March 31, 2009

Obama links Chrysler aid to Fiat (Updated)


For Chrysler, America’s third biggest car manufacturer, the clock is ticking. The Obama administration has told the deeply troubled automaker it has 30 days of financial aid in which to complete its proposed deal for an alliance with Italy’s Fiat. And Chrysler has responded that it has reached an agreement on a framework of a global alliance with Fiat.

Chrysler’s troubles worsened last fall when the meltdown on Wall Street hit. So most analysts said the US automaker had little hope of surviving as a standalone company. Italy’s Fiat, in turn, has its own troubles, but it is still true that it is at the moment the stronger of the two and a recognized world leader in the area of innovative and environmentally friendly products, thanks to its chief, Sergio Marchionne, who has pulled the company back from the brink collapse since taking over in 2004.

So, in January, Fiat and Chrysler decided to lend a hand to one another. And yesterday the US President Barack Obama linked Chrysler aid to Fiat and made it clear that any aid to the American automaker would depend on it striking a partnership with Italy’s Fiat. “Chrysler needs a partner,” he said, and “if they are able to reach a solid agreement which protects American consumers, we will consider lending them $6 billion […] if no such accord is reached and if no other viable partnership surfaces, we will not be able to justify the investment of further taxpayer money to keep Chrysler operating.” Fiat, he added, “is ready to transfer its cutting-edge technology to Chrysler and, after having worked closely with my team, has promised to build new, fuel-efficient cars and motors here in America.”

A Chrysler-Fiat combination would be the world’s sixth-largest by vehicle sales, behind Ford Motor Co.

UPDATE - MARCH 31, 2009, 3:00 pm

1. Fiat CEO Sergio Marchionne is in the United States to hammer out the details of the partnership with Chrysler which will allow the Detroit No.3 to qualify for up to $6 billion in government loans.

2. Corriere della Sera:
Sergio Marchionne, who has collected more than his fair share of plaudits, was stunned. He said: “I want to publicly thank President Barack Obama, on behalf of the entire management team, for his words of appreciation for the work done in the past five years, and for his encouragement to finalise a solid alliance between Chrysler and Fiat. Talks with the task force have been hard but fair. We are convinced that we can achieve a result that will offer a credible future to this crucial sector of the economy. We are extremely happy that Fiat can play a key role in this effort”.


  1. I can't really see whats in this for Fiat.

  2. I think it’s a good deal for both sides. The accord calls for Fiat to take a 35% stake in Chrysler in exchange for Fiat’s platforms for its fuel-efficient, small and medium-sized compact cars, which will fill a gap in Chrysler’s range of models.

    I’m not an expert, but it’s a zero-cost operation for Fiat …

  3. Won't Fiat get a piece of the action from the $6 billion if Chrysler qualifies for it? But that's about it, Chrysler can't really offer anything else to Fiat, all of their products are a class lower than Fiat's, will be interesting to watch what happens here.

    Take care, Jay

  4. I've been on a Chrysler monster around California a few months ago, and it nearly broke to pieces.

    Apart from an 'image' point of view, I don't see any advantage for Fiat neither.