Fiat and Chrysler: Gaining on Global Automakers?

20 Pages Posted: 5 Apr 2010

See all articles by Robert E. Spekman

Robert E. Spekman

University of Virginia - Darden School of Business

Jacki Fritz

University of Virginia - Darden School of Business

Abstract

This case examines the formation of an alliance between Fiat and Chrysler during the height of the financial crisis as a mechanism to save Chrysler from liquidation. The case traces the events leading up to the alliance, discusses the early stage issues with which the partners have to deal, addresses some of the governance issues, and examines the past merger between Chrysler and Daimler that ended in a failure. The case presents a normative approach to alliance management and conjectures about the success of the Fiat-Chrysler alliance. We address whether Chrysler is a suitable partner and whether there is a strong enough rationale for the alliance and whether the two partners are compatible. Finally, the case explores the lessons learned and the cautions that might derail the alliance.

Excerpt

UVA-M-0780

Rev. Aug. 6, 2013

FIAT AND CHRYSLER: GAINING ON GLOBAL AUTOMAKERS?

In 2009, Toyota became the largest car company in the United States. Efforts by Detroit's Big Three to develop brand extensions and fashion new technologies had not been enough to sustain their respective market shares. At the same time, General Motors, Ford, and Chrysler were facing the worst economic recession in the United States since the 1930s, which was contributing to high oil, gas, and commodity prices and a scarcity of bank loans. It appeared to be the beginning of the end for the U.S. automobile industry.

In April of that year Chrysler, on the verge of bankruptcy and seeking to avoid outright liquidation, formed an alliance with Fiat S.p.A. (Fiat), a holding company based in Turin, Italy. Analysts wondered whether the alliance would help Chrysler gain brand momentum and increase its sales or hasten the end of the American automaker. Chrysler previously had formed an alliance with another European automaker; this alliance had failed. How might this new partnership be different? Could the automaker regain lost momentum? What lessons from the past might guide its actions?

The DaimlerChrysler Alliance: A Marriage Made in Hell

. . .

Keywords: alliances, automobile industry, marketing strategy, governance, merger, alliance management

Suggested Citation

Spekman, Robert E. and Fritz, Jacki, Fiat and Chrysler: Gaining on Global Automakers?. Darden Case No. UVA-M-0780, Available at SSRN: https://ssrn.com/abstract=1584115

Robert E. Spekman (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-4860 (Phone)

HOME PAGE: http://www.darden.virginia.edu/faculty/spekman.htm

Jacki Fritz

University of Virginia - Darden School of Business

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

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