According to the latest media reports, it appears that we will not see a merger between Fiat and Chrysler before 2014. These words came from Sergio Marchionne, Chief Executive of both Fiat and Chrysler. He also told reporters that he doesn’t foresee “any necessity” of a merger, adding that the Italian carmaker needs to resolve its financial stability first.
Fiat will keep its headquarters in Italy in case of a merger with Chrysler only if the investment conditions remain. For those who don’t know, Fiat owns 25 percent of Chrysler, but the Italian manufacturer aims to take a majority stake in the US automaker.
Still, the American manufacturer needs to refinance its government loans. Chrysler needs to repay a total of $7.46 billion to the US and Canadian governments.
“If the heart of Fiat will remain in Italy, we will have our head in several places: Turin for Europe, Detroit for U.S., one in Brazil and, in the future, one in Asia,” said the carmaker’s CEO. Marchionne also noted that Fiat is still losing money in Italy.
Fiat (Fabbrica Italiana Automobili Torino) was founded in July 1899 by a group of investors, including Giovanni Agnelli. Since then, Fiat has grown to become one of the major auto companies in the world, as achieved partly by acquiring other carmakers such as Lancia in 1968, Ferrari in 1969 (as shareholder), Alfa Romeo in 1986 as well as Maserati in 1993.
Chrysler, on the other hand, was founded on June 6, 1925 by Walter Chrysler when the Maxwell Motor Co. was reorganized into the Chrysler Corp. This name remained for more than seven decades until 1998, when it formed a merged partnership with Daimler-Benz. Chrysler Corp. and Daimler were then renamed as DaimlerChrysler AG. Chrysler began doing business as Chrysler Group.
In 2007, DaimlerChrysler AG sold 80.1 percent of its stake in the Chrysler Group to Cerberus Capital Management for US$7.4 billion. Chrysler Group became Chrysler Holding LLC and then Chrysler LLC after the sale was completed.
Chrysler was severely hit by the 2008 and 2009 automotive industry crisis. Low on cash and posting disappointing sales, Chrysler inked in January 2009 non-binding term sheet to form a global alliance with Fiat.
In April 2009, Chrysler filed for Chapter 11 bankruptcy reorganization and emerged from the bankruptcy proceedings in June of the same. The new company – Chrysler Group LLC – was owned by Fiat, United Auto Workers retiree pension fund (VEBA), as well as the U.S. and Canadian governments.