Chrysler and Fiat will have along and tough time harmonizing products, parts and production, warn analysts.
Analysis released by Deutsche Bank this week, ahead of Chrysler's five-year plan announcement tomorrow, warns that most automotive mergers take "easily a decade to fully bear fruits".
Deutsche Bank said the cost benefits of combined purchasing for the two automakers will not be easy to realize given how little geographic overlap there is.
Nevertheless, it said the geographic differences offer market potential. Chrysler historically has sold 90% of its vehicles in North America, whereas Fiat is strong in Europe and Brazil, where it could push Chrysler products forward.
The analysts see savings for Fiat in stopping some of its own development efforts and replacing them with Chrysler technology, such as large saloons and SUVs.
Deutsche Bank puts at zero the value of Chrysler to Fiat initially (noting Fiat paid no cash for its initial 20 percent stake), which Deutsche Bank said has no real downside other than the investment in time and energy if the joint venture fails.
There is one area where adding Chrysler could prove to be of value to shareholders, the Deutsche Bank report said. Pairing the two automakers forms a stronger automotive unit within the Fiat Group that could be spun off from the heavy truck and agricultural divisions.
"This would uncover the value potential of CNH (Fiat's agricultural unit), which we analyze to be the main asset," say the analysts.
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