As we (and Automotive News) speculated yesterday, Chrysler has worked out a strategic alliance with Fiat, the company announced this morning.
Some details of the deal are yet to be determined but the broad outline is as expected: Fiat will give Chrysler access to its small-car platforms and power trains in exchange for a 35 percent equity stake in Chrysler. The small- and mid-size car segments have been an area of particular weakness for the Auburn Hills-based car maker. What this means for product-sharing arrangements with Nissan, which for example was to provide the platform for the Hornet small-car, is not clear.
In addition to the equity stake in the company, Fiat gets the U.S. presence and distribution it needs for a long-desired return to the U.S. market for Alfa-Romeo as well as Fiat-brand vehicles like the 500. Chrysler will apparently be able to take advantage of the Fiat's distribution network outside of the U.S., including growth markets as well as Europe, where Chrysler has never had a significant stake.
Not surprisingly, Chrysler believes that the tie-up is consistent with the terms of the federal loan agreements. In its statement announcing the tie-up the company stated:
"The proposed alliance would be consistent with the terms and conditions of the U.S. Treasury financing to Chrysler. Per the U.S. Treasury loan agreement, each constituent will be asked to contribute to Chrysler's restructuring effort including: lenders, employees, the UAW, dealers, suppliers and Chrysler Financial. Such steps would greatly contribute to Chrysler's long term viability plan. Completion of the alliance is subject to due diligence and regulatory approvals, including the U.S. Treasury."
There's no news yet as to possible management changes at the companies.
dougtheeng says:
07:20 AM, 01/20/09
Can't wait to see Fiat in NA.
flicmod says:
09:53 AM, 01/20/09
Cerberus got lucky with this one.
Here's to hoping Chrysler become competitive again.
estreka says:
09:06 PM, 01/20/09
I never saw this coming, but I must say it's a pretty wise move. Obviously the biggest benefactor will be Cerberus. Actually, the greatest benefactor will be the factory workers. Not only will many be able to keep their jobs, but the future of the Chrysler AG looks a little bit brighter.
Fiat benefits because now they have this huge dealer network and they can produce cars in the US, thus avoiding the stiff tariffs that force most Euro automakers out of the US. Bravo.