WSJ article today. GM and Ford total LT or ST debt issued= ZERO. Fiat Dept PAYMENTS $2.9Billion/yr, that $2.9B would FUND 2 new vehicle developments/year if it didn't have to go to debt payments. fiat loaded up on debt to get chrysler. Margins for fiat overall is 1/2 to 1/3 that of GM, Ford, Toyota, Honda etc. Fiat is about 3-4% margins vs. the others at 8-12% margins.
Given that if I was a car mfg, do I want to add that debt structure and margins to my business?? That's one question the other mfg need to be able to answer.
I think it will be hard for Fiat to find willing partners, as they are finding out now. Ovetures to major mfg have so far be quickly rebuffed.
In the end, looking either at investments, or aquisitions, which I have been part of, one of the veryt first question to as is "What is the compelling sustainable competiative advantage that Fiat has compared to their competitors? or that they can bring to our company?"
Not being part of the auto companies, I don't have enough knowledge to answer that question, but I'm sure the auto companies can, and have answered that question. And Fiat better be prepared to tell others what sustainable competative advantage they have.
Unless there is a strong competative advantage, there is no reason to proceed further, you walk away from the table.
If there is a compelling case, then it's time to talk business.
I guess time will tell us if any other car mfg thinks there is a sustainable competitive advantage Fiat can bring to the table.
