Fiat's race from punchline to potential white knight for Detroit
Sergio Marchionne, a jazz-loving Italian businessman who helped turn around the Italian carmaker, is poised to be the next CEO of Chrysler.
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Such jokes have long plagued Italy’s venerable national carmaker Fiat – a name that some have claimed stands for "Fix It Again Tomorrow" – after years spent turning out low-quality cars and posting annual losses.
That was before jet-setting, jazz-loving Sergio Marchionne, an Italian businessman, took over Fiat five years ago, promptly cleaned house, and set about rebuilding the brand.
No longer a punchline, the company now finds itself the most talked-about carmaker in the industry. It’s attempting to position itself as a major player among global manufacturers and a white knight with the potential to save two of Detroit’s three struggling auto giants, Chrysler and General Motors.
At a time when car companies worldwide are retreating from the bear economy, Fiat is going the other direction: It recently secured a majority stake in Chrysler and is vying to purchase GM’s European operations, which includes Germany’s Opel, Britain’s Vauxhall, and Sweden’s Saab – it's a move that could keep Detroit's top carmaker out of bankruptcy.
Mr. Marchionne was in Berlin this week to continue pressing the German government to support his bid for Opel. Acquiring GM’s Europe arm, along with Chrysler, would make Fiat the world’s second-largest car manufacturer behind Japan’s Toyota.
“It looks like everything Fiat wants, Fiat is getting,” Erich Merkle, an auto industry analyst, told Bloomberg recently.
Fiat’s recent rise belies its current position among Europe’s carmakers. It is the sixth-largest producer of cars by volume on the Continent, well behind the likes of Germany’s Volkswagen, which produced more than 6 million cars last year (Fiat produced 2.5 million).
But large players like VW have, so far, been unwilling to come to the aid of ailing brands – to say nothing of their own struggles: VW and German luxury brand Porsche are considering a merger.
That, in turn, has created a window of opportunity for Marchionne, who has shown himself to be a risk-taker, according to auto industry analysts, including Stephen Pope, of Cantor Fitzgerald in London. Fiat is “in a position that they can afford to cherry pick,” Mr. Pope says. “There is nobody else right now riding the white horse up the motorway to help these companies.”
The turnaround man