6. Auto Industry Bailout
• Total size of bailout: $80 billion
• Chrysler’s total Treasury debt peaked at $12.5
bilion
• U.S. Treasury expects to write off $14 billion
▫ Even though there will be this write off, the
bailout is still considered successful because the
companies have survived thus far.
8. Fiat
• Fabbrica Italiana Automobili Torino or Fiat was
founded in 1899
• Very well known in Europe
• Still 30% owned by Angelli family
• Existing partnership with Mazda
9. Recent Timeline of Events
1998: Daimler-Chrysler partnership
2000: Fiat enters partnership with GM
2004: Sergio Marchionne becomes CEO of Fiat
2005: GM sells shares in Fiat and is forced to pay $2
Billion on a put option for the right to sell after
significant losses due to a failed partnership
2007: Daimler sells remaining shares to Cerberus Capital
Management for $6 Billion
2009: Auto bailout and Chrysler bankruptcy. Chrysler is
issued new U.S. Treasury loans to continue operations.
Fiat takes a 20% stake in Chrysler which is also financed
by the U.S. Treasury
2011: Chrysler-Fiat has paid back all Treasury loans
2013: Fiat owns 61.8% of Chrysler and would like to
purchase the remaining shares owned by the UAW to
gain 100% ownership of Chrysler.
10. Fiat’s Return to America
• Fiat had been gone from the American market for
decades
• Introduced Fiat 500 to America
▫ Sales were slow at first, but continue to improve
• Recently introduced Chrysler 200
▫ Which is actually a re-badge of Lancia
▫ Lancia is another Italian car owned by Fiat
• 2014 Dodge Dart will be a re-badge Alfa Romeo 169
• http://www.youtube.com/watch?v=lB0q_jkjq5U
11. Alfa Romeo to be Reintroduced
• After the success of the Fiat 500, Alfa Romeo
will return to the U.S.
• Three base models: Giulia, the 4C, and the
Duetto sports car (shown in picture).
• Will capitalize on the strong marketing of the
500, and should benefit from the same novelty
factor.
14. Strategic Alliance
• Complementary goals
• Reasons for forming this Strategic Alliance:
▫ Chrysler survives as a company and has new
global opportunities to expand its brand
▫ Fiat can expand into North American market
• Type of Strategic Alliance: Equity
16. Changes to Chrysler
• New technology to develop small powertrain
engines
• Develop fuel efficient automobiles
• Develop low carbon emission automobiles
• New management: Sergio Marchionne
• Plant closures
17. Chrysler in Worldwide
Chrysler has distribution centers in over 29 countries in Europe, including Italy. As well as 8
countries in Asia, 19 in Latin America, and 14 in the Middle East & Africa.
20. Fiat in the U.S.
• https://www.youtube.com/watch?v=XKUrYf1z9
Bg
21. Fiat near Kansas City
https://www.youtube.com/watch?v=H-fH73qIvsQ
22. Update
• Consecutive quarters of positive net incomes
• Increased U.S. sales by 21%
• Increased U.S. market share from 10.7% to
11.4%
• Net profit of $2.2 billion
• Paid back auto bailout loan to the U.S. gov-$10.6
billion
