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More details on the potential Fiat-Chrysler alliance emerge


Just a day after being released for sale by the U.S. Supreme Court, the Fiat-Chrysler sale is final

Just a day after being released for sale by the U.S. Supreme Court, the Fiat-Chrysler sale is final

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At the end of March the President's task force on the industry put a 30-day window on Chrysler and Fiat reaching an alliance agreement. Just hours later Chrysler announced the two companies had signed off on the deal. That turned out to be premature, but the deal is still being developed, with new details of how it will be structured emerging today.

A series of benchmark targets for Fiat and Chrysler cooperation would gradually increase Fiat's stake in Chrysler, allowing it to grow the initial 20% stake that has been previously confirmed as the starting point of a Chrysler-Fiat alliance should it take place. The bumps include a raise to 25% equity when the first Fiat engine is certified for U.S. use, 30% when the first Fiat-based vehicle enters U.S. production and again to 35% when the first Fiat-based U.S. vehicle is exported, reports Automotive News. There remains further potential for Fiat to raise its holding to as much as 55%, though Chrysler would have to pay back any U.S.-backed loan funds before Fiat's stake could rise that high.

Still, both companies are optimistic about the deal. Its value is thought to be worth more than $10 billion for the struggling Detroit company and could potentially save more than 5,000 North American manufacturing jobs. As Nardelli described it in an email earlier this month, the value of the deal is “equal to or greater than the total amount of loans" that Chrysler is seeking from Congress.

More importantly, the deal with Fiat could save Chrysler three to five years in development time, as well as increase productivity at idle plants through North American production of Fiat vehicles. Full details on the finalized Fiat-Chrysler agreement haven't yet been released.

Chrysler is planning to release around 24 new products by 2011, which is part of the reason why the company has requested an additional $5 billion in government aid to help pay wages for workers and continue to development products. Two of Chrysler’s new-generation of products, the 2011 Chrysler 300 and Jeep Grand Cherokee, have already been previewed and more details about the rest of model updates are due later this year.

If the deal meets with the rumored restrictions on Fiat's share of Chrysler, U.S. aid totaling up to $6 billion could be on its way in the very near future. There still remain "substantial hurdles to resolve" in reaching a final agreement with Fiat, however, according to Nardelli.
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Comments (10)
  1. Technically they only agreed to a framework, not a full alliance yet
     
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  2. But better then nothing I suppose
     
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  3. Rename the company FIAT America.
     
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  4. That may actually boost sales
     
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  5. FIAT

    Fix
    It
    Again
    Tony

    I don't know if the reputation of Fiat cars is very good in America. Also, they are not very sturdy and most are underpowered.
     
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  6. Bottom line this deal will help both Companies, because there is something at Chrysler worth fighting for an Fiat brings engine and transmission technology to the table which can be improved upon and perfected. I only hope the "owners" of Chrysler don't benefit from it since they wouldn't bail out their own company.
     
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  7. FIAT

    Fix
    It
    Again
    Tony

    I don't know if the reputation of Fiat cars is very good in America. Also, they are not very sturdy and most are underpowered.

    Pretty sure most people in America don't remember much past the early 90's and many younger buyers in the market
     
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  8. Rename the company FIAT America.

    The divisions placed all over the rest of the Americas would disagree. If any, Fiat (of the) United States should be chosen.
     
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  9. I think renaming is a good move now that the Chrysler brand has been hopelessly degraded in North America after all the bad news.
     
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  10. mitzo; 2 years ago, everyone was saying ford was going to disappear.. and now theyre one of the strongest companies in the game.. and the publics perception goes hand in hand with this.

    i'd agree that no one would remember anything bad about fiat, and probably you'd have at least 10k solid fiat enthousiasts across the USA that would support the brand, just like the mini was instantly popular.

    but the question is, if they're nippy enough to satisfy the younger generation. my generation will hear "fiat.. italian eh? thats in europe right? so it must be fast.. and really really well built"... and if its anything shy of that...... look out.
     
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