Chrysler Is Pressing Forward With Fiat Plan
Over the past few weeks, we’ve all read a dizzying amount of news regarding the plight of the auto industry. Very little of that information is has been positive, with some of it bordering on the depressing.
Still, automakers have to find ways to make a go of it, otherwise they’ll find themselves absorbed in the crisis of the moment, perhaps seeing their own company collapse in the midst of the storm.
Chrysler LLC has been battling for its survival, managing to borrow several billion dollars from the federal government to keep itself afloat, while working diligently to seek out strategic alliances. One alliance with Fiat AG offers some promise, perhaps the right tonic to help with what ails America’s third largest car company.
Although the announcement of a strategic alliance with Fiat is a fresh one, Chrysler still has to make sure it passes muster with federal regulators. As part of its recovery plan, Chrysler is now beholden to the federal government to make good on its restructuring plans.
“The Fiat alliance enhances our viability plan, and we’re pleased with the progress of our discussions with Fiat. Meetings with all key constituents regarding concessions are collaborative and productive. These initiatives are totally aligned with our viability plan requirements, and will make Chrysler stronger and more competitive,” said Robert Nardelli, Chairman and CEO of Chrysler.
With Fiat in the game, Chrysler plans on keeping up its three brands — Jeep, Chrysler and Jeep — while filling out its product line. Chrysler is currently top heavy in larger cars, trucks and sport/utility vehicles, therefore what Fiat brings to the table would balance out its product line.
In exchange for access to Fiat platforms, Chrysler is to give Fiat 35% ownership of the automaker. Fiat isn’t paying for its share in Chrysler as the platforms and related technologies are basically being treated as payment in kind.
Chrysler had previously engaged in discussions that pursued a consolidation partnership with General Motors. After a series of exchanges, GM stated that the option of a consolidation was “off the table.”
As part of Chrysler’s viability plan submitted to Congress, the Company requested a $7 billion bridge loan. After extensive review, U.S. Treasury awarded the Company $4 billion of the $7 billion, with $3 billion to be distributed pending the interim review of Chrysler’s viability plan on Feb. 17, and final review on March 31. It is important to note that no U.S. taxpayer funds would go to Fiat.
Chrysler is working to meet all guidelines as defined by the terms of the loan from the U.S. Treasury and looks forward to presenting its viability plan on Feb. 17.
Source: Chrysler LLC
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