25 June 2015

Fiat Partnership Suggestion

Seeing little to praise in a merger between Fiat Group and GM, I thought about a partnership. One came to mind immediately, Tata/JLR. The issue with any collaboration is there must be a two way benefit of reasonably equal gain for both sides. So how would this prove good for both parties?

Fiat/Tata: There is already work between the two in India. A joint venture produces passenger cars for both brands, with engines and transmissions shared as part of that. Fiat has also provided diesel technology to Tata. This is an areas that a stronger partnership could explore further, with closer product sharing.

Fiat cars were marketed by Tata in India until recently, when Fiat took control of that itself. Indications are that the change hasn't gone as well as Fiat had hoped.

Alfa Romeo/Jaguar: Jaguar wants to go smaller but it is costly going it alone. AR wants a new range of sporty vehicles, full stop. There must be some mutual benefit here as both brands have a similar emphasis on good handling cars. There would be massive savings for Fiat if they could work with Jaguar. On the other hand the 'leaping cat' brand is well ahead of where AR is presently, so where is the equal gain in that? Jaguar sharing the cost of R&D, new technologies and receiving royalties from AR for all that would be passed over to them.

Jeep, Ram/Land Rover: These don't align ideally, with LR clearly a more premium offering. Jeep could do with taking it's larger vehicles more upmarket and Land Rover would help with that. LR would gain access to production facilities in the US, which it has been mulling over anyway. Ram could do a high quality truck for Land Rover with not that much cost associated with bringing it to market.

A little less bling and a bit more substance, and well, maybe

Summary: All this is from a layman, but from a distance it has the potential to work. Fiat wearing all the cost of AR's revival is almost certainly too much for FCA to stand. Muscling in on established premium marques is a long term proposition. Carrying the burden of AR while slowly eating away at other premium car makers sales does not seem viable, without some cost sharing.

The rest of FCA also needs plenty of money to move forward and the less AR takes, the more they will benefit. No wonder Sergio is concerned about FCA standing alone. A partnership seems the better solution than a merger as you can always extricate yourself quite easily if things don't go to plan. Tata/JLR is the best suggestion I can think of and there seems to be mutual benefit on offer.

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