• Jan 20, 2009


Chrysler announced this morning that the beleaguered automaker has entered into a global strategic alliance with Fiat SpA, giving both companies access to each others' products and markets. Fiat will also lend a hand in developing a business plan to present to the US Treasury; bringing to bear experience gained through the Italian auto giant's own restructuring. Overnight, Chrysler gets access to a range of small, fuel-efficient cars that are nothing like what is currently offered in Pentastar showrooms. Fiat's engineering will be ported over to some Chrysler manufacturing sites, keeping the plants busy and offering both brands ample capacity for the parts they will need to build cars.

For its efforts, Fiat will get a 35 percent equity interest in Chrysler and a way for the Italian automaker to re-enter the American market incognito by lending Chrysler the small, efficient cars it's sorely lacking. The partnership will go the other way, as well, with Chrysler vehicles gaining access to other markets through Fiat's distribution muscle. The UAW is on board, as are CEOs Marchionne and Nardelli. It's far more exciting to think of the vehicles that might come this way from Fiat, but who knows, maybe some market, somewhere, will discover it can't get enough of the Sebring. Press release after the jump.

[Source: Chrysler]

Fiat S.p.A., Chrysler LLC (Chrysler) and Cerberus Capital Management L.P., the private investment majority owner of Chrysler LLC, announced today they have signed a non-binding term sheet to establish a global strategic alliance.

The alliance, to be a key element of Chrysler's viability plan, would provide Chrysler with access to competitive, fuel-efficient vehicle platforms, powertrain, and components to be produced at Chrysler manufacturing sites. Fiat would also provide distribution capabilities in key growth markets, as well as substantial cost savings opportunities. In addition, Fiat would provide management services supporting Chrysler's submission of a viability plan to the U.S. Treasury as required. Fiat has been very successful in executing its own restructuring over the past several years. The alliance would also allow Fiat Group and Chrysler to take advantage of each other's distribution networks and to optimize fully their respective manufacturing footprint and global supplier base.

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.

As a consideration for Fiat Group's contribution to the alliance of strategic assets, to include: product and platform sharing, including city and compact segment vehicles, to expand Chrysler's current product portfolio; technology sharing, including fuel efficient and environmentally friendly powertrain technologies; and access to additional markets, including distribution for Chrysler vehicles in markets outside of North America, Fiat would receive an initial 35 percent equity interest in Chrysler. The alliance does not contemplate that Fiat would make a cash investment in Chrysler or commit to funding Chrysler in the future.

"This initiative represents a key milestone in the rapidly changing landscape of the automotive sector and confirms Fiat and Chrysler commitment and determination to continue to play a significant role in this global process. The agreement will offer both companies opportunities to gain access to most relevant automotive markets with innovative and environmentally friendly product offering, a field in which Fiat is a recognized world leader while benefitting from additional cost synergies. The deal follows a number of targeted alliances and partnerships signed by the Fiat Group with leading carmakers and automotive suppliers over the last five years aimed at supporting the growth and volume aspirations of the partners involved," the CEO of Fiat Group, Sergio Marchionne said.

"A Chrysler/Fiat partnership is a great fit as it creates the potential for a powerful, new global competitor, offering Chrysler a number of strategic benefits, including access to products that compliment our current portfolio; a distribution network outside North America; and cost savings in design, engineering, manufacturing, purchasing and sales and marketing," said Bob Nardelli, Chairman and CEO of Chrysler LLC. "This transaction will enable Chrysler to offer a broader competitive line-up of vehicles for our dealers and customers that meet emissions and fuel efficiency standards, while adhering to conditions of the Government Loan. The partnership would also provide a return on investment for the American taxpayer by securing the long-term viability of Chrysler brands in the marketplace, sustaining future product and technology development for our country and building renewed consumer confidence, while preserving American jobs."

"This is great news for the UAW Chrysler team and we look forward to supporting and working with them to ensure Chrysler's long term viability," said Ron Gettelfinger, President United Auto Workers (UAW).

"We're on board with this important strategic initiative as it will help preserve the long-term viability of our great company, its brands and of course UAW-Chrysler jobs," said General Holiefield, Vice President, United Auto Workers (UAW).


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  • 88 Comments
      • 6 Years Ago
      For those that have some concerns regarding the FIAT quality: in the latest years my parents, my wike and me have moved from Japanese (Honda), German (Mercedes) and Swedish (Saab) cars to FIAT (and Lancia). We are all satisfied. I used to have a Mercedes A and now I have a Lancia Musa and I'm impressed with the quality of the car.
      • 6 Years Ago
      Anything to get Alfa and Fiat back in The States!
      • 6 Years Ago
      Will this impact the previously announced Fiat/BMW/Mini deal? I thought the third gen. Mini was going to be developed on a Fiat chassis.
      • 6 Years Ago
      Key people of Chrysler are all italo-americans: Robert Nardelli, Thomas W. LaSorda, Lee Iacocca. It's normal that Chrysler choose the Italians for a partnership. In the world of future without barriers, the economy is going to be more ''ethnical'' and less national.
      • 6 Years Ago
      Jakesnake1294 and his Switzerland experience is spot on. I've spent 31 years in Europe, because I was born there, and I've yet to see a FIAT that could be described as reliable and well-built.

      Sure, in the last 2-3 years, the quality has improved. But it's by all accounts still substandard.

      On the following link, scroll down for reliability table compiled by German testing body TUV (7.7 million cars inspected over 12 months, at least 10,000 cars from each model). The most reliable Fiat made it to 90th place. And it's made in Poland. The top of the table is dominated by Japanese cars, followed by Germany. PT Cruiser made it to 115th place.

      http://news.auto.cz/aktuality/auto-bild-tuv-report-2009-vozy-2-3-roky-verso-toyota-corolla.html

      Sorry, but Fiat's poor quality is a fact, not myth.
      As I said yesterday, you buy a Fiat and pray... fiat voluntas tua, thy will be done...
      • 6 Years Ago
      So much for the lie, it vosts to much to certify European cars for the U.S. market.

      Reading this, you would think it was a cake walk, tomorrow we'll all be buying fiats.

      You won't be able to buy ANY current generation fiats and if you can expect to wait 2+ years.

      These things NEVER pan out.

      Just ask Mercedes.
      • 6 Years Ago
      There will be NO rebadging, the end.
      FIAT is a premium brand among small car makers, so while nobody cared when daewoos started being branded as chevys (well, the image of the latter brand might have dropped a bit), a Chrysler 500 would be about as ridiculous as a Dodge F430. I think the italians will try venturing with their own brand logos.
      • 6 Years Ago
      Good news indeed. Put me down for one Dodge-rebadged Bravo five-door. Call it the Omni.
      • 6 Years Ago
      Is it Fiaslyer or Chrysiat?
      • 6 Years Ago
      If they bring some of the better Fiats to the USA and sell through Chrysler dealers this is going to be great. I hear the Italians absolutely fell in love with the Challenger when it was over there tooling around.
      • 6 Years Ago
      I'll take a Mito and a 500!
      abnerheggs
      • 6 Years Ago
      At least one of our officials thought of this.
      ------------------------------------------------------
      Senator wants Chrysler loans canceled if Fiat takes control
      By Justin Hyde • Free Press Washington Staff • January 22, 2009

      WASHINGTON -- Chrysler LLC should be forced to pay back its $4-billion loan from the U.S. Treasury should Fiat S.p.A. take control of the automaker, a U.S. senator told President Barack Obama today. In a letter, U.S. Sen. Robert Menendez, D-N.J., said he did not want “American taxpayers paying to prop up the foreign auto industry.” Under the terms of the deal announced Tuesday, Fiat will take a 35% stake in Chrysler, and has the right to increase its stake to 55% if the two companies work well together.
      http://www.freep.com/article/20090122/BUSINESS01/90122091/-1/rss07
      --------------------------------------------------------------------------------------------------------

      I hope our officials follow through on this. Other Fiat news:

      Fiat reports 70 percent drop in 4Q profit
      By ARIEL DAVID, Associated Press Writer Ariel David – Thu Jan 22, 2009
      http://news.yahoo.com/s/ap/20090122/ap_on_bi_ge/eu_italy_earns_fiat_4
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      In 2000 GM gave Fiat $2.4 billion in stock for 20% of Fiat. Fiat was deep in debt and its stocks were falling fast. Four years later GM paid Fiat another $2 billion to get out of the deal which may have forced GM to buy all of Fiat. The cash helped keep Fiat afloat.

      Today Fiat is once again in deep debt and Italian banks arent cooperating to loan them the money. Will Chrysler be duped like GM was? One failing automaker teaming with another failing automaker seems like a bad idea to me.
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