industry seem to be the only viable solution to help car makers
avoid risks of bankruptcy, and also to convince governments to
inject cash into their manufacturing and financing arms.
“strategic alliance” between Italy’s biggest manufacturer, Fiat,
and Chrysler, the troubled US car company, which is planning a
restructuring and has asked the US government for an extra $5
billion to stay afloat after having received $4 billion last
December.
The two manufacturers agreed at the end of January to sign a
non-binding term sheet which would allow Chrysler to get access to
Fiat’s fuel-efficient vehicle technologies, as well as better
access to markets outside North America. In return, Fiat will get a
35 percent stake in Chrysler.
For the time being, it is still unknown whether the deal will
have any impact on the captive arms of the two companies, a
Chrysler Financial spokesperson said.
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Chrysler Financial currently offers car financing for Chrysler,
Jeep and Dodge vehicles in the US, Canada, Mexico and Venezuela –
but not Europe – and has a global portfolio of $60 billion. It
received $1.5 billion from the US government in December.
Fiat’s captive arm, FGA Capital, on the other hand, operates in
13 European countries. It is a 50-50 joint venture between Fiat
Group Automobiles and French banking group Crédit Agricole.
Last year it also signed a co-operation agreement to cover
financing for Jaguar and Land Rover.
The new alliance between Chrysler and Fiat would allow both
companies to take advantage of each other’s distribution
networks.
Moreover, in return for a 35 percent equity interest, Chrysler
will have access to all of Fiat’s strategic assets, as well as
product and platform sharing which could help the company expand
its current portfolio and develop smaller and more fuel-efficient
cars.
Fiat CEO Sergio Marchionne said that the partnership was a “key
milestone in the rapidly-changing landscape of the automotive
sector” and confirmed the two companies’ determination to continue
to play “a significant role in this global process”.
Chrysler’s CEO Robert Nardelli said the alliance with Fiat was
Chrysler’s “best option” and was part of its plans to enhance its
long term prospects.
