Auto Makers: US Stelantis (Part 4C) 1st half

The best way to tackle Car Manufacturers in the US is to break them up by category. We started with Ford and GM earlier this month. Now it’s time for the “parent company” car maker you’ve probably never heard of even though they are currently responsible for many long standing and household recognized brands. Later in this series we’ll get to some of the the start ups and those that have been phased out or gone out of business.

Stelantis

Vital Stats: 2021-Present, Headquartered in Amsterdam.

Ever heard of Stellantis? You’ve probably heard of Chrysler and assumed that was the third spoke in the US automotive “Big Three.” Stellantis formed in 2021 as a multinational automotive manufacturing corporation. In order to understand this merger you must first know what happened to Chrysler, detailed below, but in short it became the Italian-American conglomerate Fiat Chrysler Automobiles (FCA).

FCA joined in a 50-50 cross-border merger with the French PSA Group. Upon forming Stellantis became the fifth largest automaker in the world, behind ToyotaVolkswagenHyundai, and General Motors. At the time of the merger, Stellantis had approximately 300,000 employees, and manufactured in 30 countries. Sales are worldwide in 130 countries.

Major brands include  AbarthAlfa RomeoChryslerCitroënDodgeDSFiatFiat ProfessionalJeepLanciaMaseratiMoparOpelPeugeotRam and Vauxhall. This article will focus on the US concerns since this is a US Automaker post. Other car makers will be covered with the respective countries where the brand is most commonly associated. For example, while Vauxhall has long been thought of as Chrysler of the UK most Americans are unfamiliar and unaware the brand even exists.

The deal is estimated to save the companies $4.22 billion. While the merger is thought of as 50-50 PSA got six out of the 11 board members and retained their CEO at the helm of the newly formed company. PSA shareholders paid a fee to acquire their shares in the new company which went to FTA shareholders to compensate them for differences in valuations. It looks to us like a David ate Goliath situation purely for the glory of becoming the #4 car maker in the world.

Chrysler

Vital Stats: 1925-Present, headquartered in Auburn Hills, Michigan as the flagship of the Chrysler Corporation.

Walter Chrysler founded the company from the remains of the Maxwell Motor Company. In fact it’s a little hard to sort Chryslers motor companies success from what was happening at Maxwell and at Willys-Overland before that. (Our post on Willy’s is coming). Walter was hired to help reorganize Maxwell like he had done for Willy’s, which promptly went out of business. Willies contributed a several parts from their prototype to the original 1924 Chrysler model, while Maxwell contributed it’s factory and employees.

The key to Chryslers success was targeting the budget conscious buyer with a reliable car. Early innovations like the first practical mass-produced four-wheel hydraulic brakes, and rubber engine mounts to reduce vibration helped Chrysler win the #2 slot in sales from 1936 to 1949. Chrysler also developed a ridged rim for their wheel (to keep a deflated tire from flying off) which became industry standard.

Classic Desoto

In 1928, the Chrysler Corporation began stratifying it’s vehicle offerings by price/class and function–an idea Walter stole, we mean, observed while working at GM, Buick division. At the low end they introduced a rebadged version of their 4-cylandar car under the name Plymouth. The midrange they called DeSoto. 1928 was the year Chrysler bought-out the Dodge brothers and initially put them at their high end. With that acquisition Chrysler also picked up Fargo Trucks which became their truck brand. Though in the mid-30’s Chrysler swapped Dodge with DeSoto in price point classification these remained the brands most associated with Chrysler during their run as one of the “Big Three” as an entirely US based auto-maker.

Chrysler Corp. has expanded and thrived in fits and spurts throughout it’s history. Often failing to adapt to new market condition. Starting in post war when Chrysler lost market share to both Ford and GM, having to borrow from $250 million in 1954 from Prudential Insurance to pay for expansion and updated car designs.

Chrysler World Headquarters

Chrysler Europe was born in the 1960s by taking control of French, British, and Spanish auto companies, which Chrysler later sold to PSA Peugeot Citroën for $1 in 1978. Struggling again with changing markets, increased U.S. import competition, and safety and environmental regulation in the 1970s Chrysler resorted to selling Mitsubishi vehicles branded as Dodge and Plymouth in North America.

New CEO Lee Iacocca was credited with returning the company to profitability in the 1980s which had resorted to $1.5 billion in loan guarantees from the U.S. government in the 1970’s. 1985 saw further expanding the Chrysler-Mitsubishi partnership in the creation of Diamond-Star Motors. Then in 1987, Chrysler acquired American Motors Corporation (AMC), along with it the Jeep brand which had been propping up it’s sales.

Evolution of Chrysler Logos

Recent Chrysler mergers and acquisitions:.
1998 acquired by Daimler-Benz, renamed DaimlerChrysler
2007 Daimler divested Chrysler, operated as Chrysler LLC (07–09), Chrysler Group LLC (09–2014)
2014 acquired by Fiat S.p.A. and becoming subsidiary of newly formed Fiat Chrysler Automobiles (“FCA”)

2021 Chrysler 300

What the above succession doesn’t explain is how Chrysler and Diamler didn’t get along, which caused Cerberus Investment group to broker the separation to keep investors from taking a bath. This isn’t the last time investors would get the short end of the stick. When the 2008 economy crashed and virtually killed every US auto maker (except Ford), Chryslers spiraled and June 10, 2009, Chrysler emerged from bankruptcy owned by the United Auto Workers pension fund, Fiat S.p.A., and the U.S. and Canadian governments as principal owners–defaulting on $4 Billion of investor money.

Fiat waited while Chrysler paid off the fed five years early, costing US taxpayers $1.3 Billion, then started buying out other investors. The merger became formal January 21, 2014, and became complete December 15, 2014, when it was renamed FCA US LLC, to reflect Fiat-Chrysler.

Dodge

Vital Stats: 1900-Present, Headquartered in Auburn Hills, Michigan. Founded by John F. and Horace E Dodge (aka The Dodge Brothers.) Acquired by Chrysler in 1928.

The Dodge story isn’t one of corporate raiding or rampant capitalisms on the part of some disgruntled executive. Horace and John started their company to supply precision parts and chassis to the nearby automotive factories–mainly Oldsmobile and Ford. In fact, they dropped Olds and made so many parts of the Model A that Ford offered them 10% of the company in exchange for work Dodge had already done. By 1914 the Dodge brothers introduced there first complete car, a four-cylinder touring car called the  Dodge Model 30-35.

The goal of the Model 30-35 was to be slightly upscale from Ford’s Model T. So they forwent the wood frame for all metal, 12-volt electrical systems, 35 horsepower engines, and a sliding gear transmission–all features that would later become standard for all cars. It marketed well and Dodge Brothers cars were ranked second in U.S. sales as early as 1916.

’89 Dodge Ram

It’s unclear if the Dodge brothers predicted that Ford would take over making their own parts entirely or if their decision was a fortunate side effect of already wanting to build their own car, but had they not made the leap they’d have likely had to pivot hard. Instead, Ford cashed the Brothers out of their original $10,000 investment for $25 million. Adding that to the almost $10 million they’d already made in dividends, the brothers were set for life.

Noteworthy: Gen. “BlackJack” Pershing bought a couple hundred vehicles from Dodge for the Mexican boarder dispute with Mexico (technically we weren’t fighting Mexico, we were fighting Poncho Villa).  Lt. George S. Patton led ten soldiers and two civilian guides in three Dodge Model 30 touring cars to conduct America’s first motorized military raid at a ranch house in San Miguelito, Sonora. You’ll be happy to note that we won. Dodge continued to supply vehicles to the US Military through WWI.

Since Dodge was already making cars (1914) before Chrysler came into existence (1925), how did Chrysler end up owning them? The sad answer is that the Dodge brother died. John of pneumonia/flu in 1920, and Horace in his grief over John’s death and a lifetime of hard drinking, died of cirrhosis in December of the same year. John was 55 years old and Horace was 52.Their widows promoted long-time employee Frederick Haynes to the presidency and the company lost market share steadily from 2nd to 7th over the rest of the decade.

Evolution of Dodge Logo

Dodge is as known for their trucks as for cars. Not long after taking control of the company Haynes signed a deal with  Graham Brothers of Evansville, Indiana. This lead to an era of “Graham” Trucks with Dodge-built chassis. Ultimately, when the widows sold the company to an investment group (Dillon, Read & Co.) Dodge took control of Graham trucks. When Dodge sold to Chrysler the three Graham brothers took their profits and started another car company (the Graham-Paige company).

Coming in the second half…Jeep and Ram Trucks. Look for it 7/25/22

One thought on “Auto Makers: US Stelantis (Part 4C) 1st half

  1. Pingback: Auto Makers: US Stelantis (Part 4C) 2nd half | The Kicker Blog

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