Chrysler Fiat alliance confirmed

Chrysler and Fiat have finalised agreements that confirm their strategic alliance that will see Chrysler gain small-car and small-engine technology and Fiat get a foothold in the US market in return.

As a result of the alliance Chrysler, recently emerged from Chapter 11 bankruptcy, will relaunch a revised model line-up, with more small cars likely. Chrysler will also gain access to Fiat’s Latin America and Russia distribution networks.

“This is a very significant day, not only for Chrysler and its dedicated employees, who have persevered through a great deal of uncertainty during the past year, but for the global automotive industry as a whole,” said Sergio Marchionne.

"We intend to build on Chrysler’s culture of innovation and Fiat’s complementary technology and expertise to expand Chrysler's product portfolio both in North America and overseas," continued Marchionne.

"Those Chrysler operations assumed by the new company that were idled during this process have or will soon be back up and running, and work is already underway on developing new environmentally friendly, fuel-efficient, high-quality vehicles that we intend to become Chrysler's hallmark going forward.

“The same attributes that first attracted us to this alliance – a global automotive company with first-class technology, a devoted workforce, improved efficiency, a strong, global distribution network and an unyielding passion for building great cars that consumers want – are even more true today."

The Fiat boss has also been named Chief Executive Officer of Chrysler Group LLC. Marchionne is expected to concentrate design and development in Italy, effectively running Fiat and Chrysler as one company and putting product development for Chrysler, Jeep and Dodge in the hands of Fiat.

Bob Nardelli, appointed by previous owners Cerberus, has stepped aside after seeing Chrysler through restructuring.

Cerberus and former owners Daimler are believed to have lost significant amounts of money under the restructuring, which has also seen auto union the UAW take a chunk of the company.

The US government also owns a chunk of Chrysler, with Fiat set to gain higher stakes of the company, from 20 per cent up to a total of 35 per cent, as it meets certain criteria. Fiat cannot obtain a majority stake in Chrysler until all taxpayer funds are repaid.

Under the terms approved by the US Bankruptcy Court, Chrysler LLC has been reformed as Chrysler Group LLC without certain debts and liabilities.

The UAW effectively owns 55 per cent of Chrysler, while the US Treasury and the Canadian Government own 8 per cent and 2 per cent respectively.

The first development of the alliance is expected to be the arrival of the Fiat 500 on the US market. No other Fiat models are expected to be sold as badged Fiats in the US, while Marchionne is expected to use Chrysler's dealership network to reintroduce Alfa Romeo to the US.

• Image by Jermz Photography via Creative Commons

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