I appeared on the Cavuto show on Fox Business News last night (see Appearance on Cavuto for specifics). We talked, in general terms, about Fiat and Chrysler.

The segment ran for a total of about 4 minutes. There’s not much meaningful information you can share in that amount of time, but I tried my best. Unfortunately, we only got to talk about one aspect of the deal – the integration. I would have welcomed the opportunity to share my views on the specifics of the integration in greater detail. I would have also liked to have touched upon Fiat’s product portfolio and whether their products will inspire the American consumer, especially in a market that is already saturated. But we never got there.

Although I don’t necessarily agree with Cavuto’s politics, on a personal level I thought he was very gracious, charming, and funny even. During the commercial break we discussed some of the ills confronting the global auto industry – i.e., the severe overcapacity problem (in the order of 20-30 million units per year). We also talked about the prospects of Chrysler ending up right back in bankruptcy within 5 years. That is a distinct possibility.

I have been trying to find the video link to post it, but I have not had any success thus far. I will definitely post it when/if I do find it.

I was able to find a transcript of the interview. The transcript (with some minor edits for clarity) appears below.

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CAVUTO: Well, Robert Salomon thinks that Fiat may be nuts. He says that it is a stretch to imagine the Italian automaker could bring Chrysler back to life. And here, Robert, he’s a very thin, fit guy, he could fit in those Fiat cars, it’s certainly not that as an issue. Why don’t you think this works?

SALOMON: Well, prima facie, if you look at the deal it actually seems to make some strategic sense. On the one hand you have Fiat whose strengths lie in the small cars, engine technology, fuel-efficient automobiles and Chrysler whose strengths lie in minivans and Jeeps. So, you put that combination together, the product portfolio looks pretty nice. Also geographically…

CAVUTO: But there may have been others who where that (INAUDIBLE, but I think he said something to the effect that there were other suitors who shared such complementarities with Chrysler) like Fiat who could have similarly seen such a merger and they did not.

SALOMON: That was the proposition behind the entire Daimler Chrysler deal to begin with. It was Daimler has the high end saloons and Chrysler had the smaller sort of mass-market brand and that combination then would create strategic overlap. So, you could look at this deal and say there’s some strategic overlap and even geographical [overlap], you have Chrysler’s strength in the United States [and Fiat's in Europe].

MY SIDEBAR: Although I said, “overlap”, I meant, “complementarity.”

CAVUTO: [But why don’t] you think it’s going to work, if it makes sense on paper?

SALOMON: I think when the rubber hits the road you need to think about the integration and integrating these two firms; and I think Fiat, at this point, is getting itself in over its head, especially in taking on Chrysler.

CAVUTO: One other issue, I always look at if it was so attractive a lot of people would be bidding for it. Have you ever been to school where you look back and see the most hideous, horrendous troll of a person in your class got married, right? In my case, that was me. Everyone said, gee, Neil got married, what the hell? And so I am saying that there is a socket for every wrench, you know? But I am wondering if there were any other interest sockets for the wrench they would have popped up. Fiat kept being the only one. We’re interested. We’re interested. It’s sort of like a, you know, “Shrek” with the queen, deal. You know? Like, oh well, that’s it. You know?

SALOMON: Yeah, and you know, I would not characterize Fiat as the most sound automobile maker in the world right now, either. Fiat has had its share of trouble. You go back five years and Fiat was on the brink of bankruptcy.

CAVUTO: Right, they’re hardly a management test case, here.

SALOMON: Right, so if you look at — and that, actually, though, is Sergio Marchionne’s argument which is, “Hey, we have been here, we’ve been through bankruptcy. We know what it means…”

MY SIDEBAR: I was in the process of saying, “to turnaround a troubled automaker“ when he cut me off.

CAVUTO: We know how to screw up. We’re experienced at screwing up. That’s a hell of a way to market yourself. How do think (INAUDIBLE), if they get back some of the initial marketing and integration hurdles you talk about, which they never really quite did with Daimler. Then what? On paper, like you say, it does make sense small and large, these oil prices keep rising up as they seem to as of late, there could be something to this, but even then the Fiat cars are delayed getting here, quite some time, right?

SALOMON: Yeah, I mean it takes five to 10 years for Fiat and Chrysler to work as a unified organization.

MY SIDEBAR: I did not mean to imply that it would be five years before Fiat cars start arriving on the U.S. shores (they will begin selling here relatively quickly – within 1-2 years), only that the integration process will take that long.

CAVUTO: Really, that long?

SALOMON: Yeah, I think so. I mean, you’re looking at five years for this integration. The integration, again, it’s hard enough to do a domestic integration, but to do this now on a global scale where you have cultural problems, language problems, institutional problems across these two countries that makes it very, very difficult to manage.

CAVUTO: So, you think Steve Rattner, the auto czar, whoever is spearheading this process, was just pushing this because it was the only deal in town?

SALOMON: That may be right. The alternative, right, was liquidation and was the wholesale liquidation of Chrysler. And I think the question there became, “Are we willing to live with the consequences of that outcome?”

CAVUTO: Very good stuff. Robert, thank you.

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