The Fiat 500 has arrived in the USA

In the midst of high gas prices and a trend toward smaller vehicles, the Fiat 500 is still a head-scratcher.  One simple reason:  price.

Per this story on Boston.com, the Fiat 500 will have a 101-hp engine starting at $16,000, topping out around $21,000.

While this vehicle is not meant to compete with, say, a Honda Civic - which has grown in size in lockstep with the Accord to the point that the Accord is now a "full size" car - it'll still be difficult to find a market for the upstream trim level, which will likely surpass $20K.  For $20K, you can get a Civic with decent features and the gas mileage will be about the same in an auto transmission: 34/27 for the AT Fiat 500, and 38mpg highway for the 2011 Civic coupe.

I can understand the novelty of such a vehicle but feel it will have a limited market, appealing to hipsters looking for something different as well as the article's protagonist - Boomers who are of Italian descent or who used to own a "CinqueCento" back in the day.

Still, one can hardly blame Marchionne for not showing all his cards in Fiat's first romp back in the States since 1984.  It didn't cost Fiat much to re-enter the market, having brought no cash to the table when obtaining a stake in the bankrupt Chrysler back in 2009.  So, much like with the Alfa 8C Competezione, he's aiming for a very targeted campaign, hoping they sell out, and having this car be, in effect, free advertising for the next wave of more sensible Fiat vehicles. 

Here's to hoping Fiat sells out the 500 at all of the 130 dealerships at which it will be offered, and we see more Fiats and Alfas in the coming years.

Supreme Court Delays Sale of Chrysler

The sale of the core Chrysler business to Fiat is at the heart of Barack Obama's plans to save the automaker from liquidation, something which the administration's lawyers argued is inevitable if the Italians walk away. Under the terms of the agreement, the deal must be completed by 15 June.

Fiat will emerge with management control and with an initial 20 per cent ownership of Chrysler under the deal, hammered out ahead of the bankruptcy filing at the end of March. A union-run healthcare trust will own most of the company, while unsecured bondholders will get only a sliver. Mr Obama condemned hedge funds holding the bonds for refusing to sign up to the deal, but a trio of Indiana state pension funds continued to try to block it.

They lost in bankruptcy court, and in an appeals court ruling last Friday, but were given permission to pursue the matter at the Supreme Court. They argued that the interests of unsecured bondholders had illegally been placed behind those of the union.

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The Obama spin here is laughable: Chrysler is being sold because, since 1979, it has needed bailout after bailout & is in the business of providing pensions to former and current workers, instead of making great cars people want.

While I definitely want to see Fiat & Alfa vehicles sold here as soon as possible, I didn't know the majority shareholder of the new entity would be a union-run healthcare trust. This spells trouble, and this is exactly why Fiat refuses to put up any of their own cash to be part of this deal: because even Fiat knows subsidizing healthcare pensions and union corruption with their own money coming into this deal means that money disappears and is never heard from again.

Much as I hate to see the union be any part of this, I still want Ginsberg to finally let Chrysler die - in part, at least - and allow Fiat to take control to send the message that American car companies need to be more like Ford if they want to survive.

UPDATE 6/11/2009: It appears Chrysler is finally going to die, for the most part, as Fiat has been approved to take over all of Chrysler's assets. Let's hope this leads to a rebadging of the brand to Fiat and Chrysler finally dies a decent death, as should have happened in 1979.

Hitches in Fiat/Chrysler negotiations

MILAN – Automaker Fiat Group SpA will walk away from a deal to take a 20-percent stake in Chrysler LLC if the U.S. automaker's unions don't agree to major cost cuts, Fiat CEO Sergio Marchionne said in an interview published Wednesday.

Fiat and Chrysler are up against an April 30 deadline for Fiat to take a stake in the failing U.S. automaker in exchange for small car technology, but Chrysler first needs concessions from creditors and unions to ink the Fiat deal. If the Fiat alliance isn't finalized by then, the U.S. government has threatened not to provide any more aid and let Chrysler be sold off in pieces.

"The dialogue is out of sync," Marchionne said. "I think they need to see what state the industry is in. Canada and the U.S. are coming in as the lender of last resort. .... No one else would put a dollar in. This is the worst condemnation of the viability of this business."

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UPDATE 4/27/2009 (SEE BOTTOM OF POST)

Rewind 20 or 30 years. Think anything like this could ever happen?

Chrysler is defnitely an American-auto-hating whipping boy, for sure. For a German/Italian car loving guy, it's easy to completely disregard Chrysler and maybe even scoff at them. But haven't they also been an accurate sign of the times in the US? In the 70s, they represented a company that refused to change even in the midst of much higher oil prices than their cars could handle, and needed a government bailout. I think there was another bailout in there somewhere. Now they need $6billion - and then more to make this deal work, with two weeks left before D-Day.

Chrysler hasn't learned a thing over the past 30 years. They've had some nice vehicles in that time, but most of them are run of the mill and don't even compare to Japanese or German counterparts. And now, in typically American fashion, they are ready to allow unions to do all the talking for them in another "save our asses" deal.

Sure, Fiat won't inject cash or buy stock from Chrysler...but why should they? The government has offered $6billion to help Chrysler, and apparently even that is not enough to bring them out of bankruptcy and allow Fiat to take the reins & run with a freshly bailed out American auto giant.

It's sad, and shows just how far America has fallen internationally - not only in cars, but as a trade partner and in terms of asset value. Thirty years ago, Fiat would have jumped at the chance to buy Chrysler and would have offered stock, bonds, cash, anything it could throw to have such a large American base.

For my part, I'd love to see this deal go through - DaimlerBenz lost their patience with the Chrysler brand, but Fiat seems to be more about completely remaking the company if they have the opportunity, while also selling Alfa Romeo vehicles here in the States again for the first time since 1995. This could only be a good thing for the American consumer, and yet again, we see labor unions getting in the way. They would apparently rather lose their jobs and see the company completely fail than give concessions to at least keep some of their huge pensions and disproportionate benefits.

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UPDATE 4/27/2009

This update was just posted on most of the major news sites. Looks like we may see Alfa Romeo & Fiat models here in the next few years after all! I guess the unions would rather make concessions than, ya know, join the ranks of the unemployed...surprisingly easy logic to follow after you think about it!