January 21, 2009
Chrysler and Fiat form a global alliance
Chrysler-200C-EV In the high stakes game of “Bankruptcy or No Bankruptcy,” Chrysler Corp. got a lifeline from Fiat. The two automakers have announced a global alliance that provides Chrysler with a much-needed save during desperate times.
The cash-less partnership will give Fiat a 35-percent equity interest in Chrysler. In return, Chrysler gains product, platform, and powertrain sharing, with the promise of fuel-efficient engines. In short, Chrysler gains an imported solution to its home-grown problems.
Chrysler has a product portfolio skewed toward midsize and large vehicles, emphasizing power over fuel efficiency. There simply are no small, truly thrifty vehicles available from Chrysler, Dodge, or Jeep dealerships, leaving the struggling automaker conspicuously absent from vital budget-priced segments. The PT Cruiser is about as close as the company comes, and this merely average, long-running model is overdue for retirement.
The most fuel-efficient current product we have tested from Chrysler is the Dodge Caliber. With a manual transmission, the four-cylinder Caliber average 25 mpg overall in our fuel economy tests—not bad considering it was the supercharged SRT model. However, in most vehicle segments, Chrysler provides middling mileage, at best.
Overall, Chrysler has Detroit’s poorest reliability. Almost two-thirds of its models get a below-average reliability Rating. Chrysler as a brand ranks 32nd among 34 brands included in our latest Reliability survey. Among all models, the Sebring Convertible is the worst; it has 283 percent more problems than average.
In the U.S., Fiat has never been a brand that resonated with reliability. Looking back at Reliability ratings from the late 1970s, we found the Fiat 128 and 131 received a “worse” overall Reliability rating for several years. However, overseas data shows that Fiat rates above average in the What Car? Reliability Index in the U.K.
Many Chrysler Corp. models have a lackluster driving experience and subpar fit and finish. Based on our testing, Chrysler needs to give its model line a major overhaul and raise its reliability, interiors, fuel economy, and overall refinement up to the level of its styling. Such work has begun, with positive signs shown in the 2009 Dodge Ram pickup truck, a model currently undergoing testing; so far, we think the Ram has improved. Ultimately, Chrysler’s critical weaknesses speak to areas the new alliance may be able to better address than the company could tackle alone, as history has shown when it was merged with Daimler. (Read our Detroit Report Card.)
Even with the new partnership, Chrysler continues to seek aid from American taxpayers. (Read Consumer Reports’ statement on the emergency aid.) After all, Fiat isn’t investing capital in Chrysler, and it will take money to restructure and develop new models. However, the potential cost savings from product and technology sharing, as well as distribution potential and joint supplier negotiations, could enrich both automakers in the long run.
An interesting footnote, this arrangement will mean the majority of Chrysler Corp. ownership is foreign, with Fiat claiming 35 percent and Daimler retaining almost 20 percent – though Daimler has sought to divest its interests.
A strong, solvent Chrysler with clever, fuel-efficient models inspired by the Fiat 500, Grande Punto, Panda, and Qubo, plus the potential for Alfa Romeo to return to the United States, all sounds good to me.
—Jeff Bartlett
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Also: The Fiat 500: http://www.motortrend.com/features/auto_news/2009/112_0901_chrysler_fiat_500/index.html