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Chrysler-Fiat plans take shape

Small contribution: Chrysler reportedly has its eyes on the Fiat 500 for US release.

Chrysler continues talks with other car-makers in case treasury vetoes Fiat deal

Chrysler logo30 Jan 2009

WHILE Chrysler works through the details of its planned tie-up with Fiat – including what cars it will share and where they are built – the embattled US auto-maker admits it is continuing talks with other potential partners in case the US government vetoes the Fiat deal.

Chrysler is looking to Fiat for a range of small and medium cars and SUVs, including the popular Fiat 500 – although that car could be built in Mexico and sold with a Chrysler or Dodge badge in the US, where the ‘Cinquecento’ has little or no history.

Nevertheless, the Italian company still has a well-documented desire to get a foothold in America, where Fiat has been absent since 1983 and which Alfa Romeo abandoned in 1995, and is looking to gain access to Chrysler’s expansive dealer network for its own brands.

Chrysler vice-chairman and president Jim Press said this week Fiat would provide “billions and billions of dollars” worth of new fuel-efficient small models in return for a 35 per cent stake in Chrysler under the proposed deal, which must be approved by the US Treasury Department under the terms of its $US4 billion ($A6.2b) government bailout loan.

 center image Left: Chrysler Sebring, Dodge Caliber, and Jeep Compass.

Chrysler has requested a further $US3b ($A4.6b) from the government by March 31, which apparently must last until the troubled company returns to profitability, whenever that may be.

It must provide a viability plan for the government by February 17 before further loans are approved.

But a Democrat colleague of Barack Obama, Senator Robert Menendez, has told the president that the loan extension should not be approved and that Chrysler should immediately repay the original loan if the Fiat deal goes ahead.

Mr Press revealed that confidential talks were still taking place with other car-makers in case the Fiat deal was vetoed.

“If it doesn’t work out with Fiat, we still have had other conversations with other potential partners and alliances and those obviously can continue, so we have other alternatives,” said Mr Press.

“It’s a little bit like dating: nobody knows who we’re dating. We don’t need the paparazzi to follow us around and put pressure on the dates.

“Even without Fiat, we have a good viability plan to get the balance of the $7 billion we requested.”

He added that Chrysler should get the extra money because it wants to “carry on the company’s rich heritage of design and quality manufacturing”, but critics have noted that consumer organisations in the US consistently rank Chrysler brands among the worst.

In return for its cashless equity in Chrysler, Fiat will provide access to every platform it produces as well as tooling, which will enable Chrysler to get a range of mini and small cars, and appease the environment-conscious Obama administration.

US trade weekly Automotive News reported that the proposed alliance will bring seven new models to the US, with four to be branded by Chrysler and the remaining three to be sold as Fiats or Alfa Romeos.

However, surprised Chrysler insiders say this is highly speculative and that the two companies are still working through all the potential programs, with no decisions likely until April.

In addition to the A-segment (light-car class in Australia) 500, it seems likely that the B-segment (small) Punto will provide two or three models, including a small front-drive SUV for Chrysler and the Alfa Romeo MiTo hatchback.

In the C-segment (medium), an existing or newly-developed Fiat platform could provide the basis for replacements for vehicles as diverse as the Chrysler Sebring and Dodge Avenger sedans, SUV-like Dodge Caliber, Dodge Nitro and Jeep Compass SUVs, and Dodge Journey MPV/SUV crossover.

However, getting any of these new vehicles into production in North America would take at least two years.

In the meantime, Chrysler at least has a product-swap deal with Nissan that will see a small Japanese-built B-segment car – smaller than anything else currently sold by Chrysler – on sale in the US in 2010.

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Chrysler, Fiat join forces

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