Fiat steps in to save ChryslerFiat announces partnership with Chrysler

01 May 2009

Chrysler 300C

Chrysler is well-known for producing large cars like the 300C

Chrysler has been given a lifeline by Fiat, the day after the ailing American car giant was forced to file for bankruptcy.

Fiat announced today that it will form a ‘global strategic alliance’ with Chrysler to help form a ‘vibrant new company’. The Italian carmaker is currently popular for its small stylish remake of the classic Fiat 500, which goes on sale in convertible form this summer.  

Chrysler, Jeep and Dodge vehicles to continue

Over a set timescale it will take a 35% stake in the company and is pledging to continue producing vehicles under the Chrysler, Dodge and Jeep brands.

Fiat has been talking to Chrysler for more than a year about a partnership in which the two companies would share products and technology.

The partnership will give the European firm better access to the American car market and a more global distribution network.

Green engine technology

Fiat Bravo 1.6 Multijet Active Eco

Fiat already sells 'green' versions of some models, such as the Bravo 1.6 Multijet Eco

In return Chrysler stands to benefit from using Fiat’s more advanced ‘green’ engine technology in its vehicles. Fiat sells an Eco version of its family hatchback that's fitted with a fuel-efficient and environmentally friendly, sub 120g/km diesel engine. 

Chrysler chairman Bob Nardelli, who will step down when the bankruptcy is complete, said that in the future Chrysler would be able to produce a more competitive line-up of fuel efficient, environmentally-friendly vehicles. The first alliance vehicles that would offer greener driving could go on sale within 18 months.

America’s third-largest car company will also benefit from up to $8 billion more in government aid to honour current car warranties.

Chrysler was forced into bankruptcy yesterday after some creditors refused to agree to the US government’s proposals regarding its debts.

Fiat to make 40mpg Chrysler

The American government hopes that the bankruptcy proceedings can be finalised in 30 to 60 days. Chrysler’s American factories will close next week and not reopen till the proceedings are complete, but dealerships will stay open.

At the end of the proceedings, Chrysler will be 55% owned by the United Auto Workers union and Fiat will have a 20% stake in the company. It will be able to increase this to 35% in three stages if it completes certain criteria.

These include producing a 40mpg Chrysler vehicle in the US, introducing a fuel-efficient range of American-built engines and using the Fiat network to improve global distribution of Chrysler vehicles.


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