Fiat Sketches Chrylser Alliance Plan

Fiat plans to finish its review of Chrysler's operations by February 17, in order to help the American counterpart to get a green light with this vital point in the viability report expected by the US Government. The alliance doesn't mean Fiat will put cash on the table, but it will provide the small cars and fuel-efficient engines Chrysler needs to avoid an extra $3 billion research expense.

Even if recent rumors said Fiat will receive a 30 percent share-hold in return for its aid, Sergio Marchionne, Fiat CEO told The Wall Street Journal the Italians won't “take a dollar out of Chrysler. We're doing this for free”. Not quite. The incredibly generous offer was not made out of the goodness of Marchionne's heart, but only to ensure the American Government that US bailout money will not come into foreign hands. Fiat says it will start collecting as soon as the State is paid back.

"If I am not comfortable that we can help Chrysler come out of this, then we won't. My goal is to eventually make money." And money they must make. Fiat plans to invest up to $4 billion dollars in the following years, and it will take at least two after the deal is signed before Italian products could be built in the States.

"We need to come up with a capital structure of Chrysler so that by the time we finish with all these gyrations, the lottery ticket delivers - we will have 35% of something that is worth something," Marchionne said. "I don't want to go through the next five years owning 35% of nothing. The objective here, ultimately, is to deliver value for Fiat shareholders."

The two companies' combined selling power is expected to reach 5 million units per year. A number that is, in Marchionne's opinion, required for any car manufacturer to survive.
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About the author: Daniel Patrascu
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Daniel loves writing (or so he claims), and he uses this skill to offer readers a "behind the scenes" look at the automotive industry. He also enjoys talking about space exploration and robots, because in his view the only way forward for humanity is away from this planet, in metal bodies.
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