Posted Aug 7th 2012 10:45AM
Despite the fact that Fiat has a controlling stake in Chrysler, the Italian automaker cannot take advantage of the Pentastar's recent success to ease its pain in Europe.
Chrysler is on a roll right now, with an improving product portfolio, most recently highlighted by the Dodge Dart small car. The Pentastar brand has combined cash and credit worth US$13 billion, but according to a new USA Today report, the Italian automaker cannot plunder Chrysler to address shortfalls on its end. Fiat was forced to cut capital expenditures in 2012 by US$612 million, and while the brand posted a US$440 million profit, without Chrysler's earnings, it would have been a US$302 million loss.
So while the temptation might be there to move around funds where it is needed most, protections have been put in place by the American government. According to Marichionne, "Firewalls are up, [Fiat] can't get to it."
As part of the original deal with Fiat and the American government bailout, Fiat cannot get access to Chrysler's increasing stockpile of cash. It can, however, keep profits, of which Chrysler earned $436 million in the second quarter of this year.
Click here for a closer look of the Dodge Dart on video.