Wednesday, April 22, 2009

Chrysler-Fiat deal looks promising

More details about the Fiat-Chrysler deal.

I doubt that Fiat will make mistakes of the magnitude that Daimler made in trying to make this deal work. THAT debacle resulted in a lot of serious studies of the risks inherent in international mergers, such as this from Emory University.

What encourages me most is that this is being structured as a global alliance, a la Nissan-Renault, not an acquisition of Chrysler by Fiat. Nissan-Renault seems to be working out, under very tough conditions. A global alliance means that Fiat will work with, not massacre Chrysler's current management.

Also, Fiat is doing a lot better, or at least a lot less bad, than all of its rivals except Volkswagen because of "scrappage payments", European government incentives to trade in old cars for new. Both VW and Fiat have the cars that Europoeans want, and now how the government incentives to make them more marketable.

The Canadion Government has a modest scrappage program but the US has nothing as yet. S.247, the "Accelerated Retirement of Inefficient Vehicles Act of 2009" introduced by Diane Feinstein and co-sponsored by Susan Collins and Chuck Schumer, and its companion House bill, HR 520, are arousing a lot of well-0rganized opposition from dealers and enthusiasts of low-MPG, high-emission cars, and from dealers who want incentives for used cars included.

My own feeling is that real incentives such as scrappage payments could get a lot more people who really need new, efficient cars to move now rather than later.

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