General Motors and Chrysler have been in meetings with the U.S. Treasury this week to discuss how and when the Detroit automakers can again become viable. Both companies are asking for additional billions to fund their perspective turnarounds, but Chrysler is also defending a proposed partnership with Fiat. Fiat's pending 35% ownership stake would provide Chrysler with small and mid-size cars and more fuel efficient powertrains, but no cash.
Some in Congress have questioned whether or not to give money to a company that would have such a large foreign ownership stake. Fiat CEO Sergio Marchionne gave the government task force a great reason to welcome the Italian automaker's stake: Fiat can help Chrysler repay loans. Does that mean Fiat will use its own cash on hand to help Chrysler keep the lights on? We don't know, but a Fiat partnership could give Chrysler far more than a sugar daddy in the Mediterranean. Giving Chrysler small and medium platforms that the company doesn't already have and likely can't afford to develop on its own will save billions of dollars in development costs, which will ultimately help Chrysler become more competitive on the cheap. Without high quality, fuel-efficient vehicles, Chrysler doesn't have much of a chance of ever repaying the U.S. government.

[Source: Detroit Free Press]

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