As Chrysler has built up an enviable record of month-over-month sales increases and steadily growing profits, it has also been building up its cash. At the moment, its cash, cash equivalents, and available credit lines amount to about $13 billion; money for expanding production, developing new products and hiring new workers.
In the first half of 2012, Chrysler spent an estimated $1.9 billion on product development and upgrading facilities, 58% more than it did in the first six months of last year.
Contrast that with Fiat: caught in the downward spiral of the European market, Fiat desperately needs new product, which means plant upgrades and money for engineering, tooling and training. On the other hand, Fiat has to conserve cash.
While Fiat Group reported $440 million in profits yesterday, it was all Chrysler. Without the contribution from Auburn Hills, the Italian side of the house lost $302 million.
Fiat has reduced its cash burn by idling plants and postponing fresh vehicles like the new Punto. It also was able to save a significant amount of money last year by closing the Termini Imerese plant on the island of Sicily.
Fiat is not hurting for money at the moment. Its holdings in cash and credit are higher than Chrysler’s: nearly $15 billion. But it can’t operate in the red long term and it can’t touch Chrysler’s money.
Unlike what happened in when Juergen Schrempp created the “merger of equals” and absorbed Chrysler Corporation’s multi-billion-dollar nest egg, Fiat is legally barred from using Chrysler cash for its own operations.
When the deal was struck for Fiat to assume control of Chrysler in 2009, the U.S. and Canadian governments added a condition that sequestered the American automaker’s cash. When Sergio Marchionne put together the financing deal that allowed Fiat to repay its government loans, a similar condition was included in the package.
Until the loans are repaid or renegotiated, “firewalls are up,” as Marchionne said during yesterday’s conference call with analysts.
While the situation possibly makes for perilous times for Fiat, it also means Chrysler gets to build up and retain the resources necessary to ensure its own future.
Dodge and SRT are rejoining the Trans Am Series, with Miller Racing fielding two new Dodge Challengers at the Mid-Ohio Sports Car Course on August 15 and 16. Driving will be four-time series champion Tommy Kendall, making his first Trans Am start since 2004 in the TA2 series class. The cars appear to be driven by 5.7 liter Hemi engines. [...]
Though the Ram 1500 just had major upgrades, another refresh is due in 2017, to deal with the new F-150s and a possible Chevrolet Silverado update. So far not much is known about these trucks, except that they will likely include the Pentastar engine upgrade, might include the rumored 5.7 Hemi V8 upgrade, and are likely to have undergone weight reduction therapy [...]
With the supercharged 6.2 Hemi delivering 707 horsepower to the Dodge Charger and Challenger, the Viper boys are reportedly looking for ways to get back on top. While the Viper may be superior on a tight racing course, the straight-line performance of Charger and Challenger, in five-seaters with all the amenities, large trunks, and automatic or manual transmissions, is a challenge for Team [...]
Artist suzq044 has provided an alternative view of what the 2017 Ram may look like. This refresh will counter new F-150s. The trucks will almost certainly include the V6 engine upgrade, might include the rumored 5.7 Hemi V8 upgrade, and are likely to have more high-strength steel and aluminum to cut weight. The 2017 Ram is also likely to have aerodynamic improvements to increase highway [...]
It has been years since Allpar first reported on the future launch of a new Jeep Wagoneer, and the dropping of the Dodge Caravan. With Wagoneer on the books, Chrysler planners may have had mixed feelings about the sudden success of the Dodge Durango. They wanted to drop the Durango for a more-profitable Wagoneer (essentially a Durango with the Grand Cherokee suspension design [...]