End of an Era: Fiat merges with Chrysler image

Today is the end of Fiat as an Italian company after it merges with Chrysler. Fiat SpA, the largest manufacturer in Italy will be leaving 115 years of reign in Italy as the Agnelli family and other investors are meeting in Turin. The new Fiat Chrysler Automobiles NV will be incorporated under the Dutch law, based in the U.K. and listed on the New York Stock Exchange.

CEO Sergio Marchionne explained that the merger can better compete on the global auto market with companies like General Motors Co., Volkswagen AG and Toyota Motor Corp, adding that a brush with bankruptcy 10 years ago proved that the Italian focus can’t be sustained. The Italian economy has been stagnant for the past 14 years and unemployment rates are close to record levels.
In search of a better future, Fiat plans to invest €55 billion in the next 5 years to raise deliveries 61%, up to 7 million cars by 2018. This is still a lot less than the target set by VW, which is to sell 10 million vehicles only this year.

There was little chance of success for Fiat as a stand-alone company; without its U.S. division it would have not had any profit in 2012 and 2013. Fiat gained control of Chrysler five years ago, taking on North American operations, which accounted for 62% of the group’s second-quarter operating profit.
Rest assured, Italy will not be completely abandoned. It is going to become less central as the new location will be in Slough England until Fiat opens a London office by the end of the year. Marchionne wants to keep administration and information-technology functions in Turin and promises to keep all of Fiat’s Italian factories open, while rehiring about 30,000 line workers. He plans to build the compact Jeep Renegade and other models from the Chrysler brand in Italy. Fiat also intends to upscale Alfa Romeo and Maserati nameplates to compete worldwide with brands like BMW, Audi and Porsche.

Before Chrysler was resuscitated under Fiat, the CEO said in June that “we were the poor kids, Cinderella at the ball.” He added that the people from U.S. seem to actually like that and how the story happened. We’ll only have to wait and see what the future has in store for the new merger.

By Gabriela Florea