Fiat Chrysler Automobiles: How They'll Make It Work

How two failing regional automakers could add up to a global powerhouse -- in time.

Feb 11, 2014 at 8:15PM


The 2014 Maserati Ghibli sedan won't put up huge sales numbers, but it's one of the foundations of Fiat and Chrysler's plan to become a global auto giant. Photo credit: Fiat Chrysler Automobiles.

When is it possible for two failing companies to add up to a successful one?

When the combination gives them the economies of scale they need to succeed.

As second-tier, regional automakers, Fiat and Chrysler were doomed to fall far behind bigger rivals. But merge the two as Fiat Chrysler Automobiles (NASDAQOTH:FIATY), or FCA, and suddenly the combined company has a promising future.

On paper, Chrysler's traditional strengths in trucks and SUVs meshes nicely with Fiat's strengths in small cars and luxury vehicles. And in practice, the two companies have proved that they can work very well together: Since Fiat took control in 2009, Chrysler has launched a string of much-improved products.

With a full merger now essentially complete, FCA can shift into higher gear and begin building out a truly global product portfolio. As Fool contributor John Rosevear explains in this video, there's still a lot of work to be done -- but already, it's possible to see how FCA's product strategy is taking shape.

A transcript follows the video.

Special free report: The secrets to saving big on your next new car or truck
You don't know it yet, but you probably spent thousands more than you should have on your vehicle. In fact, the auto industry can be such a dangerous place for consumers that our top auto experts are determined to even the playing field. That's why they created a a brand-new free report on the car-buying secrets you must know. The advice inside could save you thousands of dollars on your next car, so be sure to read this report while it lasts. Your conscience, and your wallet, will thank you. Click here now for instant access.

Hey, Fools, it's John Rosevear. So we've talked a bit about this new automaker, FCA, Fiat Chrysler Automobiles -- it's Fiat and Chrysler, but fully merged and building out their portfolio as a global automaker. And I want to talk a little bit about how this is taking shape, because FCA is going to be a big topic for us here at the Fool going forward, the stock is expected to be listed on the New York Stock Exchange sometime this fall, and lots of investors have been interested.

But it's interesting how this is coming together. For a while now we've seen Chrysler's strength in trucks, with the Ram pickups and SUVs with Jeeps, and in larger cars with the Dodge Charger and Chrysler 300, but they've lacked somewhat in smaller cars. They've moved to change that a bit with the Dodge Dart a year ago and now the new Chrysler 200. The 200 is an all-new vehicle that is aimed right at the Ford Fusion, they say; it's a big improvement over the outgoing model. And it's built on a platform that started with Alfa Romeo; it has been enlarged and Americanized, they say, but of course Alfa is a Fiat brand, and it is known for sharp handling, so the 200 should be fun to drive.

With very small cars, Fiat, of course, has the Fiat 500; that has been sold here for a while now. And the company is building out its premium offerings. We've seen the Maseratis, the Ghibli, and the Quattroporte, medium and big sedans, along with a couple of sports cars, but we're also expecting to see some new Alfa Romeos, including probably a compact sedan that will be aimed in the BMW 3-Series neighborhood, whereas the Ghibli is kind of being positioned as an alternative to the 5-Series.

Now, this will take a few years to build out, and really it's something of a gamble as to whether they're going to be able to pull this off. A cynic would say that in the big trend of consolidation of the global auto business, Fiat and Chrysler were both companies that were kind of expected to die off. But instead, they've found their way to a mash-up that has the makings of a thriving global automaker, and while they still have a lot of work to do, we have to give them some benefit of the doubt here, simply because the products so far have been good. The overhauled Grand Cherokee is terrific, the Ram is a very strong contender, the new Chrysler 200 looks promising, the new Maserati sedans have gotten good reviews, and those are just starting points.

But consider that the whole company is going to be built out around these bones -- for instance, the platform that underpins the Maseratis will be used in the next-generation Dodge Charger and Chrysler 300, obviously with lower-cost parts to some extent, but still, if the basic quality and execution is there, it should continue to be there. So I'm optimistic about their chances. We'll see. Thanks for watching, and Fool on.

John Rosevear owns shares of Ford. The Motley Fool recommends BMW and Ford and owns shares of Ford. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information