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Fiat, Chrysler join forces

2009-01-21 10:35

Fiat and Chrysler on Tuesday announced their plan to establish a new global alliance.

Indicative of the turbulent global automotive climate described by Fiat Group CEO Sergio Marchionne as a "rapidly changing landscape of the automotive sector," the Fiat Group will initially take a 35% stake in Chrysler.

However, the Italian carmaker has said it will not make a cash investment in the ailing US manufacturer, nor will it commit to funding Chrysler in the future.

The alliance will see Chrysler gaining access to Fiat's vehicle platforms, powertrains and components to allow it to expand its product portfolio.

Fiat will also assist the American manufacturer with its distribution in markets outside of North America, along with providing "management services" to support Chrysler's submission of a viability plan to the US Treasury.

As part of the new alliance, Fiat through a distribution agreement also gains access to the key US market, where the Fiat Group remains solely represented by high-end marques Ferrari and Maserati. As US consumers scramble for smaller, more fuel-efficient vehicles, the Fiat Group stands to benefit from having models from its Fiat, Alfa Romeo and Lancia nameplates in what remains the world's biggest vehicle market.

"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 recognised 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,” the CEO of Fiat Group, Sergio Marchionne said.

"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 compliment our current portfolio; a distribution network outside North America; and cost savings in design, engineering, manufacturing, purchasing and sales and marketing," said Bob Nardelli, chairman and CEO of Chrysler LLC.

"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."


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