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Chrysler’s wild ride continues, and with new partners

Chrysler’s wild ride continues, and with new partners

Once again, Chrysler enters a so-called merger of equals

Chrysler didn’t have much going for it in the late 1970s. The entire nation suffered a series of recessionary periods. Interest rates were astronomic. Gasoline was expensive, and the vehicles Chrysler produced tended not toward fuel efficiency.

The arrival of Lee Iacocca and a $1.5 billion bailout loan from the federal government bought time for a turnaround, of sorts. There were K cars and minivans and the acquisition of American Motors and its Jeeps (and so much optimism there also was the acquisition of Gulfstream and its aircraft). There was a series of sensational concept vehicles and a Ram pickup truck that looked like a mini semi and a four-door sedan that looked like an affordable Bentley.

FCA+PSA=world’s fourth-largest automaking enterprise | PSA photo

But while the cars were cool the business was not, and Chrysler was sold to Daimler, and then to Cerberus Capital, and then to Fiat.  Now it appears that along with Fiat, it is being sold in yet another of those so-called “merger of equals,” this time to Groupe PSA, the French-based corporation that owns Peugeot, Citroen, Opel and Vauxhall.

Yes, I know, this latest marriage will be owned 50/50 by the stockholders of FCA and PSA, but as The Associated Press Stylebook points out, “Few business combinations are truly a merger or equals…” and it gives journalists a list of things to consider. 

Two of those things are “Which company’s executives are filling most of the top management roles? The key distinction usually is who gets the CEO slot,” and “Which company will end up with the majority of the seats on the new board of directors. This is often the tie breaker.”

In answer to the first question, Carlos Tavares of PSA will be chief executive (John Elkann of FCA gets the title of chairman) and the new 11-person board of directors will include six members from PSA.

Whatever the new company may be called, it will establish its headquarters in the Netherlands.

If Chrysler is, indeed, becoming French, it sort of completes a circle when you consider that in the 1960s Chrysler bought French automaker Simca during an European expansion in which it also acquired British automaking conglomerate Rootes and Barreiros, a Spanish automaker. 

Around a decade later, when Chrysler itself was struggling to survive, Chrysler would sell Simca, Rootes and Barreiros to the PSA group.

Regardless of whether the FCA/PSA deal is a true merger of equals, it is evidence of the difficult global business environment in which automobile companies are operating. Once upon a time there were hundreds of companies just in Michigan and Indiana that were producing motorcars. 

In the late 20th Century, when I was an editor at AutoWeek magazine, we predicted that at some point in the not-to-distant future, there might be just five or seven automaking companies in the entire world.

We were wrong, because advances in the technologies of design, production and batteries means that there are automotive upstarts all around the globe — from Tesla to any number of Chinese factories. 

Tesla Model 3 selling very well in Europe | Tesla photo

Speaking of Tesla, check out this factoid: JATO, a company that tracks automotive sales, reports that for the August-September period, the Tesla Model 3 not only was the best-selling electric vehicle in Europe but the 11th best-selling vehicle of any kind in that market, missing the top 10 by a mere 222 units, and outselling the likes of the Mini, Fiat 500, Toyota Corolla and Opel Astra.

“It was the first time in history that an electric car has come so close to entering Europe’s top 10 model ranking,” JATO noted.

So what’s it all about, Alfie? In some ways it’s way too early to know. But the PSA/FCA union would make it the fourth-largest automaker in the world, there should be plenty of savings through the elimination of vehicles and employees the resulting company no longer needs, and there will be increased pressure on other major automakers to look toward partnerships as they seek to maintain their places in the world automotive hierarchy.

And who knows, maybe we were right back at AutoWeek. Maybe someday there will, indeed, be only five or seven global automakers.

Toledo plant produces Jeeps | FCA photo

Oh, one other thing we do know. Perhaps the best thing that ever happened to Chrysler from the days when Walter P. bought Maxwell and Dodge was another acquisition the company made, in the 1980s. No, not Gulfstream but AMC, not for its cars but for the Jeep brand.

Those Ram trucks sell well in the U.S., and a significant segment of Americans may be in love with Hemi-powered muscle cars, but from Wrangler to Grand Cherokee, and everything in between, what makes Chrysler appealing to the rest of the world, from consumers to business partners, is — Holy Toledo indeed — Jeep.

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  • Hank Hill
    November 11, 2019, 8:17 PM

    I would love to buy a new Wrangler except for 2 reason, one, they are just way overpriced. I want a basic 4 X 4 to take camping and fishing and for winter when the roads are snowy. I do want to pay 35 K for a vehicle and then take a chance having it become damaged or breaking down on me. Second, the reliability ratings on the Wrangler are not that good. How about the new Fiat and their partner come up with a 20 K 4 X 4, it must be reliable, solid, and something I can have fun with on the weekend without having to borrow 35 K to purchase. If they could do that, they would not be able to make enough of them.

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