Cash-strapped to flush in two years - Chrysler now holding up Fiat

You wouldn't have predicted it two years ago but American car firm Chrysler is now the one propping up Fiat from the brink of economic collapse.

Fiat stepped in to save Chrysler from bankruptcy back in 2009, having recorded net losses totalling $34 billion from 2006 through to 2010. But according to Bloomberg, it appears that Chrysler is now set to outpace its Italian parent company.Recording an operating profit of 864 million euros in the second half of 2011, compared to Fiat's 462 million euros, Chrysler outperformed its owner by 87% – and the gap is set to grow again in 2012.

For the tables to have turned so quickly, with Chrysler now shoring up Fiat, it shows that as the European debt crisis deepens the automotive industry is being hit hard with sales diminishing and in the case of Saab, whole companies on the brink.

Even with a reinvigorated Chrysler brand in its armoury, the news doesn't bode well for Fiat boss Sergio Marchionne's plans to create an integrated automotive group to rival that of the Volkswagen empire, especially after shares plummeted 40% in the last three months.

It looks like uncertain times ahead for Fiat then, and without Chrysler money keeping them afloat, the Italian car giant would find itself in an extremely vulnerable position – no matter how many little retro city cars you sell, if you don't have big enough margins things are going to get tough. Just ask MG Rover.

The news is good for Chrysler though, and with the launch of its new Ypsilon and Delta models in Europe (well, we say new models but we really mean warmed up Lancia leftovers) it bodes well for the American firm; news which can only be good for Fiat.
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