Fiat future development

Since Fiat get the full control of chrysler, Fiat’s future will get more attention.

Firstly, a brief look at this acquisition, SpA said it would get full control of Chrysler Group LLC in a $4.35 billion deal, ending a standoff that had clouded the future of both companies.

For this acquisition, I think, Fiat and Chrysler have a natural complementarity, Fiat has a relatively mature small car and compact car product line, but SUV product line is basically in a blank state; While Chrysler has a very mature experience in the production of large cars in the U.S. market. In addition, Fiat “green technology” can also help Chrysler’s models solve the problem of large displacement, high fuel consumption.

Fiat’s future can be analysed from three parts: production, marketing and energy.

The first is the production. For the supply chain and procurement system, the Fiat and Chrysler have a lot of overlap in many manufacturing materials procurement, and therefore will have a greater synergy. For example, in 2011, only one purchase of the rearview mirror, it can save 33% of the cost. Fiat and Chrysler plan to share 65% vendor in 2014, saving near $2.9 billion.

In addition,sharing the platform will also save the costs. Chrysler had announced the 2010-2014 five-year recovery plan, which says the company will release 21 new models in the next five years, of which the most important is the integration the existing platforms. Chrysler will get into new market segments with the Fiat’s help, and will share three main platforms with Fiat to reduce costs.

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From a market perspective, it is not easy for european brand get into the north american market. Except BMW and Mercedes-Benz, the other European brand’s share in the North American market is not large. The Chrysler as one of the biggest three American tradition, and with its huge production and sales network, can help Fiat successfully expand in the North American car market, increasing market share. It also can re-launched the Alfa Romeo brand in America. Otherwise, Chrysler can also expand the European market, but the models need to be changed to cater for euro consumers.

From the energy point of view, the manufacturers around the world are working to develop new energy vehicles, Fiat is no exception, 500e launch is the best proof .

References:

http://www.motortrend.com/features/auto_news/2011/1103_chrysler_engines_to_get_fiat_multiair_technology/

http://www.caranddriver.com/reviews/2013-fiat-500e-ev-first-drive-review

http://online.wsj.com/news/articles/SB10001424052702303640604579294631534003954?KEYWORDS=fiat&mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB10001424052702303640604579294631534003954.html%3FKEYWORDS%3Dfiat

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