As all the domestic automakers are making a mad dash to develop “small but cool” cars, I wish someone heard me back in 2005, just so I could be able to say “I told you so”. The day was when General Motors announced that it would not buy the Fiat Group and instead would pay them to go away. That was a day I knew a mistake was made.
For those of you who don’t remember, GM had a firm hold on Fiat. In fact, Fiat had negotiated a put option that could make GM buy the whole company if Fiat said so. Well as debt began mounting, Fiat needed saving. It was looking like Fiat was going to exercise its option and have Generals Motors buy them. But like a middle aged man divorcing his first wife, GM just wrote a big check to get rid of the Italian girl who was past her prime. The cost: $2 billion, and it may not have taken much more for GM to buy Fiat outright.
For this I say shame on you General Motors for not noticing the wealth that Italian design could have brought to your line up. And Fiat was one of the few companies out there that actually could have learned a lesson on build quality from GM. But I don’t need to dwell on it; the fact that it’s selling Aveos instead of 500s is punishment enough.
Only that’s not the whole story. In fact, I may need to say thank you GM. If General Motors had not abandoned Fiat, there may not be a Fiat Group today.
Fiat was always in trouble under GM. At the time, all of Fiat’s brands were in an identity crisis. Italians had no national loyalty to the cars because they knew Uncle Sam was really holding the pure strings, and the rest of Europe would not let beautiful looks forgive abysmal build quality. But once General Motors left town, things became clearer.
By being abandoned and left for dead, Fiat knew it had to pull itself up and show the world that the Italians had a contribution to the automotive community. By giving them their company back, General Motors also gave the Italians their national pride back. The $2 billion parting gift now meant Fiat had capital to develop new cars. It used the new money to insure quality on the Panda and Grande Punto. That success carried into the Bravo and allowed Fiat to purge its past for the popular 500.
The group has been revitalized from Lancia to Alfa Romeo. Design has always been a hallmark of the Italian brands, but now there’s something extra – passion. Oh yeah, and the interior no longer feels like it was made from graham crackers.
Unfortunately for GM, after all the work it put into Fiat, it only made a stronger competitor. In fact Fiat may even lease unused factory space from GM’s cross-town rival Chrysler. General Motors restored a great automotive icon. It paid for the new Fiat, but it doesn’t get to reap the benefits.
Shame on you GM; thank you GM.