The Patriot Post® · The Other Government Motors Is Now Italian

While saving Chrysler to the tune of the government losing $1.3 billion wasn’t as expensive to taxpayers as propping up General Motors, the end result is that one of Detroit’s Big Three is now lock, stock and fender a subsidiary of Italian automaker Fiat. Stymied in the American market 30 years ago with a car line so known for unreliability that humorists called the Fiat name the acronym for “fix it again, Tony,” suddenly it got a second chance with a company already in possession of a line of dealerships and the established brands of Dodge, Chrysler, Jeep and Ram. All that for the contribution of what was termed “intellectual property” that didn’t cost Fiat one euro for its first 20% stake in Chrysler, although eventually Fiat bought another 38% for $2.2 billion. It was as if Fiat won the lottery.

The final Fiat payment of $4.4 billion to assume complete control of Chrysler won’t go to taxpayers, either. That payment goes to a United Auto Workers trust fund, which was given a portion of the company during an unusual bankruptcy process that shut out several more deserving creditors.

Fiat’s first move in its return to the American market was the introduction of the 500 model subcompact, which has sold reasonably well. But John Berlau of the Competitive Enterprise Institute writes, “Chrysler being tied to Fiat’s European woes makes it less and less likely that much of the profit will be reinvested in the U.S. It’s likely that the bulk of that profit will instead be plowed into Fiat’s operations in Italy.”

Foreign ownership and federal bailouts are nothing new to the smallest member of the Big Three. After a Carter-era series of federal loan guarantees saved Chrysler and made Lee Iacocca a household name, the company merged with German automaker Daimler AG in 1998 to begin a decade as DaimlerChrysler. That “merger of equals” wasn’t enough to prevent its eventual bankruptcy, and the fear is Fiat will drive Chrysler to the same fate yet again.