Is Fiat Repeating GM’s Mistakes?

by Lloyd Frazier

The last three months of reports coming out of the global auto industry has been full of wild speculation, some good news, and mostly bad.  We are seeing the beginnings of a major realignment of this industry due to the global economic meltdown.  The big question of the moment is why Fiat is so determined to follow in GM’s footsteps…and Ford’s for that matter.  They seem to be on a crusade to rule the auto world.  First they snag Chrysler, now they are after Opel and some others.  Ford methodically shed Jaguar, Rover and Aston Martin last year, just ahead of when the major meltdown started materializing.  That is why they are ahead of the curve in the global scheme of things.  GM is still trying to slim down by dropping Opel, Saab, Saturn, Hummer, Vauxhall and some others.  These domestics did what Fiat is now doing, gobbling up more than it can chew.  And at the worst time in history.  Or, do they know something that we industry observers are unaware of.  Maybe this is the perfect time for bargain shopping.

I just read an article about real estate and its valuation across different markets in the US.  It appears the Denver/Northern Colorado market is already in recovery mode ahead of the rest of the US.  How fortuitous that I happen to live in Northern Colorado.  Of course, our area was in a major real estate downturn since 2005/2006.  We had the most foreclosures prior to 2009.  What goes down usually starts an upturn at some point.  We now appear to be ahead of the curve in the US.  Does the same go for auto manufacturing?  Chrysler went bankrupt and GM will most likely follow next week since no agreements have been reached with bond holders.  Does that give them an edge in the near future?  The first to go bankrupt and first to come out lean and mean?  Ford has avoided bankruptcy, so far.  Alan Mulally has done an outstanding job at the helm.  Ford is in the best shape out of most all world auto manufacturers.

We are so focused on the Big Three that we forget that all the other manufacturers across the globe are starting to feel the pain.  Porsche spent billions trying to takeover VW.  Now, they are in talks about bankruptcy avoidance.  Toyota is bleeding cash and seeking loans from their government.  The pain has spread throughout the industry.  It is going to be interesting to see what this industry looks like in two or three years.  Who knows, maybe the Big Three will actually live up to our expectations.  Happy days might be back again!

Lloyd…signing out