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.
2011 Chrysler 300 and Jeep Grand Cherokee official preview