FIAT / CHRYSLER 'Strategic Alliance'

Fiat and Chrysler

Tuesday's Detroit News:

Fiat and Chrysler sign alliance plan
ROME -- Fiat and Chrysler have signed a nonbinding agreement for a strategic alliance that would give the Italian auto empire a 35-percent stake in the troubled U.S. carmaker.

The two companies said in a joint statement Tuesday they would share technologies and vehicle platforms. Under the proposed alliance, Fiat would not invest cash in Chrysler but would provide access to its products and platforms.
 
It Looks Official, I'm Not Sure What To Think..

FIAT & Chrysler signed... Today.:confused:

http://www.google.com/hostednews/ap/article/ALeqM5gtozmSgzCVQtCkQ0B8b-lpDDI5rAD95QVAK00
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Fiat and Chrysler sign alliance plan

By ARIEL DAVID – 8 minutes ago
ROME (AP) — Fiat and Chrysler said Tuesday they have agreed to form a strategic alliance that would give the Italian auto empire a 35-percent stake in the troubled U.S. carmaker and could eventually bring it full control.
The deal means Chrysler, which is fighting off bankruptcy and struggling to sell less fuel efficient larger models, would have access to new markets and cheaper, more environmentally friendly technologies.
Fiat Group SpA, which makes Fiat, Lancia and Alfa Romeo vehicles, would gain a foothold in the huge U.S. market. The company has bounced back recently with cars such as the tiny 500 two-door hatchback, a hit remake of an earlier iconic Fiat model that competes with Daimler AG's Smart, BMW AG's Mini and other very small cars.
The two companies said in a joint statement that in exchange for sharing its small-car platforms and fuel-efficient engines, Fiat would take an "initial" 35-percent stake in Chrysler but would not invest cash.
The indication that Fiat could eventually gain full control was further backed by John Elkann, Fiat vice president and heir of its founding Agnelli family, who was quoted as saying by the ANSA news agency that the company's stake "could increase."
However the joint statement stressed that the Turin-based Fiat was not committing to funding Chrysler in the future.
CreditSights analyst Brian Studioso said Fiat, which has its own challenges this year from continued drops in car and truck production, isn't in a position to part with cash.
"For Fiat, the non-cash transaction would limit downside exposure while giving the company a foothold in the North American market," Studioso wrote in a note to investors.
For Chrysler, based in Auburn Hills, Michigan, the deal would mean breaking out of the North American market and gaining access to more competitive products.
"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 complement our current portfolio (and) a distribution network outside North America," said Bob Nardelli, Chairman and CEO of Chrysler LLC.
Under the deal, Chrysler will be able to manufacture and market in the United States new models based on Fiat platforms as well as the Italian company's own products.
The alliance is subject to a review of company finances and regulatory approvals, including by the U.S. Treasury Department, which last week announced an emergency bridge loan for Chrysler.
"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 benefiting from additional cost synergies," said Fiat CEO Sergio Marchionne.
Fiat shares on the Milan stock exchange surged more than 4 percent to euro4.66 ($6.03). Economy Minister Giulio Tremonti hailed the deal as "a sign of vitality."
The deal is the latest coup for Marchionne, who returned the once-struggling Fiat to profitability after taking the helm in 2004.
As part of his strategy, the turnaround expert dissolved in 2005 an alliance with General Motors Corp. that could have forced the U.S. company to buy the 90 percent of Fiat it did not already own. GM agreed to pay the Italian automaker $2 billion, mostly in exchange for canceling the clause.
However, Marchionne had recently warned that independence was no longer sustainable amid the financial crisis, indicating Fiat was looking for new partners.
In December, the drop in demand in its key Italian market forced Fiat to shut most of its plants in the country for a month, laying off nearly 50,000 workers for an extended holiday.
Fiat announces its fourth-quarter results on Thursday. In October, it reported a 1.8 percent increase in its third-quarter profit but also outlined a worst-case forecast that said sales could drop up to 20 percent in 2009.
Chrysler, best known for its Jeep and minivan models, has been hurt by its reliance upon slow-selling trucks and sport utility vehicles and analysts have said it may not survive the year as an independent company despite receiving a $4 billion government loan late last year.
The company was hit especially hard by last year's industrywide drop in North American auto sales. Its sales plunged 53 percent in December and it posted a 30 percent drop for 2008.
Nardelli said the partnership would provide a return for taxpayers on the loan, "securing long-term viability of Chrysler brands," boosting consumer confidence and "preserving American jobs."
Chrysler is 80.1 percent owned by Cerberus Capital Management LLP, which acquired its stake for $7.4 billion in 2007 as Germany's Daimler AG dissolved a "merger of equals" made in 1998 between Daimler-Benz and Chrysler Corp.
It is likely that part of Fiat's stake will come from Daimler's remaining share in the company.
"Daimler welcomes any initiative which enables Chrysler to stabilize its situation and to secure jobs in the company," spokesman Thomas Froehlich said.
"It is still our intention to dispose of our 19.9 percent stake in Chrysler," Froehlich said, declining to comment further.
AP Writer Bree Fowler contributed to this report.
 
Press Release from FIAT

Here is the Official Press Release from Fiat HQ press office:

20/01/2009

Joint Press Release - Fiat Group, Chrysler LLC and Cerberus Capital Management L.P. announce plans for a global strategic alliance

Fiat S.p.A., Chrysler LLC (Chrysler) and Cerberus Capital Management L.P., the private investment majority owner of Chrysler LLC, announced today they have signed a non-binding term sheet to establish a global strategic alliance.

The alliance, to be a key element of Chrysler’s viability plan, would provide Chrysler with access to competitive, fuel-efficient vehicle platforms, powertrain, and components to be produced at Chrysler manufacturing sites. Fiat would also provide distribution capabilities in key growth markets, as well as substantial cost savings opportunities. In addition, Fiat would provide management services supporting Chrysler’s submission of a viability plan to the U.S. Treasury as required. Fiat has been very successful in executing its own restructuring over the past several years. The alliance would also allow Fiat Group and Chrysler to take advantage of each other's distribution networks and to optimize fully their respective manufacturing footprint and global supplier base.

The proposed alliance would be consistent with the terms and conditions of the U.S. Treasury financing to Chrysler. Per the U.S. Treasury loan agreement, each constituent will be asked to contribute to Chrysler’s restructuring effort including: lenders, employees, the UAW, dealers, suppliers and Chrysler Financial. Such steps would greatly contribute to Chrysler’s long term viability plan. Completion of the alliance is subject to due diligence and regulatory approvals, including the U.S. Treasury.

As a consideration for Fiat Group’s contribution to the alliance of strategic assets, to include: product and platform sharing, including city and compact segment vehicles, to expand Chrysler’s current product portfolio; technology sharing, including fuel efficient and environmentally friendly powertrain technologies; and access to additional markets, including distribution for Chrysler vehicles in markets outside of North America, Fiat would receive an initial 35 percent equity interest in Chrysler. The alliance does not contemplate that Fiat would make a cash investment in Chrysler or commit to funding Chrysler in the future.

“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 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."

"This is great news for the UAW Chrysler team and we look forward to supporting and working with them to ensure Chrysler's long term viability,” said Ron Gettelfinger, President United Auto Workers (UAW).

“We're on board with this important strategic initiative as it will help preserve the long-term viability of our great company, its brands and of course UAW-Chrysler jobs,” said General Holiefield, Vice President, United Auto Workers (UAW).

Torino – Auburn Hills, MI, January 20, 2009
 
PS, a few initial thoughts

1: Fiat seeking a partner is not all that surprising if you think about it. About a month or so ago, I already had heard news reports discussing the health of the auto industry and Fiat was singled out as one company who may have a hard time surviving the global economic downturn without finding some 'partner'...

2: Of the field of partners to choose from, Chrysler would perhaps not been my first guess, but it does make some sense, they are the weakest of the big 3 right now and therefore most interested in entering some alliance arrangement to help themselves out as well, and with Fiat's small/econo car expertise, hey...

3: How many US Chrysler dealers do you think are probably getting ready to throw in the towel now, having discovered their would-be savior is going to be ... .. Fiat? :hmm2: Imagine yourself as a Chrysler dealer right now, bad as things are, then imagine yourself selling Chryslers AND Fiats...? :hypno: Hmmm

4: If this flies, Americans get yourselves ready to endure a whole new revival/era/generation of Fiat jokes :rolleyes:
 
I cannot seem to leave this topic alone...

I agree with Mac that the Fix It Again Tony jokes will all be dragged out again over and over along with the rust problems. Automotive journalist will not be kind to FIAT or Chrysler as both are considered less than desierable and status filled.

Myth and perception is going to be a serious problem for FIAT all based on their previous reputation in the US market.

It's going to be a long road for both companies in the US market.

Lotus was also deemed as crap by a good number of the automotive media. Since the introduction of the Elise, many automotive media folks have crowed about the Elise and have praised it. In the past they would have dismissed a new Lotus as cheap, poorly engineered and cheap construction and materials.

FIAT has a HUGE public, automotive media problem to over come. If they can change the perceived image of FIAT and stop the media perpetuated myths and lies while improving their image, they might have a chance in the US car market.

.
 
A Chrysler badged ...

... Fiat 500 ... Punto ... Qubo ... 4x4 Panda?
An Iveco truck wearing a Dodge badge?

A Chrysler tractor anyone?

Or ... really stretching the imagination here, but, a Fiat badged Lancer Evo X?

:)

S'fun ...
 
Made it onto CNN

Wasn't sure this was going to make CNN today since it's wall to wall Inauguration day coverage, but they still managed to slip it in there ...

Fiat takes 35% stake in Chrysler
The maker of Ferrari and Maserati takes a stake in the ailing U.S. automaker, but no cash is exchanged.
http://money.cnn.com/2009/01/19/autos/chrysler_fiat.reut/index.htm

It boggles the American mind to read an article like that. Who in this country would have ever even jokingly imagined seeing a day when it is announced that "Fiat values Chrysler at zero?" - Yikes :eek:

Then, this...

Chief Executive Sergio Marchionne said in a joint statement the deal was designed to help Fiat boost its volumes. It will also help Fiat return to the U.S. market :clap: where it has long been absent.

And...

Speaking to reporters at an event in Milan, Fiat Vice Chairman John Elkann said Fiat could raise its stake.

Wow ... but then this too...

"What Daimler or private equity could not fix is not likely to be fixed by Fiat," Harald Hendrikse at Bank of America Merrill Lynch said

Hey shut up, hater! :rolleyes: ;)
 
Hope it doesn't drag down Fiat like it did Mercedes

A lot of economists are pointing out the myriad failures of the big banking conglomerates and pointing out that big is not better...and they also look to the big auto mergers and say the same thing. I'm of the same opinion.

Fiat has been well served by its joint venture with Suzuki--the SX4 has been very popularly received over here. Seems like it could well proceed with similar ventures and succeed without having to take on Chrysler...

Business as usual cannot proceed as usual... hope the right people in the planning depts of both Fiat and Chrysler are putting their best efforts forward in whatever they do.

Meanwhiles, bring over that 500!
 
I want my Abarth 500 in either white or baby blue!!!

I`ve been already planning on buying myself a nice used sporty car in at least 2yrs,when my oldest daughter get her drivers license and gets my daily commuter for herself.
On my list i have NOT in order of acceptance;
1)85-89 Porsche 911 Carrera
2)BMW Z3/Z4 M
3)BMW M3
4)Mini Cooper S
5) the new 370Z(its gonna be at least 2yrs old by then)
AND NOW
6)Fiat Abarth 500!!!!!

Bring it over,can`t wait to try it and compare.....:headbang:
 
OK this is just WRONG though...

:eek:

newrl2uc1.jpg
 
Some obvious issues

The world economy and the future oil position has reached the stage where vehicle manufacturers must have fuel efficient cars in order to survive. Both the motoring public and governments will not support manufacturers who insist on building gas guzzlers.

So which volume manufacturers can survive? We can exclude low volume sports car makers such as Porcshe, Lotus, etc, as their survival depends on other factors.

GM and Ford are in a lotta trouble. IMO they have had their heads in the sand for too long. Same with Chrysler, although they at least have tried to develop niche vehicles.

I worry about the smaller Japanese firms as they lack the volume to invest heavily in the technologies required to survive. Only Toyota and Honda are well positioned to survive the cull. Mazda are a query.

Which brings us to the Europeans. BMW and Mercedes are ok for the moment but longer term will have to invest heavily in new fuel technologies. Have they got the financial clout? The Audi/Volkswagen group is the best positioned manufacturer due to large volumes of reasonably fuel efficient cars.

The French? I feel they are in the same position as the smaller Japanese firms.

And so we come to Fiat. Of all the Europeans, Fiat's cars are the most fuel efficient. A combination of small efficient engines, low vehicle weight and diesel technology places Fiat in a handy, but not invincible, position. If Fiat could flick a switch and have Punto and Diesels and 500's on sale in the USA tomorrow then the cars would walk out the showroom door. The new 500 is a 40mpg car with 5 star safety rating. But of course, Fiat can't flick the switch.

So they have done the next best thing in forging a relationship with Chrysler and in particular Chryslers Dealer Network. In the next couple of years we may see Fiat cars being sold in America with a proper dealer support network.

In my opinion this move may be the saviour of both firms, and may make Ford and GM very nervous. Which aint a bad thing LOL.

Finally, is it possible that this new relationship (with Daimler as a 19.9% partner) could give Fiat access to the Smart Roadster platform? And a new X?
 
In the next couple of years we may see Fiat cars being sold in America with a proper dealer support network.

That remains to be seen, how many franchise dealers are going to be leaping to start trying to convince the US buying public to try out Fiats again? Or even desire to do so themselves after some of them ran failed Fiat dealers in the past and have bad memories?

Even if the dealers support, there are other 'perception issues'. In the US diesel is not exactly an overwhelming selling point either. These are American buyers some of whom would jump at a decent diesel but others who only would recall stinky diesels (or refried biodiesels) for the most part and many do still think "diesel is for trucks".

Plus well on decades of cherished "Fix it again" jokes passed down from dad to son over the fender of a Camaro or Charger or Mustang somewhere. Plus the automotive media as Bernice mentioned upstream who just love making Fiat jokes, because it sells here, regardless whether any of those still hold water regarding Fiat today...

It will be one heck of a climb I suspect -until/unless- people begin over time to see Fiats around town not breaking down... That will convince more people. And then we might be getting somewhere.

In my opinion this move may be the saviour of both firms, and may make Ford and GM very nervous. Which aint a bad thing

According to some news chatter about it, they are, some execs at both companies have already been quoted making vague ambiguous comments about it "turning up the pressure on us" etc (while tugging at collars like Dangerfield, I presume...)

Finally, is it possible that this new relationship (with Daimler as a 19.9% partner) could give Fiat access to the Smart Roadster platform? And a new X?

I suppose anything is theoretically possible, but I don't know whether they would be doing a revival of any of Fiat's old mainstay US model lineup here anytime soon... even if the platform were free. Maybe, if ever, long after they had established a good rep in the US but that I think will be quite a hike from today probably
 
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