Fiat gets 35% stake in Chrysler for no cash

[Auburn85 438]

http://www.marketwatch.com/news/story/fiat...amp;dist=msr_16

SAN FRANCISCO (MarketWatch) -- Italy's Fiat SpA, in an effort to help both sides navigate a historic downturn in the global auto industry, struck a deal Tuesday for a 35% stake in struggling U.S. carmaker Chrysler in exchange for access to Fiat's overseas distribution network and smaller car technologies.

Fiat , the maker of the Cinquecento car, will pay no cash for its stake or commit any funding in the future. Chrysler's majority owner, private-equity group Cerberus Capital Management, will see its 80% stake in the group diluted.

Fiat shares rose 3.4% in Milan afternoon trading.

Chrysler Chairman and CEO Bob Nardelli called the deal a "great fit" and said it will give Chrysler access to products that complement its current lineup while creating channels outside North America, an area in which Chrysler has trailed its rivals.

"The partnership would also provide a return on investment for the American taxpayer by securing the long-term viability of Chrysler brands in the marketplace, sustaining future product and technology development for our country and building renewed consumer confidence, while preserving American jobs," he said.

Fiat's management talent also appealed to Chrysler.

Fiat Chief Executive Sergio Marchionne is credited in the industry for pulling the Italian group back from the brink of collapse by overhauling production techniques, increasing the speed at which new cars are released and boosting their design appeal.

The United Auto Workers union also gave the deal its stamp of approval.

"As the U.S. auto industry undergoes a restructuring process, this alliance has the potential to preserve a wide range of choices for U.S. consumers, as well as good-paying manufacturing jobs for our communities," said UAW President Ron Gettelfinger.

Fiat, which also owns Ferrari and Maserati, sold 2.5 million vehicles worldwide last year while Chrysler, reeling in the face of a brutal U.S. market, sold 2 million cars and trucks.

In recent months Chrysler has slowed the development of new cars in an attempt to save cash. At the North American International Auto Show in Detroit this month Chrysler didn't show a single vehicle that will be launched in 2009.

The deal will also help Chrysler strengthen its case as it seeks more loans from the U.S. government. The group nearly collapsed last year before the Treasury Department provided $4 billion in emergency loans. In order to keep those loans and to qualify for the additional $3 billion it says it needs the carmaker has until March to prove it's a viable business.

Meanwhile for Fiat, the deal means access to Chrysler's distribution network in the U.S., where it plans to re-launch its Alfa Romeo brand. In the past few months Fiat has been looking for ways to expand its foothold in the U.S. and to manufacture its new Fiat 500 model.

The idea behind the partnership is that both carmakers would gain economies of scale and geographical reach to better compete against stronger global players like France's Renault or Japan's Toyota Motor Corp.

Daimler AG has a 20% stake in Chrysler.

[CCTAU 3,878]

Have any of you ever seen a fiat that was dependable? Me neither.

I don't think this ends well.

[arnaldoabru 11]

Have any of you ever seen a fiat that was dependable? Me neither.

I don't think this ends well.

I don't think I 've ever seen a Fiat

[jdub5793 0]

Have any of you ever seen a fiat that was dependable? Me neither.

I don't think this ends well.

Hell, Chryslers haven't been that dependable in my view anyway. I currently own one and have had another before this one. Stylistically, I love them. Dependability is the issue. Litle problems build up and the little things keep adding up for me. Don't get me wrong, I love my Concord, but I am tired of repair bills too.

[AU alum 2]

Right after I graduated in 1976, I bought a Fiat X/1-9. Prettiest car you have ever seen. Stayed at the shop more than my driveway. When it ran, I got tons of compliments on it. Unfortunatly, it didn't run much. This was definitely a car for a 22 year old with no family, that didn't have to have a reliable vehicle.