Chrysler’s re-incarnation gathers momentum
Special Report: JOHN GRIFFITHS, industry correspondent
Nigel Land declares that he has one of the best jobs in the car industry and he can present a plausible case for saying so.
His role as UK brand director of Chrysler/Jeep is not without risks. The past decade’s arrival then swift virtual disappearance from the UK of General Motors’ rival American brand, Cadillac, is testament to the vagaries and perils of the marketplace for manufacturers. But as the first units of an all-new generation of Canadian-built Chrysler 300C executive saloons start entering UK showrooms (see BCM’s road test review), Chrysler is on the kind of roll no-one would have dared predict when it was struggling with bankruptcy and a $12.5bn US government loan bail-out in the late Noughties.
Its white knight in those dark days of global financial crisis emerged in the form of Fiat, Chrysler’s former partner Mercedes-Benz having long since fled the coop. But the white knight had strong self-interest. Fiat wanted an easy re-entry to North American markets; cost savings through shared engineering, and improved economies of scale in production. Chrysler was much the same size as Fiat – churning out around 2m units a year – and better yet, in the crafty view of Fiat chief Sergio Marchionne, was in deep doo-doo and might be brought on board for pocket money.
Spot on. A grateful US Government, desperate to avoid a fatal financial crash and umpteen jobless at Chrysler, agreed to Fiat taking a 20 per cent stake. The gratis stake rose to 40 per cent as various performance targets were met and future commitments to developing new fuel-efficient Chrysler/Dodge models made, against the background of by-then recovering North American car markets.
And what a turn-round there has been.
Chrysler and Jeep sales have recovered at a far sharper rate than the US market overall, leaping 40 per cent last year with the help of refreshed models and some Fiat-built, fuel-efficient cars, the Delta and Ypsilon, which – as in the UK – are essentially re-badged Lancias. The red ink has turned to black. Another white knight has appeared. But lift its visor this time round and it turns out to be – heavens above! – Chrysler. And who’s the damsel in, not quite distress, but feeling the pinch on the money front? Mama Mia! It’s Fiat.
Look closely at Fiat’s first quarter results and things might not appear too bad, given still-plunging new car markets across a Europe now in a blue funk over the Eurozone. It recorded a profit of €379m, almost exactly 10 times the same period in 2011. But this year’s quarter is the first in which the financial results of Chrysler – now 58.5 per cent owned by Fiat – have been consolidated. And Chrysler itself made $473m. Take out the Chrysler contribution and, yes, Fiat itself is just about bumping along at breakeven.
No wonder, then, that Chrysler UK’s Land is feeling cheerful as well as challenged. Chrysler’s profitability comes despite it having already paid back $7.5bn, the last of the Government loans for its bail-out. Meanwhile, Fiat figures the $625m it has had to spend to raise its stake to 58.5 per cent is well invested in the future.
So where does Chrysler UK go from here; and with what relevance to business users?