What Fiat would give Chrysler

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Audio Transcript:

LISA MULLINS: Before leaving for the G-20 summit, President Obama handed U.S. automaker Chrysler an ultimatum. Finalize a partnership deal with Italian car company FIAT -- or forget about getting new government loans. That's quite an endorsement for FIAT -- a company that many Americans still refer to as "Fix It Again Tony!" Anil Valsan is the global director of research for automotive and transportation at Frost & Sullivan, which is a consulting company in London. Does FIAT still stand for ?Fix It Again Tony? in your mind?

ANIL VALSAN: Not anymore. That was definitely the case a few years back, but thanks to the leadership of Mr. Marchionne that image has definitely changed. And they have definitely bagged a few car of the year awards in the last couple of years for some of their new models.

LISA MULLINS: Now, this is Sergio Marchionne who's the chief executive of the FIAT group and, as you said, the architect around the turn-around. How has he turned FIAT around?

ANIL VALSAN: It's been on a number of fronts, but the most important element that's quite relevant for Chrysler particularly is on the product front. The complete product line-up has been upgraded. These vehicles have become highly competitive. In addition he has introduced some key technologies, particularly relating to fuel efficiency, just to give an example; some of the new models include some technologies which actually enable drivers to actually monitor the level of emissions that these vehicles are giving out. And these are technologies that are benchmarks today in the European industry.

LISA MULLINS: So, what does Chrysler want to get from this deal, and what does FIAT want to get?

ANIL VALSAN: For Chrysler it's a matter of survival. It's literally a do or die situation. They need the technology. They need the models to actually survive. And, obviously, they need FIAT's turnaround strategy. That's what Chrysler needs. In the case of FIAT the opportunity, really, is to enter the U.S. market on the back of Chrysler and, in the hope of turning around Chrysler, and using that access to launch their other vehicles as well.

LISA MULLINS: So, what kind of FIATs would they be producing and what kind of Chryslers?

ANIL VALSAN: That's very difficult to say at this stage. I think that really boils down to what would be agreed between Mr. Marchionne and his Chrysler counterparts. But, at this stage, I think the objective, really, is to ensure that you keep Chrysler as a going concern and offer support to Chrysler in terms of technology, in terms of vehicle platforms, to essentially fill a lot of gaps in Chrysler's portfolio. And, most importantly, compensate for the SUV's and Van segments which are, at the moment, shrinking. And really fill the gaps in terms of the small cars, which is, sort of, the only segment which is actually growing in the U.S.

LISA MULLINS: Would you feel safe, by the way, if you were here in the United States, you're in London right now, but if you were here driving one of those really cute little FIAT 500s, about the size of a Mini Cooper alongside a fat honking SUV?

ANIL VALSAN: Well, it would definitely be scary, but I believe technology is at a stage where even those 500s can be a bit safe.

LISA MULLINS: Okay. Very diplomatically put. By the way, maybe a Chrysler SUV alongside the FIAT 500.
ANIL VALSAN: Yes, yes. I believe so. I believe that would be some of the technologies that they would actually share.

LISA MULLINS: Thank you very much. Anil Valsan is a car industry specialist with a London consulting company, Frost and Sullivan. Very nice to speak with you.

ANIL VALSAN: Thank you very much, Lisa.