Auto News

Fiat and Chrysler Ink Global Alliance

By Motortrend India Staff   |   11 June,2009

Ending months of uncertainty, Italian car manufacturer Fiat has acquired most of Chrysler's assets to become the world's sixth largest car manufacturer. The two companies clinched the deal after the U.S. Supreme Court dismissed a plea filed by some creditors.

After the sale of Chrysler, Fiat holds 20 per cent of the newly formed Chrysler Group, with the stake going up to 35 per cent if targets are met. This will be an important step in Fiat's plan to establish its global presence. In addition to Fiat, union-aligned trust will own 55 per cent and the U.S. and Canadian governments will have a combined 10 per cent stake in the new group.

Fiat-Chrysler targets a sale of 4.5 million vehicles globally, ranking just behind Ford Motors based on 2008 results.

Fiat will start the transfer of its technology and powertrains in the coming months and Fiat cars from Chrysler are expected to roll out in as little as 18 months.

The acquisition transfers most of Chrysler's operations, excluding eight manufacturing sites, dozens of pieces of real estate, equipment leases, and contracts with 789 U.S. auto dealerships.

Chrysler holds a major market share in North America where Fiat's presence is almost nil. The marriage of two car manufacturers brings together companies with largely different products and markets. This, according to Fiat chief executive Sergio Marchionne, will help to create a global player to ride out the worldwide auto sales downturn.

The completion of Chrysler-Fiat deal in the stipulated time gives bankrupt General Motors a ray of hope to finish a similar process in time. However, that would take more time owing to the size and complexity of the American behemoth.

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