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Tue May 24, 2011
What goes around comes around, and if you live long enough, you get to see it come around more than once. I’ve now been through two Chrysler near-death experiences in my adult life.
That includes two controversial loan or loan guarantee cycles, two cases of triumphant resurgence, and as of today, two triumphant moments in which the loans were paid back early.
Wasn’t it just the other day that Lee Iacocca was standing on a stage, grinning from ear to ear, and presenting a huge signed check to pay off the last of his generation’s loan guarantees?
Actually, that was 1983. We were still worried about the Soviet Union and there wasn’t any World Wide Web, but it wasn’t all that long ago. Today, it will be Sergio Marchionne pushing buttons to execute wire transfers to pay off loans.
But it feels pretty much the same. In between, we had interludes in which Chrysler sold itself first to the Germans, then the Italians. I hope somebody realizes that they are running out of former Axis nations to partner with. The only one left has its hands more than full with Toyota and the aftermath of the tsunami.
Seriously, what will happen today is good news. It is also a stinging rebuke to those who argued in 2009 that the government should just let General Motors and Chrysler die. That would have plunged us into deep depression.
Now the company is back on its feet - or almost. One thing that is important to remember is that Chrysler is not really an independent company any more. There is no more Chrysler Corporation. It is now the Chrysler Group, LLC. And to all intents and purposes, it is a division of the Italian automaker Fiat.
Fiat, which already has a controlling interest in Chrysler, will be majority owner by the end of the year. The Italian automaker’s stake in Chrysler may eventually rise to about three-quarters, with the remaining share sold as stock to the general public.
So Chrysler is back. Not coincidentally, so is Fiat, which just opened its first, stand-alone Fiat dealership in Michigan. First, that is, since the company beat an ignominious retreat from the U.S. market back in the 1980s, a period when they had lousy cars and even lousier service. The joke then was that Fiat was an acronym for “Fix it Again, Tony.” In fact, Fiat was a laughingstock even in Italy till seven years ago, when Marchionne began doing for it what Lee Iacocca had done for Chrysler thirty-odd years ago. These men saved their companies.
But nobody lasts forever, and few corporations do. Fiat and Chrysler look good right now. They have some good vehicles. They have downsized, and seem to have a healthy sense of perspective. They aren’t going to be Ford or Toyota, and they know it.
The real test, however, will be to see if they can keep it going ten years out. What happens when Marchionne is gone? What happens when the Fiat 500 is no longer trendy? How do both divisions keep exciting new products in the pipeline?
If we live long enough, we’ll find out. For now, however, it’s clear that reports of Detroit and Chrysler’s deaths were premature. Let’s hope that’s a trend that continues.