Fiat now in driver's seat in Chrysler acquisition
Posted: Tue Mar 31, 2009 3:03 am
Last update: 2:00 a.m. EDT March 30, 2009DETROIT
The future of Chrysler LLC seems irretrievably tied to an Italian company boasting its own turnaround success after flirting with disaster earlier in the decade.
Fiat has been reborn with a knack for producing cool, small cars; its desire to return to the U.S. market after a 20-year break marks the best, perhaps only, hope for Chrysler.
The planned Fiat-Chrysler alliance outlined in January may have been given a "fail" by the U.S. auto task force, but the companies at least can resit the exam in 30 days.
Documents released by the Obama administration show that Chrysler can't survive without merging with Fiat SpA. The U.S. government also has no plans to provide any additional funding to Chrysler unless it links with Fiat.
It's a position, auto industry analysts say, that Fiat isn't likely to pass up. For giving Chrysler access to its small car technology, research and platforms, Fiat would have a quick way to make and deliver its cars in the U.S. without starting from scratch.
Chrysler would benefit by getting access up to $6 billion in federal low-interest loans with the partnership and a way to sell its cars outside North America.
"It makes sense for them," said IHS Global insight analysts Rebecca Lindland. "The appeal here is that it is still cheaper for Fiat to come into the U.S. through Chrysler."
Under tentative terms worked out between the two auto makers, Fiat has agreed to give Chrysler access to technology, platforms and research worth $10 billion. In return, Fiat could take a 35% ownership stake in the company.
Fiat chief Sergio Marchionnne has already met with the Obama Administration's automotive Task Force and has voiced his approval of such a deal. He has also updated the committee on what would be done if Fiat were to partner with the company.
In the meantime, Chrysler's cost-cutting efforts initiated between the company and its union in the U.S. and Canada will continue.
"I think a lot of it will now be led by General Motors Corp. (GMGeneral Motors Corporation)
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Sponsored by:
GM) ," said Jeremy Anwyl, Edmunds.com chief executive officer. "The unions and auto makers want pattern bargaining so that no one company has an advanatage over another. The UAW already has an agreement with Ford Motor Co. and is in talks with GM and Chrysler. That will continue."
The future of Chrysler LLC seems irretrievably tied to an Italian company boasting its own turnaround success after flirting with disaster earlier in the decade.
Fiat has been reborn with a knack for producing cool, small cars; its desire to return to the U.S. market after a 20-year break marks the best, perhaps only, hope for Chrysler.
The planned Fiat-Chrysler alliance outlined in January may have been given a "fail" by the U.S. auto task force, but the companies at least can resit the exam in 30 days.
Documents released by the Obama administration show that Chrysler can't survive without merging with Fiat SpA. The U.S. government also has no plans to provide any additional funding to Chrysler unless it links with Fiat.
It's a position, auto industry analysts say, that Fiat isn't likely to pass up. For giving Chrysler access to its small car technology, research and platforms, Fiat would have a quick way to make and deliver its cars in the U.S. without starting from scratch.
Chrysler would benefit by getting access up to $6 billion in federal low-interest loans with the partnership and a way to sell its cars outside North America.
"It makes sense for them," said IHS Global insight analysts Rebecca Lindland. "The appeal here is that it is still cheaper for Fiat to come into the U.S. through Chrysler."
Under tentative terms worked out between the two auto makers, Fiat has agreed to give Chrysler access to technology, platforms and research worth $10 billion. In return, Fiat could take a 35% ownership stake in the company.
Fiat chief Sergio Marchionnne has already met with the Obama Administration's automotive Task Force and has voiced his approval of such a deal. He has also updated the committee on what would be done if Fiat were to partner with the company.
In the meantime, Chrysler's cost-cutting efforts initiated between the company and its union in the U.S. and Canada will continue.
"I think a lot of it will now be led by General Motors Corp. (GMGeneral Motors Corporation)
News , chart , profile , more
Delayed quote data
Add to portfolio
Analyst
Create alert Insider
Discuss
Financials
Sponsored by:
GM) ," said Jeremy Anwyl, Edmunds.com chief executive officer. "The unions and auto makers want pattern bargaining so that no one company has an advanatage over another. The UAW already has an agreement with Ford Motor Co. and is in talks with GM and Chrysler. That will continue."