Fiat accompli for Chrysler?

"It's a wonder it didn't work," says Chrysler Australia MD, Gerry Jenkins, tongue-in-cheek, on learning for the first time of the Toyota Lexcen.

If he were bemused by the badge engineered Holden Commodore from the early-to-mid 1990s, Jenkins, was positively tossed by Falcon utes sold as Nissans and Toyota Camrys sold as Holdens. Presumably, he has his fingers crossed that he doesn't end up attempting to sell Fiats as Dodges or Alfas as Chryslers.

He's on pretty safe ground though. For about 10 years, the option was open for Chrysler to sell badge-engineered versions of Mercedes-Benz products, yet that never eventuated. Certainly, Mercedes-Benz technology and engineering found its way into Chrysler, Dodge and Jeep products, but never badge engineering alone. So there's no precedent from Chrysler's earlier alliance and there's unlikely to be anything so unholy from the company's latest tryst.

What does Fiat and Chrysler's 'non-binding term sheet' (more here) portend for the two corporations' different distribution networks in Australia?

Not much in the immediate short term, says Jenkins, who spoke to the Carsales Network on the condition that his remarks not be construed as necessarily the corporate view from Chrysler.

The Chrysler MD is not fully conversant with all aspects of the alliance as it has been proposed, but welcomes the initiative at a global level.

"Fiat is so strong in Europe... we're nowhere," he says, explaining that the relative low profile in non-traditional markets can conceivably be addressed by the other partner.

"We need Fiat in Europe as much as they need us in America. [In Europe] They're a household name..."

The situation is different in the Australian market.

"Australia is a relatively small market... with a lot of small players. Fiat is kind of smaller than we are," says Jenkins.

"They have about 22 dealers across all of Australia, we have 60."

There are wholesale infrastructure opportunities for the two companies locally, but there's no word on how the new contractual arrangement would affect third-party distributor, Ateco Automotive.

"At this point there's been no contact between myself and Ateco. It's just too early..." says Jenkins.

Asked whether there could be synergies at a retail level -- as Holden has done with GM's premium brands, Saab and Hummer -- Jenkins expresses doubt. His concern mainly lies with retailers who have responded to Chrysler's recent insistence on an upgraded corporate look for each outlet, "urging them to refurbish" and "modernise".

There are similar issues on the other side of the fence.

"The reality is there's already existing business people out there that have invested [a lot] and they have beautiful facilities. I've had the chance to visit a couple, drive by several -- and they have very strong brand positioning," he says of the Fiat and Alfa Romeo dealers.

It's the brand positioning that potentially stands in the way of a close-knit dealer network for both distributors. Would buyers go to a Chrysler-Fiat-Alfa dealership to purchase an Alfa GTV or a Jeep Wrangler? The actual diversity of models available through such a dealer would probably be no greater than is typically available from any Toyota dealer, but the Toyotas are all sold under the one brand. Jenkins sees some benefits for both the buyers and the dealers in combining business this way.

"Can they be promoted effectively under one roof?" he wondered out loud.

"There are many examples of that. From a dealer's perspective, it makes nothing but good sense. From a consumer's perspective... it makes nothing but good sense."

Involved in a teleconference just days before with Chrysler Co-President Jim Press, Jenkins has been advised that the transaction with Fiat will go from provisional to concrete in a matter of months.

"My understanding is by the end of April," he said. "They [Press and his market analysts] talked a little bit about Fiat, but mostly about Chrysler's future."

Jenkins is looking forward to future product development -- "the babies" -- from the union of the two companies, but as with any union, there's always an 'ex' in the background.

So how are relations with Daimler AG these days? For that matter, what sort of influence will the nuptials with Fiat bear on relations with Chrysler's other product partners?

"I don't know the answer to that," says Jenkins. "The only thing I can say is that... Chrysler still -- as part of its strategy -- will continue to look for strategic alliances."

"We're building minivans for [Volkswagen] in North America. We're building pick-up... utes for Nissan. That's the nature of the business, I don't think that's going to stop..."

Even with the ink dry on the decree nisi with Daimler AG, Jenkins claims that the two companies still work together on various projects -- and that will continue for a while yet. 

"All I know is that right now, MB still has 19.9 [per cent of Chrysler shareholding] and I still know a lot of German MB employees that are working at Chrysler.

"Future products that we have down the road have a lot of MB componentry in them, so I don't think the relationship is going to be severed anytime in the future.

"I don't know whether there's a desire to do so. MB probably want to recover some of their investment -- maybe that's why they're hanging on to 20 per cent. Or maybe they're simply hanging on to it so they can have that free-flow of technology back and forth.

"There's still some love there."