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Fiat & Chrysler in partnership talks!

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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.

source: automotivenews

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