Evaluating the Chrysler-Fiat Auto Alliance 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…
In 2011, revenues of the top auto firms were: Toyota $235 billion; Volkswagen $168 billion; GM $149 billion; Ford $136 billion; and Honda $117 billion. During the same period, Chrysler-Fiat’s revenue surpassed $102 billion.
Due to the auto industry’s growth processes, economies of scale in manufacturing, and consolidations, it has witnessed many structural changes in the forms of strategic alliances and collaborative activities in R&D, distribution agreements, joint ventures, and equity stakes. Restructuring by GM, Ford, Chrysler, and other manufacturers have bought cost efficiencies and flexible manufacturing. European carmakers have been struggling in the sector after serious restructuring during the financial crisis by America’s top three auto manufacturers. Auto analysts suggest that in upcoming years, only a small number of auto manufacturers will be left at the global level because of consolidations and mergers. As of 2012, companies maintaining strong brand identities with competitive technologies and quality are those that are able to compete effectively. Chrysler and Fiat have pooled their resources together successfully to consolidate brand portfolios that aim at significant cost savings in R&D and technology platforms. This gives them a competitive advantage in today’s global auto industry.
4. Analyze Chrysler and Fiat’s 2012 brand portfolio in the world auto industry. How do you see both companies making changes to