Italian companies and there is definitely a different business culture."
Cole believes this could cause damaging delays in implementing the technological upgrades and business plans that will be essential for the Fiat-Chrysler deal to succeed.
Then there is the question of money. Daimler had deep pockets but Chrysler is racking up $100 million of losses a day and sales are down 46% over last year, while Fiat isn't exactly awash with cash. Chrysler has already received $8.6 billion in federal funding and will get as much as $6 billion more in financing as it exits bankruptcy, including $2 billion paid to creditors in exchange for forgiving their debts.
But if that money proves insufficient the new alliance could have a serious problem. Cerberus fared even worse with Chrysler than Daimler did. The private-equity house picked the ailing carmaker up in 2007 for a song. But it was in such bad shape that Cerberus insisted Daimler keep a 20% stake.
Fiat has followed this example too. The Italians have only so far bought 20% of Chrysler, with the option to raise their stake to 35% in the future. The rest is held, for now, by the US and Canadian governments and car-workers' unions.
With all these politically motivated stakeholders at the table, doing business in a quick and nimble fashion is not going to be easy.
Another of the big problems that Fiat faces, Cole believes, is that Chrysler's brand has been so sullied by its various failures that it is viewed as worthless by many Americans.
Let us not forget that Chrysler has been fighting off collapse since 1979 when former chairman Lee Iacocca went to Congress begging for $1.2 billion in loan guarantees to "save" the company. "Chrysler's name has been dragged through the mud for years," Cole says. Market weakness must lead to the failure of some car companies. There simply are too many carmakers out there for our needs. In Asia, Toyota, Honda and Nissan are feeling the same economic crunch that brought Chrysler to its knees.
So much so that Japan's own Big Three are looking over their shoulders at fast-growing rivals such as Korea's Hyundai, Brilliance, Chery and Geely of China and India's Tata and Mahindra. All of these companies are in stronger positions than Fiat or Chrysler. So ask yourself which of them will go, for some of them must.
"The Fiat-Chrysler deal is the best option on the table for either company but this is no guarantee that the deal will succeed," says Cole."In fact, it probably would have been better to have let Chrysler fail back in 1979."
