Can Chrysler Survive Without Fiat?

News that Chrysler and Fiat have signed a non-binding strategic business relationship is something that should warm the hearts of Chrysler faithful everywhere. Just a few weeks ago it looked as if Chrysler would fail, perhaps be forced to liquidate its assets after ceasing production.

A Chrysler failure would be devastating as tens of thousands of jobs would evaporate, manufacturing plants would be shuttered, and millions of Chrysler, Plymouth, Jeep, Dodge, Eagle and AMC owners would be left without a company to support them long term.

But the Chrysler deal with Fiat isn’t a given.

First of all, Chrysler must present a recovery plan to Congress by March 31st, one that outlines the direction of the automaker. That requirement was put in place by Congress as part of its $17.4 billion loan package to the auto industry.  Chrysler won’t see additional funds without a plan in place and it had better be a good one.

Second of all, there are some rumblings from politicians who are contending that supporting Chrysler is the same as supporting a foreign car company. 19.9% owned by German automaker Daimler AG, Fiat is set to gain a 35% share in Chrysler, putting most of the ownership in foreign hands.  The loan package is for the American industry only; some Congressmen are openly objecting to helping Chrysler if the company is controlled by Fiat, Daimler and others.

All may not be lost if the Fiat deal sinks, however. Chrysler already has a pair of alliances in place with Volkswagen and Nissan, arrangements which could be expanded if each party agrees.

Right now, Chrysler is supplying Volkswagen with a minivan, the Routan, but they are not receiving a vehicle from VW. VW will be opening a plant in Tennessee in 2011, so perhaps a model built there for VW dealers could also be built for Dodge or Chrysler dealers.

Nissan and Chrysler have inked several deals recently, including a pair which would bring two new models to Chrysler by next year (including the pictured Dodge Hornet). In addition, Nissan has decided that building its big Titan truck on its own isn’t worth it and had signed an agreement with Chrysler whereby the next generation Titan would sit on the Dodge Ram platform. Talk of Nissan supplying a midsize car for Dodge and Chrysler has also surfaced in recent months.

You have to think that Chrysler is in talks with other automakers even as it awaits approval for the Fiat deal. Time is of the essence for America’s third largest automaker, a precious commodity the company certainly does not have much to spare.