PARIS — The Fiat boss, Sergio Marchionne, has finally won complete ownership of Chrysler and can begin trying to realize his dream of building a world-class carmaker to compete with industry leaders Toyota, General Motors and Volkswagen. At the top of the to-do list: Stanch the deterioration in Fiat's home market and fix a glaring hole in its Asia business.
Marchionne, chief executive of Chrysler and Fiat, rescued the Detroit automaker from bankruptcy in a 2009 deal with the Obama administration that gave Fiat 58.5 percent of Chrysler and the potential to raise that stake. In an agreement announced last week, the companies said Fiat would buy the remaining 41.5 percent from a United Automobile Workers health care trust for $4.35 billion. The deal creates a company that last year had $114 billion in sales, making it the world's seventh-largest automaker.
Marchionne has long held that to be competitive and profitable in the global auto market, a carmaker needs to sell at least 6 million vehicles annually. The Chrysler-Fiat alliance, which sold about 4.5 million vehicles last year, remains short of that target.
The agreement capped months of thorny negotiations and opens the way to a possible New York listing of Fiat-Chrysler shares. It also smooths the way for a relaunch of the Alfa Romeo brand in the United States.
“It's a deal that Fiat had to get done,” said Harald Hendrikse, an analyst at Nomura in London. “As usual, Mr. Marchionne's pulled a rabbit out of the hat.”
To lift sales, Marchionne must look to emerging markets, analysts said.
Fiat has a good presence in Brazil, enjoying a healthy 23 percent of the market, though that share is under threat from aggressive entrants like Toyota and Hyundai.
But it has only a minimal presence in China, the world's biggest car market. Massimo Vecchio, an analyst at Mediobanca in Milan, said the only hope of reaching Marchionne's goal of 6 million vehicles was through a partnership with an Asian automaker that would allow it to gain access to the Chinese car market, the world's biggest.
“Fiat is late to the game in Asia,” Vecchio said. “That's the only way they'll be able to recover the lost ground.”
He suggested the Japanese automakers Mazda and Suzuki as possible partners.
While Chrysler is doing well in the United States, with sales rising 9.3 percent last year, Fiat is faltering in Europe. Its European sales — which include its own brand, as well as Lancia, Chrysler, Alfa Romeo and Jeep vehicles — fell 7.8 percent in the 11 months through November from the same period in 2012. That's far worse than the 2.7 percent decline in the overall European market.
In that time, the company's market share slipped to 5.8 percent from 6.2 percent. But the picture is even worse than it first appears, Hendrikse said. The company is overly reliant on Italy, which accounts for about a third of Fiat's sales. Excluding the Italian market, he said, Fiat's European market share is only about 2 percent.
“The Fiat brand at this stage is no longer a relevant competitor in the European space,” Hendrikse said. The company, he added, is “horrendously undercapitalized and badly positioned. I don't see how Chrysler is going to help them much in Europe.”
When the deal was first struck in 2009, Fiat played the white knight to Chrysler, providing the American company with leadership and technology at a moment of crisis. Chrysler's Dodge Dart, for example, is built on a modified Alfa Romeo platform.
But now the roles are reversed. Chrysler has been providing virtually all of Fiat's profit for the last three quarters, and with Europe's car market expected to grow only about 3 percent this year, that is unlikely to change soon.
Vecchio said Fiat was trying to move upmarket in Europe, where profit margins are higher than in the mass market. But the company's combined debt could hamper investment. Still, analysts are cautious about underestimating Marchionne, especially before an April update when the company is set to present a new business plan.
“The unified ownership structure will now allow us to fully execute our vision of creating a global automaker that is truly unique,” Marchionne said.
At about $4.35 billion, Marchionne is getting Chrysler for a small fraction of the $36 billion that Daimler, the maker of Mercedes-Benz cars, paid for it in 1998. Daimler, the German company, later came to regret that investment, essentially handing it to Cerberus Capital Management in 2007 to cut its losses.
Still, Marchionne faces an uphill climb, as he looks to build the company into a top player in the auto industry.
“What was true in 2009 remains true today,” Stephanie Brinley, an analyst at IHS Automotive, wrote in a research note. “Fiat and Chrysler independently were both weaker, smaller players. Combining two weak companies may not result in one strong company, even with the opportunities for better efficiencies of scale, plant utilization and purchasing power.”