Posted by: gurglin | March 4, 2011

Marchionne’s (Fiat + Chrysler) strategy

The Italian-Canadian-Swiss manager Sergio Marchionne, CEO of car companies FIAT and Chrysler, is acclaimed by economic press as a saviour. But what is his merit build on? Let’s take a look.

From the industrial point of view FIAT is merely using Chrysler current cars and projects, re-branding them with the Italian logos (FIAT and Lancia) and selling them in Europe. I understand we (some countries more than others) are still going through a difficult crisis and it does make sense to exploit all possible potential available, but to me this does not seem to be a long-run strategy.

Let’s move towards a more subtle fact. FIAT, one of the most mediocre car companies ever, are still alive thanks to the Italian State and its blind vision. In Italy they are so powerful that influenced urban transportation policy: due to the crap quality of their cars, Italy was the only possible market for FIAT, therefore (at least since the 60s) to please them city public transportation was almost eradicated, forcing Italian people to buy their cars. As if it was not enough, through the decades they have been also receiving from the Italian State a huge amount of money – that at current exchange rate would be of hundreds of billions of dollars – in different forms such as incentives, tax discounts, subsidies to employers, etc.

Chrysler through the years already got hundreds of millions of dollars, but more recently got another huge subsidy from the Obama administration.

Marchionne, in the end, only put together two companies heavily subsidised by each respective State, for exploiting public money.

Liberalism, R.I.P.


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