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Chrysler and Fiat merge plans

American car maker Chrysler and Italian car maker Fiat join forces

Chrysler and Italian car maker Fiat have announced they’ll join forces to fill in market gaps, exchange fuel-efficient vehicle technology and hopefully help stabilize Chrysler’s crippled books.

The Associated Press discussed in a recent article how Fiat would not be required to provide cash in the deal, but its willingness to partner with Chrysler could provide assurances to Washington about the company's long-term prospects.

Fiat's support will help Chrysler pay back the government loan

The agreement "will significantly improve the chances of Chrysler paying [the U.S. government loan] money back," said Rebecca Lindland, an auto industry analyst with the consulting firm IHS Global Insight.

The Bush administration gave Chrysler a $4 billion loan in early January to help Chrysler avoid bankruptcy. It was just a fraction of the amount of bail out money the U.S. car maker asked the government for.

Fiat won't run Chrysler

Fiat stated that there won’t be any direct cash buyout in Chrysler, and Chief Executive Sergio Marchionne said he had “absolutely no intention of running Chrysler” on Jan. 22.

The alliance is a great fit, said Bob Nardelli, Chairman and CEO of Chrysler, LLC. The plan is to exchange platforms and products missing in Chrysler’s current lineup, including the fuel-efficient city and small vehicle segment.

Sources:
Google News, Associated Press, “Mixed Reviews in Congress for Fiat-Chrysler deal,” Ken Thomas, 01/22/09
Forbes.com, “Statement On Fiat-Chrysler Alliance,” Market Scan, 01/20/09
Reuters.com, “Fiat CEO says has no intention of running Chrysler,” Thompson Reuters, 01/22/09

 

 

 
                                                                 

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