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Lira Got ‘Ya Low? Looks Like Chrysler’s Bailing Out Fiat

The Detroit News has an interesting update on the shotgun marriage of Chrysler and Fiat. Although the Italian automaker has the largest share of the small car market in Europe (30%,) it’s has lost billions in the last few years and won’t break even until 2014. What is emerging now is that Fiat needs Chrysler, not vice versa.

With Europe’s financial meltdown in full swing, Fiat is toying with ditching the Euro and reverting back to the Italian Lira. With a very favorable exchange rate, Fiat’s fortunes in Europe could see a drastic turnaround.

Whether that happens remains to be seen, but with continuing losses piling up, Fiat’s future product pipeline is conspicuously bare. Full integration with Chrysler, which can’t come soon enough, wont’ be complete until 2014 at the earliest.

Meanwhile, CEO Sergio Marchionne has been running around the US trying to get Chrysler dealers to cough up $1 million for new Fiat franchises. But with the 500 now officially a flop, there are few takers.

Ironically, Chrysler is much stronger. After bankruptcy, the company responded with 16 new or refreshed models, most significantly the Grand Cherokee, and orchestrated a remarkable and profitable turnaround.

Chrysler is by no means out of the woods yet. The new products on the ground were in gestation during the much maligned Cerberus period, and we have yet to see offspring from the current union. As it stands now, for American autoworkers, Chrysler employees and fans, this is sweet vindication. Chrysler is the crown jewel, not a minor league Italian automaker.



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