Chrysler and Fiat announce strategic alliance

News coming out of America is that Chrysler has been, somewhat forced by the American government, to file for bankruptcy protection, the so called “Chapter 11” which provides breathing space for a new Chrysler to emerge from the ashes of the previous one.Part of this restructuring has seen the possibility that down the line Chrysler could well be owned by Fiat SpA, the huge European automotive company with marques such as Fiat, Ferrari, Alfa Romeo, and Iveco.Outgoing Chrysler Chairman Bob Nardelli explains:“We want to personally assure everyone that the new company will produce and support quality vehicles under the Jeep, Dodge and Chrysler brands as well as parts under the Mopar brand. Chrysler employees will become employees of the new company. Chrysler dealerships remain open for business serving our customers. All vehicle warranties will be honoured without interruption and consumers can continue to purchase our vehicles with complete confidence.”Chrysler has arguably been most effected by the current financial turmoil of the historic American Big three motor companies – the other two being General Motors and Ford, and many observers concluded that Chapter 11 protection was the most likely outcome for the business.Under the new alliance between the new Chrysler and Fiat the European manufacturer will initially hold a 20% stake in the new company with scope to increase this to 35% if the company can hit three key markers: 5% for bringing a 40 mpg vehicle platform to Chrysler to be produced in the U.S.; 5% for providing a fuel-efficient engine family to be produced in the U.S. for use in Chrysler vehicles; and 5% for providing Chrysler access to its vast global distribution network to facilitate the export of Chrysler vehicles. However part of the deal also stipulates that Fiat cannot become the majority stakeholder until all US government loans have been repaid in full."This partnership transforms Chrysler into a vibrant new company with a wealth of strategic advantages,” continues Bob Nardelli,. “It enables us to better serve our customers and dealers with a broader and more competitive line-up of environmentally friendly, fuel-efficient high-quality vehicles. Benefits to the new company include access to exciting products that complement our current portfolio, technology cooperation and stronger global distribution."As part of the restructuring and with the backing of the U.S. Treasury, agreement has been reached with General Motors finance arm, GMAC to become the preferred lender for Chrysler dealer and consumer business. GMAC will be able to offer the best long-term finance options for Chrysler dealers and customers with standard rate instalment products."Although UK Chrysler dealers will be concerned about the manufacturer’s move into bankruptcy protection, the move will give dealers time to assess their own situation and make any changes they feel necessary to secure the future of their own businesses," said Sue Robinson, Director of the RMI’s National Franchised Dealers Association (NFDA)."The NFDA is in the process of contacting all its Chrysler dealer members so that they know that support and advice is available if required."It is anticipated that the new phoenix from the ashes of the old company should spread its wings within 60 days.Let us know your thoughts below

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