Evaluating the Chrysler-Fiat Auto Alliance in 2012

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1. What are your views of the Chrysler-Fiat auto alliance and its status in 2012? Despite some drawbacks, the alliance has worked well, and has been beneficial for Chrysler and Fiat. The growth and survival of both companies had faced problems in the areas of technology and quality standards. Chrysler needed the alliance for survival due to its bankruptcy position and conditions of bailout. It also needed a partner to bring innovation, increased R&D opportunities, low cost technology and access to European markets. Fiat wanted to reenter the North American market and needed access and distribution through an established manufacturer that knew the market, and had the technology available; which would be possible through a strategic…show more content…
The company had also encountered growth and survival difficulties in the areas of technology and quality standards. Chrysler’s strengths before the alliance were that it was a well-known competitor in the American market and had solid growth in minivans and the Jeep brand. Its weaknesses were its reputation for poor quality products, low market share, and global recession pressure in 2008-2009 which ultimately led to its downfall. Strengths after the alliance are combined production capacity, technology sharing, overall increases in sales, and major savings in joint product development and in supplier and dealer networks. Chrysler recovered financially and repaid $7.6 billion of its bailout loans to the U.S. and Canadian governments in 2011, six years before the required date. This was a major achievement of the alliance and its credibility in the auto industry. The Chrysler-Fiat alliance sold 4.2 million vehicles worldwide in 2011, and Chrysler saw an 18% sales increase in 2012. Weaknesses have been in the post-alliance integration. Fiat’s sales declined in European markets due to the economic downturn in 2011, and labor related issues in Italy disrupted corporate efficiencies. 3. Compare and contrast Chrysler and Fiat with other auto manufacturers. In 2012, only three American auto manufacturers prevailed in North America: General Motors, Ford, and Chrysler, while Japan had three major firms:

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