Fiat, led by CEO Sergio Marchionne, revealed the new strategy for its Chrysler Group and introduced key members of the management team to the media Nov. 4 at Chrysler's Auburn Hills (Mich.) headquarters.  David Cole, chairman of the Center for Automotive Research, was among those in attendance.  Cole discussed his reactions to the event with @Ford Online.  

Q. What was your general reaction to the program?

A. The chemistry among the leadership team was quite impressive.  They were enthusiastic and appeared to be very confident.  I think Sergio Marchionne is a very passionate individual.  You can tell he is a very strong leader.  He is very funny and he handled media questions quite brilliantly.  But he's got everybody's feet to the fire.

One of the points made repeatedly is that Chrysler has its money.  There will not be any additional funds from Fiat.  Chrysler has to make that work.  Their tone was this is Chrysler's last shot and they have to put things together very quickly.  They realize they are either going to make the merger work or die.

Q. Was there much discussion about specific product on the way?

A. No.  There weren't a lot of details.  They weren’t giving everybody a sneak peak at future designs. This was a layout of the strategy that they were going to follow and to let people see the leadership team.  They don't have the product portfolio they would like to have over the next couple of years. There is near-term emphasis on freshenings, new interiors and a couple of new products, but the next couple of years are critical.

Q. Will future Chryslers be rebadged Fiats?

A. No.  They made a point of that.  They will, however, be bringing the Fiat 500 small car to this market.  In the future, the basic vehicle architectures will be consistent around world, with unique cars developed from those platforms for individual markets.  It's a good, solid plan for integration – dramatically different than anything Chrysler ever could have achieved with Daimler.  The trick is getting to that point.  If they pull it off, they'll be a formidable player.

Their success will depend on a reasonable U.S. market over the next couple of years.  If we continue with annual sales between 9 million and 10 million units, that will be disastrous for everybody, but particularly for Fiat and Chrysler.  However, if we reach 11.5 million to 13 million the next couple of years and they are able to retain a reasonable amount of market share, they should be okay until the integrated products begin to kick in. 

Q. Do you think this is the right fit for both companies?

A. In general, the concept of this merger with Fiat is the right thing to do.  The companies are remarkably similar in size and they both lack a global presence and economies of scale.  I think Fiat and Chrysler were both dead without one another.  They needed each other very badly.

It's notable that Fiat has really made a lot of progress in the last few years.  Their quality has improved substantially along with their powertrain execution.  They are a much better company than they were four or five years ago.

Q. Why did DaimlerChrysler fail?

A. DaimlerChrysler was never workable.  It was not a merger of equals.  They couldn't integrate.  In the case of Fiat, there are some complementary products.  It’s a much more compatible relationship in that regard.  With Daimler – a company with a high-end brand – they were concerned their image would be tarnished by Chrysler, and Daimler's costs were much higher than Chrysler's, so there was minimal opportunity for integration.   There is vastly greater potential between Fiat and Chrysler.

Q. Is a healthy Chrysler good for the industry?

A. That's hard to answer.  If Chrysler fails, someone else will get their sales.  From an overall political standpoint, it's probably good.  My personal view is that all three U.S. domestic automakers, with their dramatic cost reductions, are going to be positioned quite well.

The day of huge incentives and overproduction is going to disappear.  If we can return to a reasonable level of incentives, I think there is opportunity for all three to gain cost reductions in the area of $4,000 to $6,000 per vehicle, which would provide an opportunity to be very profitable fairly quickly when the market improves.  However, the two big questions I have with respect to the market are the trajectory of its improvement and the uncertainty of energy prices.