Chrysler LLC confirmed Tuesday morning that Fiat S.p.A. will share vehicle platforms, powertrains and components to be built in Chrysler’s U.S. manufacturing facilities in exchange for a 35-percent share in the American automaker. That leaves Cerberus Capital Management with 45.1-percent of Chrysler, assuming Daimler AG still owns the other 19.9 percent. (The statement issued Tuesday morning does not mention the German company’s interest.) The announcement, made on the same day as Barack Obama’s inauguration, says Fiat “would provide management supporting Chrysler’s submission of a viability plan to the U.S. Treasury as required.”
Of course, Daimler last fall made it clear it wants to unload its shares of Chrysler, which led to a squabble over the value of those shares. Fiat is providing no cash in the Chrysler alliance deal, although Automotive News reports that Fiat may take its interest up to 55 percent in the future.
Chrysler’s statement goes on to note that Fiat “has been very successful in executing its own restructuring plan for the past several years. The alliance would also allow Fiat Group and Chrysler to take advantage of each other’s distribution networks and to optimize fully their respective manufacturing footprint and global supply base.”
Fiat is anxious to sell its 500 in the same market that has become the largest in the world for BMW Group’s Mini. Fiat wants to build its car here, for cost-savings and to avoid the vagaries of the euro-to-dollar relationship. And this deal may finally help return Alfa Romeo to the U.S.
Meanwhile, Chrysler gets much-needed mass-distribution in Europe and other overseas markets. The statement, calling the nascent alliance “a non-binding term sheet,” says it will provide Chrysler city and compact segment vehicle platforms, and will share such technology as fuel-efficient powertrains. And the United Auto Workers has been in the loop and is on-board. Why not? Fiats could become the only European cars built here in unionized U.S. factories.
Because Chrysler received $4 billion in federal loan guarantees late last year, the Treasury department must approve it. We knew last week at the North American International Auto Show that Chrysler would need a new ownership structure before the end of the year in order to survive. We (the collected automotive press) didn’t know it would come so quickly.
So a half-decade after General Motors had to pay Fiat Auto more than $3-billion not to buy it, the Italian company has finally found the right U.S. partner. Thanks in part to that GM “contribution,” Fiat is a much different company, in much better shape, although like the rest of the world, it’s suffering the same downturn as the rest of the global automotive industry.
Check back here for more details as they become available. Meanwhile, here are statements from the two automakers’ leaders.
Sergio Marchionne, CEO of Fiat Group (which is the part of Fiat S.p.A. that runs Fiat, Alfa Romeo and Lancia, but not Ferrari and Maserati): “This initiative represents a key milestone in the rapidly changing landscape of the automotive sector and confirms Fiat and Chrysler commitment and determination to continue to play a significant role in this global process. The agreement will offer both companies opportunities to gain access to most relevant automotive markets with innovative and environmentally friendly product offering, a field in which Fiat is a recognized world leader while benefiting from additional cost synergies. The deal follows a number of targeted alliances and partnerships signed by the Fiat Group with leading carmakers and automotive suppliers over the last five years aimed at supporting the growth and volume aspirations of the partners involved.”
And Chrysler CEO Bob Nardelli: "A Chrysler/Fiat partnership is a great fit as it creates the potential for a powerful, new global competitor, offering Chrysler a number of strategic benefits, including access to products that complement our current portfolio; a distribution network outside North America; and cost savings in design, engineering, manufacturing, purchasing and sales and marketing. This transaction will enable Chrysler to offer a broader competitive line-up of vehicles for our dealers and customers that meet emissions and fuel efficiency standards, while adhering to conditions of the government loan. The partnership would also provide a return on investment for the American taxpayer by securing the long-term viability of Chrysler brands in the marketplace, sustaining future product and technology development for our country and building renewed consumer confidence, while preserving American jobs."
Of course, Daimler last fall made it clear it wants to unload its shares of Chrysler, which led to a squabble over the value of those shares. Fiat is providing no cash in the Chrysler alliance deal, although Automotive News reports that Fiat may take its interest up to 55 percent in the future.
Chrysler’s statement goes on to note that Fiat “has been very successful in executing its own restructuring plan for the past several years. The alliance would also allow Fiat Group and Chrysler to take advantage of each other’s distribution networks and to optimize fully their respective manufacturing footprint and global supply base.”
Fiat is anxious to sell its 500 in the same market that has become the largest in the world for BMW Group’s Mini. Fiat wants to build its car here, for cost-savings and to avoid the vagaries of the euro-to-dollar relationship. And this deal may finally help return Alfa Romeo to the U.S.
Meanwhile, Chrysler gets much-needed mass-distribution in Europe and other overseas markets. The statement, calling the nascent alliance “a non-binding term sheet,” says it will provide Chrysler city and compact segment vehicle platforms, and will share such technology as fuel-efficient powertrains. And the United Auto Workers has been in the loop and is on-board. Why not? Fiats could become the only European cars built here in unionized U.S. factories.
Because Chrysler received $4 billion in federal loan guarantees late last year, the Treasury department must approve it. We knew last week at the North American International Auto Show that Chrysler would need a new ownership structure before the end of the year in order to survive. We (the collected automotive press) didn’t know it would come so quickly.
So a half-decade after General Motors had to pay Fiat Auto more than $3-billion not to buy it, the Italian company has finally found the right U.S. partner. Thanks in part to that GM “contribution,” Fiat is a much different company, in much better shape, although like the rest of the world, it’s suffering the same downturn as the rest of the global automotive industry.
Check back here for more details as they become available. Meanwhile, here are statements from the two automakers’ leaders.
Sergio Marchionne, CEO of Fiat Group (which is the part of Fiat S.p.A. that runs Fiat, Alfa Romeo and Lancia, but not Ferrari and Maserati): “This initiative represents a key milestone in the rapidly changing landscape of the automotive sector and confirms Fiat and Chrysler commitment and determination to continue to play a significant role in this global process. The agreement will offer both companies opportunities to gain access to most relevant automotive markets with innovative and environmentally friendly product offering, a field in which Fiat is a recognized world leader while benefiting from additional cost synergies. The deal follows a number of targeted alliances and partnerships signed by the Fiat Group with leading carmakers and automotive suppliers over the last five years aimed at supporting the growth and volume aspirations of the partners involved.”
And Chrysler CEO Bob Nardelli: "A Chrysler/Fiat partnership is a great fit as it creates the potential for a powerful, new global competitor, offering Chrysler a number of strategic benefits, including access to products that complement our current portfolio; a distribution network outside North America; and cost savings in design, engineering, manufacturing, purchasing and sales and marketing. This transaction will enable Chrysler to offer a broader competitive line-up of vehicles for our dealers and customers that meet emissions and fuel efficiency standards, while adhering to conditions of the government loan. The partnership would also provide a return on investment for the American taxpayer by securing the long-term viability of Chrysler brands in the marketplace, sustaining future product and technology development for our country and building renewed consumer confidence, while preserving American jobs."
