Fiat may control Chrysler, but it can’t reach in its pockets
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 $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 $612 million, and while the brand posted a $440 million profit, without Chrysler’s earnings, it would have been a $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 U.S. government. According to Marichionne, “Firewalls are up, [Fiat] can’t get to it.”
As part of the original deal with Fiat and the U.S. 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 off this year.
Fiat may control Chrysler, but it can’t reach in its pockets originally appeared on Autoblog on Mon, 06 Aug 2012 17:35:00 EST. Please see our terms for use of feeds.