Chrysler, Cerberus and Fiat Announce Strategic Partnership
January 6th, 2009 | by admin |
Matthew C. Keegan asked:
The news about a possible Chrysler-Fiat partnership broker earlier in the week, but was quickly followed up with a formal announcement from Chrysler LLC that the two car companies have forged an alliance which will benefit each automaker.
Called a “global strategic alliance” by the companies, the deal will allow Chrysler to obtain small car Fiat platforms and use them to build their own fleet of vehicles for the North American market. In addition, Chrysler would gain access to Fiat’s global market, a move which could help the company expand beyond its domestic base.
For Fiat, the cost of the deal is virtually nothing as no funds are being exchanged. Instead, Fiat will gain a 35% equity interest in Chrysler, a move which will also permit the Italian automaker to begin selling cars stateside again. Currently, Fiat’s wholly owned subsidiary, Ferrari, is the only brand with a presence in North America, while the deal could allow Fiat to sell Alfa Romeo, Maserati and Lancia models in the US and Canada. In addition, Fiat could sell its own Fiat brand in the two countries, but likely will not in a bid to allow Chrysler to do that work for them.
“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 benefitting 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.”
Because Chrysler is the recipient of US Treasury funds to help keep its operation afloat, the deal will have to pass regulatory approval before it can be finalized. That move is likely to happen, and quickly, as the federal government has been insisting that Chrysler seek out some sort of arrangement to keep the company afloat.
With the Fiat deal, Chrysler could quickly transform its product line, producing a number of small, fuel efficient cars that would help the company compete with other automakers on its home turf and abroad.
Fred
The news about a possible Chrysler-Fiat partnership broker earlier in the week, but was quickly followed up with a formal announcement from Chrysler LLC that the two car companies have forged an alliance which will benefit each automaker.
Called a “global strategic alliance” by the companies, the deal will allow Chrysler to obtain small car Fiat platforms and use them to build their own fleet of vehicles for the North American market. In addition, Chrysler would gain access to Fiat’s global market, a move which could help the company expand beyond its domestic base.
For Fiat, the cost of the deal is virtually nothing as no funds are being exchanged. Instead, Fiat will gain a 35% equity interest in Chrysler, a move which will also permit the Italian automaker to begin selling cars stateside again. Currently, Fiat’s wholly owned subsidiary, Ferrari, is the only brand with a presence in North America, while the deal could allow Fiat to sell Alfa Romeo, Maserati and Lancia models in the US and Canada. In addition, Fiat could sell its own Fiat brand in the two countries, but likely will not in a bid to allow Chrysler to do that work for them.
“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 benefitting 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.”
Because Chrysler is the recipient of US Treasury funds to help keep its operation afloat, the deal will have to pass regulatory approval before it can be finalized. That move is likely to happen, and quickly, as the federal government has been insisting that Chrysler seek out some sort of arrangement to keep the company afloat.
With the Fiat deal, Chrysler could quickly transform its product line, producing a number of small, fuel efficient cars that would help the company compete with other automakers on its home turf and abroad.
Fred
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