Findings of new IHS SupplierBusiness report

Fiat and Chrysler are continuing to strengthen cross-company ties to take advantage of the cost-saving synergies that the partnership has created. Although a United Auto Workers (UAW) healthcare trust is threatening to derail Fiat’s plan to hold a 100% share in the US OEM, the two carmakers are continuing to incorporate technologies taken from each company into their respective product ranges that will result in the two being inextricably linked for the foreseeable future, whether or not Fiat is able to take complete control of Chrysler.

The first cross-company collaboration between Fiat and Chrysler was based around a programme of basic cross-brand model sharing. The result of this is that most Lancia models now offered in Europe are based on vehicles manufactured by Chrysler. But beyond this ‘filling out’ of model ranges, the two OEMs have advanced to developing and sharing new vehicle platforms and powertrain technologies for the production of all-new models. This is the case with the Dodge Dart which, launched in 2012, uses a modified version of the platform underpinning the Alfa Romeo Giulietta and also features Fiat’s MultiAir fuel injection technology. A future example of this could see the rear-wheel drive platform now used in production of the Maserati Quattroporte and Ghibli saloons being modified for use across production of Alfa Romeo and Chrysler vehicles in Europe and North America.

In addition to these and other instances of technology sharing, company integration is also progressing on a deeper level. Although the two OEMs still remain separate legal entities, it is claimed that they will be sharing two-thirds of all component and raw material suppliers by the end of 2014. As part of this, both are already taking advantage of the cost savings available through the combined bulk purchase of raw materials, such as steel, where increased total volume in a single buy results in a more favourable delivered cost-per-tonne.

Chrysler is also benefitting from access to technology suppliers within the group. When the US carmaker needed to update its Toledo Supplier Park facility, which produces the Jeep Wrangler and Wrangler Unlimited, the manufacturing equipment supplier was Comau, a Fiat group company. While this keeps the investment spend within the group (with all the related benefits), it means that other areas of production, including underlying software and basic overall processes, are also being shared across Fiat and Chrysler, further binding the two OEMs.

Chrysler has been recently valued at USD10 billion, which translates to the 41.5% portion of company shares owned by the UAW voluntary employees beneficiary association (VEBA) healthcare trust being worth about USD4.15 billion. The trust, which provides healthcare and other benefits to about 800,000 former Chrysler employees, is estimated to have an outstanding future payment shortfall of USD3 billion and so will be intent on fulfilling that obligation and building further cash reserves with the sale. The downside to this is that an over-valued IPO could reduce the number of potential investors, while driving down the stock value and making Chrysler less investable, so a balance must be struck in terms of final value.

Fiat Chrysler CEO Sergio Marchionne would likely prefer to own 100% of Chrysler, but whether this will be possible without the VEBA issuing an IPO will be determined over 2014. Marchionne has already alluded to the idea that it’s not necessary for Fiat to own all of Chrysler for the partnership to be a success and it appears he is being good to his word, as even with only the current 58.5% holding in place, the two OEMs continue to close ranks and move closer in all areas of business.

Contacts

Copyright © 2025 S&P Global Inc. All rights reserved.

These materials, including any software, data, processing technology, index data, ratings, credit-related analysis, research, model, software or other application or output described herein, or any part thereof (collectively the “Property”) constitute the proprietary and confidential information of S&P Global Inc its affiliates (each and together “S&P Global”) and/or its third party provider licensors. S&P Global on behalf of itself and its third-party licensors reserves all rights in and to the Property. These materials have been prepared solely for information purposes based upon information generally available to the public and from sources believed to be reliable.
Any copying, reproduction, reverse-engineering, modification, distribution, transmission or disclosure of the Property, in any form or by any means, is strictly prohibited without the prior written consent of S&P Global. The Property shall not be used for any unauthorized or unlawful purposes. S&P Global’s opinions, statements, estimates, projections, quotes and credit-related and other analyses are statements of opinion as of the date they are expressed and not statements of fact or recommendations to purchase, hold, or sell any securities or to make any investment decisions, and do not address the suitability of any security, and there is no obligation on S&P Global to update the foregoing or any other element of the Property. S&P Global may provide index data. Direct investment in an index is not possible. Exposure to an asset class represented by an index is available through investable instruments based on that index. The Property and its composition and content are subject to change without notice.

THE PROPERTY IS PROVIDED ON AN “AS IS” BASIS. NEITHER S&P GLOBAL NOR ANY THIRD PARTY PROVIDERS (TOGETHER, “S&P GLOBAL PARTIES”) MAKE ANY WARRANTY, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, FREEDOM FROM BUGS, SOFTWARE ERRORS OR DEFECTS, THAT THE PROPERTY’S FUNCTIONING WILL BE UNINTERRUPTED OR THAT THE PROPERTY WILL OPERATE IN ANY SOFTWARE OR HARDWARE CONFIGURATION, NOR ANY WARRANTIES, EXPRESS OR IMPLIED, AS TO ITS ACCURACY, AVAILABILITY, COMPLETENESS OR TIMELINESS, OR TO THE RESULTS TO BE OBTAINED FROM THE USE OF THE PROPERTY. S&P GLOBAL PARTIES SHALL NOT IN ANY WAY BE LIABLE TO ANY RECIPIENT FOR ANY INACCURACIES, ERRORS OR OMISSIONS REGARDLESS OF THE CAUSE. Without limiting the foregoing, S&P Global Parties shall have no liability whatsoever to any recipient, whether in contract, in tort (including negligence), under warranty, under statute or otherwise, in respect of any loss or damage suffered by any recipient as a result of or in connection with the Property, or any course of action determined, by it or any third party, whether or not based on or relating to the Property. In no event shall S&P Global be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees or losses (including without limitation lost income or lost profits and opportunity costs or losses caused by negligence) in connection with any use of the Property even if advised of the possibility of such damages. The Property should not be relied on and is not a substitute for the skill, judgment and experience of the user, its management, employees, advisors and/or clients when making investment and other business decisions.

The S&P Global logo is a registered trademark of S&P Global, and the trademarks of S&P Global used within this document or materials are protected by international laws. Any other names may be trademarks of their respective owners.

The inclusion of a link to an external website by S&P Global should not be understood to be an endorsement of that website or the website's owners (or their products/services). S&P Global is not responsible for either the content or output of external websites. S&P Global keeps certain activities of its divisions separate from each other in order to preserve the independence and objectivity of their respective activities. As a result, certain divisions of S&P Global may have information that is not available to other S&P Global divisions. S&P Global has established policies and procedures to maintain the confidentiality of certain nonpublic information received in connection with each analytical process. S&P Global may receive compensation for its ratings and certain analyses, normally from issuers or underwriters of securities or from obligors. S&P Global reserves the right to disseminate its opinions and analyses. S&P Global Ratings’ public ratings and analyses are made available on its sites, www.spglobal.com/ratings (free of charge) and www.capitaliq.com (subscription), and may be distributed through other means, including via S&P Global publications and third party redistributors.