Chrysler Deal Puts Fiat in D.C. Spotlight

Venerable Italian Carmaker Has Little Experience With Congress

Posted June 23, 2009 at 6:16pm

Italian automaker Fiat SpA, the newest entrant to the American car market, is taking a low-key approach to its lobbying strategy, deciding for now against opening a K Street outpost and relying instead on a tractor-making subsidiary to make its case before lawmakers.

The Turin, Italy-based manufacturer now owns 20 percent of the Chrysler Group, a new company that earlier this month emerged from the wreckage of the once-storied automaker. A United Auto Worker’s health care trust fund acquired 55 percent of the new company as part of the deal, while the American and Canadian governments now share a 10 percent stake.

According to the terms of the new alliance, Fiat could eventually control more than a third of Chrysler. Fiat CEO Sergio Marchionne also was recently installed as Chrysler’s new CEO.

A Fiat representative on Tuesday declined to discuss any new lobbying moves by the company.

Still, the expectation is that Fiat will continue to lean on its lobbyists from heavy-equipment manufacturer Case New Holland, a Fiat subsidiary whose lobbying team worked with lawmakers on the purchase of Chrysler.

In February, amended lobbying documents filed by CNH stated that its in-house team was involved in “the automobile industry restructuring.—

CNH’s lobbying shop referred all inquiries to Fiat. A Chrysler representative also declined to comment, confirming only that the company bearing Lee Iacocca’s legacy will continue to explore its options.

Jack Bonner, a former outside lobbyist for Chrysler during the 1990s, said Fiat would be wise to get its K Street team in order — and fast. Lawmakers continue to feel the wrath from the company’s nearly 800 dealers who are losing their franchises as part of the Chrysler disintegration.

The National Automobile Dealers Association, which represents new-car dealers, has recently conducted a high-profile campaign to bring the dealers’ plight to lawmakers’ attention.

“We’re living in a period in which the impact of grass roots on the Hill on legislative outcomes is greater than it’s ever been due to [President Barack] Obama’s great success with his campaign,— said Bonner, an early grass-roots exponent. “To the extent that they choose to not get involved in Washington — and to not get their workers, suppliers and other people in the communities involved — it will be something that they may regret not doing.—

Instead of relying on its American affiliates, Bonner said Fiat should open its own office, where lobbyists would be tasked with navigating the legislative process in a market where the company has virtually no experience selling cars.

“That would be in their self-interest,— Bonner said. “The more transparency, the more they present what they’re doing … is in their interest.— And, he added: “It’s better done personally in Washington versus in New York or some other place.—

Another automotive industry lobbyist also agreed that Fiat would be unwise to continue channeling its lobbying operations through CNH. In addition to its Jeep brand and Dodge truck line, the lobbyist said Fiat will inherit all of Chrysler’s baggage, including its reputation for having to be bailed out by taxpayers and for costing thousands of well-paying jobs after years of mismanagement.

“If you’re Fiat … you’ve now got a whole new picture here,— the lobbyist said. “You’ve got all of the issues that Chrysler had, plus you’re going to have international issues. … They’ll go in and inventory their resources just like any other manager would and anticipate what the needs are.—

While perhaps safe for now, another lobbyist predicted that Chrysler’s in-house team ultimately may become collateral damage of the Fiat deal. Managers at the Italian carmaker could decide that its inherited team is damaged goods — and, given the new administration, that the time is right to stock Chrysler’s downtown shop with a new team of Democrats.

“Cleaning house gets you a fresh face on the Hill,— the lobbyist said.

The lobbyist also speculated that Chrysler’s outside team — Timmons and Co. and Venable — also could fall victim to the purchase by Fiat.

Timmons has represented Chrysler since Iacocca first pleaded for a $1.2 billion lifeline from taxpayers roughly three decades ago.

“What I’ve seen happen at times is that the buyer doesn’t have a great appreciation of the history and value of the [outside] team,— the lobbyist said. “You can replace people, but you can’t replace institutional knowledge.—