FCA US LLC, previously known (among other names) as DaimlerChrysler and Chrysler Corp., has entered a new phase — a possible acquisition target by a Chinese automaker.
Chrysler (for old timers) has survived two US bailouts (early 1980s and 2009), an acquisition by a German company (Daimler AG) that soured on it, a takeover by an private equity company (Cerberus Capital Management, named after a three-headed dog that guarded Hell) and finally a forced marriage (via the 2009 U.S. bailout) with Italy’s Fiat.
This week, trade publication Automotive News reported that Chinese automaker Great Wall Motor Co. “reached out” to Fiat Chrysler Automobiles (the current corporate name for Chrysler’s parent company) about a possible deal. Once again, Chrysler’s future is uncertain.
Truth be told, Chrysler has always been the runt of the litter of Detroit’s “Big Three” (General Motors Co. and Ford Motor Co. being the other two). In the 21st century, “Big Three” has been replaced by “Detroit Three” because of the US market share held by Asian and European automakers.
Once upon a time, Chrysler was the subject of a fairy tale. Lee Iacocca — fired at Ford Motor and taking over Chrysler — built his legend upon reviving Chrysler in the 1980s.
Overstaying a Welcome
The problem was Iacocca overstayed his welcome. The executive (who reached the standard retirement age of 65 in 1989) stayed well into the 1990s. Potential successors left the company while Iacocca kept an iron hold on the CEO job. Much of Chrysler’s 1990s story line became when would Iacocca finally let go?
The automaker finally found a successor in 1993, hiring Robert Eaton, a GM executive. He stayed on long enough to negotiate a sale to Daimler in 1998. That was the start of the DaimlerChrysler era.
It was a marriage doomed to failure. In Europe, Chrysler was viewed as a drag on the Mercedes-Benz brand. In the 21 century, Daimler finally gave up and Cerberus acquired Chrysler in 2007.
That was just in time for a major financial crisis that threw the US economy into the worst slump since the Great Depression. The Cerberus-owned Chrysler sought US assistance along with GM, while Ford (which borrowed billions of dollars and put all of its major assets up as collateral) cheered them on.
As a result, the Fiat-Chrysler marriage was arranged, courtesy of the Obama administration. The only alternative was for Chrysler to go under.
The problem is the Fiat-Chrysler combination still isn’t big enough globally. The CEO of Fiat Chrysler, Sergio Marchionne, has been, in effect, begging for another merger partner. So far, no luck.
Marchionne’s tenure is ticking down and he’s scheduled to retire in 2019.
Ironically, one Iacocca move — the acquisition of American Motors in the 1980s — makes Fiat Chrysler viable in the 21st century.
American Motors was even weaker than Chrysler. But American Motors had Jeep. Buying American Motors saved Chrysler an untold amount of money to develop its own sport-utility vehicles.
That deal keeps Fiat Chrysler alive. Under Marchionne, Fiat Chrysler has expanded Jeep production. It’s clearly the company’s biggest asset.
The current soap opera is yet to be resolved. Still, Jeep will be a major part of how the story concludes.