Fiat, Chrysler Start Alliance Negotiations

Struggling American automaker Chrysler is now in negotiations with Italian company Fiat to form an alliance that could help the US-based firm revamp the production line according to the initial plan forwarded to the government in last December. Even though this is only pure speculation, Autonews says that people familiar with the partnership talks confirmed the strategic partnership and claimed that Chrysler may take advantage of Fiat's production equipment to restructure its European and US lineup.

Mini, small and mid-sized car platforms plus engines and transmissions may be the first Fiat properties to reach Chrysler in case the two companies reach an agreement, the aforementioned source wrote quoting the Chrysler insiders.

In exchange for these production platforms, Fiat would get a 30-35 percent stake in Chrysler plus a special clause that would allow the Italian automaker to purchase up to 55 percent of the American company over the next years.

Even though representatives of both companies refused to comment the report, Chrysler issued a statement explaining that such negotiations make sense in such a difficult environment.

"In today's economic environment, talks are going on between companies in all industries -- ours is no different. Chrysler LLC as a matter of policy however, does not confirm or disclose the nature of its private business meetings. Beyond those partnerships and alliances already announced, Chrysler has no further announcements to make at this time,” Chrysler said according to Autonews.

Beside the aforementioned terms of transaction, reaching an agreement would be useful for both companies. For instance, such an agreement would allow Chrysler to concentrate on small cars and launch them faster than developing new models and using its own equipment. Such cars would be ready in 2010 or 2011, Autonews wrote, as the market is continuously demanding small-displacement vehicles that would provide reduced fuel consumption.

On the other hand, Fiat would expand its operations in the North American market, as the Italian automaker already has plans to launch a number of models in this side of the industry.
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About the author: Bogdan Popa
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Bogdan keeps an eye on how technology is taking over the car world. His long-term goals are buying an 18-wheeler because he needs more space for his kid’s toys, and convincing Google and Apple that Android Auto and CarPlay deserve at least as much attention as their phones.
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