Who could have imagined Chrysler Corp. being rescued by Fiat? When Fiats last appeared in the US automobile market, they were viewed by most US drivers as quirky little cars from Italy with maintenance problems.
I owned a Fiat 124 Sport Coupe during the late sixties. For the time, it was a great car. It had double overhead camshafts, four wheel disc brakes and a five speed transmission; features that few if any American cars had. The car had a solid rear axle; but, because the axle was well located, that had no effect on the car’s excellent handling capabilities. The engine would willingly rev well past its 7000 RPM limit if you let it. I bought it because I wanted a sports car but had a family and needed something bigger. It met my needs extremely well, but there were problems.
The exhaust manifold gasket blew out at intervals between 5,000 and 10,000 miles. The turn signals stopped working with about the same frequency, and then the steering column wiring harness had to be replaced. The rear disc brake calipers slid on dissimilar materials and stopped working due to corrosion from electrolytic action when the car was driven on salted roads in the winter. I was into working on cars then, so none of those things mattered to me.
Most US consumers didn’t take maintenance problems that lightly. When gas prices fell back after the 1979 crisis, US consumers returned to big cars, pickup trucks and SUVs and became unwilling to put up with maintenance problems in order to have better gas mileage. The Fiat dealer service network was also a problem. Finally, Fiat withdrew from the US market in 1984.
Fiat can bring a lot to Chrysler and visa versa. Fiat has a terrific small car, the Fiat 500, named after the much beloved in Italy Fiat 500 Topolino that helped Fiat get back into automobile manufacturing after WWII. Importing the Fiat 500 would give Chrysler a small, fuel efficient entry into a US market that seems to be ready for it. The established Chrysler dealer network would give Fiat an advantage that it has never had in the US. But, as with my Fiat, there are problems.
The new company will need to overcome Fiat’s image. US consumers are accustomed to cars that are virtually maintenance free. They will be put off by any perception that a car has potential maintenance problems. Today, US consumers want better gas mileage; but they have never embraced small cars like the Fiat 500. Owning a car like the Fiat 500 may convey a message that you are a conscientious person interested in saving the planet; but to many people in the US it also says that you can not afford a real car. US cars have an aura of affluence and power that has been important to US psyches. Small European cars do not.
If the Fiat/Chrysler merger does happen, watching the new company’s progress in the US will be very interesting. If gas prices go up again, the merger could be a great success. But, success will require a makeover of the Fiat image in the US and a permanent shift in US consumers’ automotive purchase decision making patterns.