[madan80]

Fiat Group is in negotiations with Chrysler LLC to form a strategic partnership that could include a Fiat equity stake in the ailing U.S. carmaker.

The pact would help Chrysler speed up and strengthen its ongoing restructuring plan.

According to people familiar with the matter in Europe and Detroit, Fiat could give Chrysler access to its mini-, small-, lower-medium and upper-medium platforms, engines and transmissions. This would allow Chrysler to quickly build a complete new range of front-wheel-drive, low-emission vehicles.
t is not clear if Fiat would receive money or equity for giving Chrysler access to its technology.

A Fiat spokesman was not immediately available to comment. A Chrysler spokeswoman today said she couldn't provide immediate comment. A spokesman for majority owner Cerberus Capital Management LP could not be immediately reached for comment. Thomas Froelich, a spokesman for Daimler AG in Stuttgart, declined to comment. Daimler owns 19.9 percent of Chrysler.


Chrysler, which was acquired by private-equity firm Cerberus in 2007, saw its sales drop 30 percent last year and has been forced to throttle back on new investment. It received $4 billion in emergency government loans this month and plans to seek another $3 billion.

Fiat began looking at Chrysler last summer and more than a dozen executives spent weeks at Chrysler headquarters, industry sources told Automotive News. Fiat executives also held talks with Chrysler dealers and held meetings with Chrysler owner Cerberus in New York, the sources said.

Wide interest in small cars

Detroit's other carmakers, General Motors and Ford Motor Co., are also planning to introduce a complete range of mini, small- and lower-medium vehicles based on their respective designs currently offered or under development for Europe. These cars would be ready in 2010 or 2011.

Chrysler, which does not have a similar range of products built in Europe, has been looking for a partner to quickly get such vehicles.

It sought help from Japan's Nissan and Chery Automobile in China. So far, only the Nissan small car project has borne fruit.

Fiat gains U.S. access

Possible extensions of the Fiat-Chrysler deal could include access for Fiat to Chrysler's North American manufacturing operations and its distribution network.

Fiat has postponed the relaunch of its Alfa Romeo brand in North America until 2011 because it has had difficulty in finding a local manufacturing and distribution infrastructure.

Fiat Group CEO Sergio Marchionne has said he would like to sell the Fiat 500 minicar in the United States but only if it is built locally.

An alliance with Chrysler would allow Fiat to sell Alfas and the 500 in the United States, because sharing manufacturing sites with Chrysler would bring down costs.

Alfa cars and the 500 would be sold in North America through Chrysler, Jeep and Dodge dealers.

At the same time, Chrysler could access Fiat's distribution network in Europe and Latin America. Fiat is the No.1 automaker in Brazil, Latin America's largest market.

In 2010, Chrysler will bring to North America a Nissan-designed small car made in Japan. Chrysler began selling the Nissan-built Dodge Trazo in Latin America in late 2008.

In December, Chrysler and Chery ended 17 months of negotiations to initially give Dodge a China-built minicar for sales in Latin America.

Chrysler and Chery also ended talks to build a small car similar to the Dodge Hornet concept car on the Chery A1 platform, to be sold in the United States, Europe and other world markets.

Nissan Motor Co. now is planning to produce a small car based on the Hornet concept in calendar year 2010.

More

[phamilyman]

Lovely. And who will bail out Fiat then?

[amtak]

Originally Posted by phamilyman

Lovely. And who will bail out Fiat then?

Arre Hitanshu, How can you forget Mr. Tata? cheers:

[Fountainheader]

Originally Posted by amtak

Arre Hitanshu, How can you forget Mr. Tata? cheers:

Ah! Let him 1st get over with the JLR blues.

[madan80]

Update!!!

Fiat would get 30-35% stake

[SkyWalker]

So when's FIAT & Tata gonna bring those Jaguar's & Chrysler's here?

[amtak]

Originally Posted by SkyWalker

So when's FIAT & Tata gonna bring those Jaguar's & Chrysler's here?

Grande Punto as well

[aaggoswami]

I thought that PSA + Fiat would be a nice combo. They do have minivan ( IIRC ) platform sharing between them, so IMO this would work out better. Also Alfo Romeo and Peugeot are out of US market, so they could make it back to US.
But this news is really surprising. The markets are not similar and the platform sharing will not be available in almost all the segments, unlike Nissan-Renault.
What Chrysler will get is Fiat space management in car and diesel engines.
What Fiat will get is access to US market ( which is not in the best of its health ).
A bit weird partnership, IMO.

Originally Posted by SkyWalker

So when's FIAT & Tata gonna bring those Jaguar's & Chrysler's here?

I dont think that Chrysler would be coming any time soon.

[madan80]

personally i think its a brilliant move. at a time when chrysler is looking for some equity infusion, fiat steps in.

the dealers network for chrysler in the US is pretty strong, and fiat is looking at tapping that. similarly, the dealer network in europe for fiat is strong enough for chrysler to piggy back.

with fiats plant in india coming up by next year, we might even end up seeing transmissions and gear boxes in chryslers.

[amit]

I always knew the Italians had suicidal tendencies.

[supremeBaleno]

Originally Posted by amtak

Arre Hitanshu, How can you forget Mr. Tata?

In the current scenario, Tata himself can do with some bailing out.

[jagan0677]

Fiat is one of the very few brands which seems to have the potential to weather this storm. I have read somewhere that the top guy @ Fiat(who also happens/ed to be on the board of UBS) is a guy with a dynamic and 'shakeout' approach. Only thing that seems negative for FIAT is their internal control on manufacturing issues. In terms of products and strategy they seem pretty strong.
My opinion only. I have nothing to quote.
But somehow i find it hard to see potential benefits in this move.

Edit: Found it!! The guy is Sergio Marchionne

[rudrah]

Originally Posted by madan80

personally i think its a brilliant move. at a time when chrysler is looking for some equity infusion, fiat steps in.

the dealers network for chrysler in the US is pretty strong, and fiat is looking at tapping that. similarly, the dealer network in europe for fiat is strong enough for chrysler to piggy back.

with fiats plant in india coming up by next year, we might even end up seeing transmissions and gear boxes in chryslers.

And thats what FIAT did it in India with TATA when they had to re-establish back here Probably trying the same formula in US now.

[GTO]

Are they nuts? Fiat is fighting for survival as well, and has seen incredibly tough times in the recent past. Two wrongs don't make a right.

Or is Fiat eyeing a slice of that lucrative auto bailout plan?

[deepakhon]

Originally Posted by GTO

Or is Fiat eyeing a slice of that lucrative auto bailout plan?

This is something I had not thought about. It looks like the only positive that might come out of this deal.

I do know that Chrysler owns Jeep and also their dealership network in US is pretty good, but is Chrysler such a good partner that Fiat wants to have a stake of 30-35% in it? I do not see any logic in this deal.