If this partnership brings some interesting new vehicles – especially Alfa Romeos – to the North American market, I’m all for it. (I just hope Fiats are more reliable than they were in the seventies – and that this turns out better than the last time Chrysler joined forces with an Italian automaker.)
In an attempt to revive two of the world’s storied auto makers, Italy’s Fiat SpA and Chrysler LLC are poised to announce a partnership as soon as today in which Fiat could take control of the U.S. company’s operations, people familiar with the matter said.
Under terms of a pact that is being hammered out, Fiat is likely to take a 35% stake in Chrysler by the middle of this year. It would have the option of increasing that to as much as 55%, these people said.
Fiat, the stronger of the two, wouldn’t immediately put cash into Chrysler. Instead it would obtain its stake mainly in exchange for covering the cost of retooling a Chrysler plant to produce one or more Fiat models to be sold in the U.S., these people said. Fiat would also provide engine and transmission technology to help Chrysler introduce new, fuel-efficient small cars, they said.
Fiat has for months been exploring ways to gain a foothold in North America, hunting for a partner that could manufacture its Fiat 500 mini model and re-launch its high-end Alfa Romeo brand in the U.S.
So, if Chrysler is saved by a bit European automaker, I guess they won’t need anymore bailout money, right? Right?
The pact with Fiat could give Chrysler a stronger case as it seeks more loans from the U.S. government. Chrysler nearly ran out of money late last year, before the Treasury Department provided $4 billion in emergency loans, and has suffered a steep drop in sales in the past three months. The auto maker needs to show it can remain a viable business by March to keep those loans and to qualify for the $3 billion in additional government aid it says it needs.
Last week, a vocal critic of Chrysler, Sen. Bob Corker (R., Tenn.) said the company needs to “merge or go away.” A Chrysler official declined to comment on Sen. Corker’s remark.