BREAKING NEWS: Fiat Auto SpA of Italy will be taking a 35% stake in Chrysler LLC of the United States. The deal has been announced in Milan. Details of the agreement are sketchy at the moment but it’s understood that the two companies will share vehicle platforms and technologies. Fiat did not pay for its stake but may help Chrysler tool up some of its factories in exchange for access to the US market as part of the deal. Money may change hands in due course.
Through this new deal Chrysler would be able to stay afloat in light of recent developments that have threatened to put it out of business. The company has been losing money by the billions. Two weeks ago it received – under strict conditions – a US$4 billion bailout cheque from the US government as part of a plan to rescue two of America’s biggest automakers, Chrysler and General Motors. More money is expected to the tune of at least US$5.4 billion within weeks.
Part of the conditions state that the US Federal government will own parts of the two companies. It’s not known what this means for Fiat and Chrysler, and their new alliance.
Fiat itself had not exactly been a sterling example of success in the auto industry over the past few years, but in the past two years the Italians have reshaped, refocused and are said to be well on their way to financial strength.
Of course it won’t be the first time that Chrysler has married a European partner. In 1998 the merger of Chrysler and Mercedes-Benz owner Daimler-Benz was finalised to create DaimlerChrysler. The two companies were together until 2007 when heavy losses at Chrysler could no longer be tolerated by Daimler’s stricter German executives. The merger itself was the brainchild of former Daimler chairman and CEO Jurgen Schrempf. At the time it was touted as a merger of equals but ended up benefiting Daimler much more than Chrysler.
Examples of this including Chryslers being fitted with previous-generation Mercedes-Benz parts and its high-performance vehicles not being able to beat or even match those offered by Merc. Remember the E55 AMG and its supercharged 5.4-litre V8 engine which produced 350kW? Well Chrysler “answered” with a 300C using a 6.1-litre V8 with only 317kW. Another example includes a car like the Crossfire which took a record 18 months to build from concept to finish. Only later during media evaluations did it become apparent that they were able to pull off this difficult feat by using old Mercedes-Benz parts like gearboxes, engines and interior bits.
Some media reports have suggested that Chrysler wants to position itself as the “Mercedes-Benz of America” effectively putting itself into competition against the Germans as well as GM’s Cadillac brand. Should these rumours be true then only time will tell how the alliance with Fiat works out as far as Fiat’s own luxury brands Ferrari, Maserati and Alfa Romeo are concerned.
We hope that Chrysler will be back on its feet again, secure and confident that its brands Chrysler, Jeep and Dodge will be supported by a happy public. Our road evaluation of the Jeep Grand Cherokee SRT-8 proves there’s plenty of life in the company and a lot of their products offer good value for money.
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