“Chrysler’s Now Fully an Italian Auto Company.”
This was a recent Time magazine online headline. Most of us are aware 
of the recent auto bailouts but do you know that the end result was 
the giveaway of a major American car company? Here’s what happened:
Chrysler was hit hard by the recession and filed for bankruptcy 
protection on April 30, 2009.
Two months later, Chrysler emerged from the proceedings with the new 
principal owners being the United Auto Workers Retiree Health Trust, 
Italian auto maker Fiat, and the U.S. and Canadian governments. Over 
the next few years Fiat gradually bought the other parties' shares.
On January 21, 2014, Fiat bought the last remaining shares making 
Chrysler a wholly owned subsidiary of Fiat.
This was a save the company at all costs plan but the costs appear to 
be way too high. Here’s what I mean: the U.S. government pitched in 
approximately $12.5 billion, but Fiat paid nothing to acquire its 
initial ownership stake.
Fiat was given a 20% ownership in Chrysler and access to its North 
American distribution network. In return, it provided Chrysler with 
technology to build more fuel-efficient vehicles and provided access 
to Fiat's global distribution network. Fiat then used the money it was 
getting from its share of the profit to acquire the remaining shares 
of the company.
Fiat also had its credit rating downgraded to junk status by Moody’s 
investment service so it used its Chrysler money to pay its own bills 
instead of expanding production and adding jobs in the U.S.
In December 2012, Fiat announced it would be making a line of Jeeps in 
Italy to export to “markets worldwide”, including the U.S., and that 
it was expanding its production in China.
This makes it very unlikely that Chrysler’s future profits will be 
reinvested in the U.S. It’s most likely that the majority of that 
profit will instead be reinvested in Fiat’s operations in Italy and 
Chrysler is now an Italian company operating within the United States. 
Fiat and Chrysler CEO Sergio Marchionne argues that the location of 
its headquarters is meaningless.
That's because the new company is now managed by a 22-member executive 
council whose members are divided between North America, Europe, and 
Latin America. Regardless, many people still view the location of a 
corporate headquarters as a symbol of pride.
Chrysler itself might still have an American headquarters, but it’s a 
fully-owned subsidiary of an Italian company. That’s an important 
distinction because, just like Anheuser-Busch, Chrysler will now send 
its profits overseas.
According to Barron’s, “Chrysler’s resurgence has been so strong that 
it now provides a lifeline for Fiat.” CEO Sergio Marchionne told 
Barron’s: “The Fiat Group has a future because of Chrysler.”
Now, however, Chrysler and its auto workers are being dictated by an 
Italian auto maker and the Italian economy.
Of the $12.5 billion bailout there's still some $1.3 billion owed by 
the bankrupt former Chrysler. According to a release issued by the 
U.S. Treasury department, the government is "unlikely to fully recover 
the difference."
Still, government officials say the loss is worth it. "This is a major 
accomplishment and further evidence of the success of the 
administration's actions to assist the U.S. auto industry...” Losing 
$1.3 billion is now a “major accomplishment” and giving Fiat 100% 
ownership of the third biggest American auto maker is now apparently 
“assisting the U.S. auto industry.”
As a free market advocate, bailing out a specific business is 
something I don’t support. It rewards failure and it’s unfair to a 
struggling company's competitors.
Had Chrysler gone through a traditional court-approved bankruptcy, the 
court would have had the opportunity to investigate Fiat’s financial 
viability, and the whole merger likely would’ve never happened. Also, 
given the popularity of the Chrysler brand, it’s not likely that it 
would have gone the way of the scrap heap.
The company would have been able to renegotiate contracts, sell off 
less profitable divisions, and likely emerge smaller but stronger.
There’s no word yet on how this will affect the Chrysler brands.
I would be surprised if Fiat decided to rename any existing Chrysler 
owned models, but it’s not entirely unimaginable. Pretty soon you may 
be buying a Fiat Grand Cherokee.