Thursday, January 22, 2009

Fiat isn't the Short Term Solution Chrysler Needs

Alex Taylor III has a very thoughtful article on about the Fiat-Chrysler link-up that has been described in media reports this week. Taylor argues that Fiat may prove very helpful as a long term strategic partner for Chrysler, but deal with the Italian carmaker does not address Chrysler's short term liquidity problem. Chrysler isn't producing cars at the moment, as they idled factories to conserve cash several weeks ago. How will the company generate cash in the short term, until the deal with Fiat begins to lead to new products for the U.S. market? It seems they'll be asking for more aid from the government, but will that be sufficient? Finally, is Chrysler going to have the cash required not only to stay alive but also to fund the development of new autos? Surely, it cannot survive simply by bringing Fiats back to the American market. It will have to continue to innovate if it wishes to preserve its most valuable assets, such as the Jeep brand and its truck business.

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