It’s a deal: Fiat takes a 35% stake in Chrysler

Article by Christian Andrei, on August 26, 2010

This morning Chrysler issued an official statement concerning its relationship with Fiat, thus effectively ending the rumor build-up of the past days. There will an alliance between Chrysler and Fiat which is essential to the viability plan of the former as required under the bailout agreement.

This partnership would, among others, include access by Chrysler to Fiat's competitive, fuel-efficient platforms, powertrain and components to be manufactures on-site at Chrysler.

Furthermore, Chrysler will also gain access to Fiat's international dealership network which will aid its products in reaching new and untapped markets.

On the other hand, Fiat is keen on gaining access to American markets for the relaunch of Alfa Romeo and the collaboration will provide it with Chrysler's distribution network of 3,373 North American dealerships.

Fiat also plans to introduce the Fiat 500 in the US. Chrysler will also be assisted by Fiat with a restructuring plan to keep it afloat making use of Fiat's successful restructuring experience.

The partnership does not require Fiat to invest cash on Chrysler making the project very attractive. Chrysler has officially struck the same alliance with Nissan which is producing diminutives for Chrysler in Latin America.

Chrysler, on the other hand, will be making a replacement for Nissan's Titan pick-up. Besides this, Chrysler has lately been assembling a variant of the Grand Voyager for VW, designated the Routan.

These are logical moves for Chrysler, observes a senior Michigan-based informant. However, he cautioned against a full-blown merger which might be detrimental to the bailout package the US government has provided Chrysler. Chrysler has until the end of March to provide the federal government a plant showing that it is still viable after a $4 billion bailout package.

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