An agreement between Fiat and Chrysler will see the Italian company take an initial stake of 20% in its new American partner. Effectively the agreement means that Fiat now owns Chrysler. Chrysler produces cars, SUVs, vans and MPVs under the brands Chrysler, Dodge and Jeep. Fiat has the right to up its stake in Chrysler up to 49% of equity until Chrysler pays back the bailout loans it was given by the US government. Thereafter Fiat would presumable buy up all of Chrysler thus creating the fourth biggest motor company in the world after Toyota, Volkswagen and Ford.
Soon the two will start sharing platforms, technologies, engines and distribution expertise. Basically Fiat is interested in re-entering the US market where its Fiat and Alfa Romeo brands have virtually no presence. Chrysler is just interested in staying alive for the time being and that means caving in to a possible white knight in the form of Fiat Auto.
The Fiat/ Chrysler tie-up makes sense on a product level where Fiat is good at producing small and medium cars while Chrysler specialises in the bigger product like Dodge Rams and Chrysler Voyagers. If it’s true that Chrysler has an ambition to take on Audi, BMW and Mercedes-Benz then there might also be some in-house competition with Fiat’s Alfa Romeo and Maserati brands.
What does this mean to the South African owners of Chrysler products? Pretty much nothing at the moment. The company says warranties will continue to be honoured as usual, service centres are still open for business and potential customers are most welcome to buy their favourite Chrysler/ Dodge/ Jeep product. Dealerships that currently exist in the old dual DaimlerChrysler system will also stay as is for the time being.
Recently rumours have emerged which suggested that Fiat is on a warpath of acquisitions. It is thought that the company is also bidding for GM’s European assets, namely Opel and SAAB. Should this really happen it would create the second biggest automaker in the world.
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