Fiat threatens to walk away from Chrysler deal

At the end of March the President's task force on the auto industry put a 30-day window on Chrysler and Fiat reaching an alliance agreement. Just hours later Chrysler announced the two companies had signed off on the deal. That turned out to be premature, as there remains a strong chance that Fiat may walk away from the talks. The CEO of the Italian auto giant, Sergio Marchionne, has given the first indication that not all is peachy around the negotiation table. Marchionne has warned that Fiat may walk away from the deal if Chrysler’s U.S. and Canadian divisions cannot reach an agreement with the unions – namely a significant pay cut. Marchionne made the comments during an interview with the Toronto daily Globe and Mail, where he also revealed that he would like to change the management structure of Chrysler if a deal was reached. What’s worrying is that talks between Fiat, Chrysler, and the American carmaker’s associated unions broke down last week due to a disagreement on the level of proposed pay cuts. Chrysler and Fiat are seeking to bring American and Canadian wages into line with lower rates paid by rival firms in Japan and Europe. Still, both companies are optimistic about the deal. Its value is thought to be worth more than $10 billion for Chrysler and could potentially save more than 5,000 North American manufacturing jobs.

By Randy #1, Posted: 4/16/2008

WooHoo! But, I want the Abarth version, hopefully arriving at the same time.
By chris #2, Posted: 4/16/2008

abarth might not be available. in fact I'd bet on it. should be interesting to see if they price this to compete with the fit, the yaris, the wave, and the fiesta,.. or if they take the high road and try to compete with cooper.
By Jim #3, Posted: 4/16/2008

More likely the 500 will be priced to compete with the Mini rather than the Fit/Yaris. This would put the base 500 around $20K and the Abarth at $25
By chris #4, Posted: 4/16/2008

jim, seeing as it's fiat, I would agree with you, except the point of the article is that chrysler may end up building it. it could end up being a very cheap car. but if fiat were smart, they've push into north america with an image of quality, not quantity. have chrysler put this thing on a low volume line, and pay two late twenties women who know their cars, but who have OCD to inspect every one of these things on the way out.
By Jim #5, Posted: 4/16/2008

Chris, quite likely the 500 in the US will be low volume, put that together with cheap to buy and its a money loser. Having not seen a 500 in person, I don't know if the car has Mini or Aveo fit and finish. There is also the cost of setting up a dealer network, even if you use existing stores that cost needs to be amortized.

If Fiat and Chrysler are smart (which may be a problem), they'll make sure they use good materials in the interior and price the 500 just below the Mini. And I agree with you about OCD inspectors.
by NoNameDenton #6, Posted: 4/15/2009

Yeah those unions are a pain to work with, they are like the appendix, they used to have a reason to exist, now they don't.
by saabfan #7, Posted: 4/15/2009

Wow, the ship is sinking and they are still arguing who gets the front seat. Amazing!
by Mike #8, Posted: 4/15/2009

Those union guys better get their heads out of their arses. They can't accept a pay cut reducing their wages to what the rest of the world gets, but don't they realize that if Chrysler fails, they'll be getting no wages at all?!!