long run, global players who would need to sell 5.5 million cars to the year in to survive. Little did we know then that Marchionne had his eyes on taking Fiat to the next level, rather than doubling its capacity through mergers and acquisitions.
Fiat’s advance will not be easy, especially in Europe, where strong unions can thwart whatever deal they have in mind. Given that unions fear losing jobs, any threat to take over Opel could be seen as a reason to close plants. If Marchionne can offer assurance that Fiat will maintain the status quo, then an acquisition of much of GM Europe’s business will likely take place. If not, then all bets are off when it comes to Fiat seeking global prominence.