Rumor: Peugeot might join Chrysler-Fiat alliance

Article by Christian Andrei, on August 27, 2010

The global alliance that have been the topic of much discussion lately has already been officially signed last week by Fiat Group, Chrysler and its parent company Cerberus Capital Management.

This alliance, which is an important element to the viability plan of Chrysler, would enable Chrysler to access Fiat's competitive, fuel-economical vehicle platforms, the latest powertrains, and parts to be manufactured at Chrysler's facilities.

On the other hand, Fiat will be providing Chrysler its distribution capabilities in important growth markets, including considerable cost-cutting opportunities and management expertise besides the aforementioned access to its technology and parts.

As reported, Fiat will not be putting in cash or be funding Chrysler in the future, but instead Fiat will be receiving 35 percent equity investment for all that it has offered Chrysler.

The advantages Chrysler will enjoy in this alliance includes city and compact vehicles sourced from Fiat, fuel efficient and eco-friendly powertrains, access to distribution networks for Chrysler vehicles in markets outside of North America.

Fiat, on the other hand, will also be provided the necessary platform to reintroduce its products, such as the Fiat 500 and Alfa Romeo, in the US markets, which will be built by Chrysler locally making a lot of business sense.

Lately, there have been signs that PSA Peugeot Citroen may be joining the alliance through a merger with Fiat, but nothing is certain though. There are reports coming out saying that Fiat is searching Europe to secure a credit line of up to 5 billion Euros ($6.4 billion) to fund it Peugoet takeover.

Meanwhile, the Agnelli family, which owns an estimated 30 percent of Fiat SpA, is trying to increase its stake in the merged company with 2 billion Euros ($2.56 billion) to retain a controlling stake. If this tripartite allegiance pushes through, it would become the third biggest in the global industry behind Toyota and GM.

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