Chrysler, FIAT Announce Merger

A couple days ago, Chrysler and FIAT announced plans to form a strategic alliance where FIAT would take a 35% stake in struggling Chrysler initially, and if things work out eventually a 55% controlling stake. While the announcement’s timing may have been a bit sudden, it should come as no surprise since Chrysler and FIAT had been in talks earlier this year about what they could do together. The deal is critical for Chrysler’s survival, having been almost forced into a shotgun wedding with GM during the Washington bailout, and most recently told by one senator to merge or die.

Fortunately, the execs at Chrysler have chosen to live on by getting access to FIAT’s small cars, likely building engines and entire cars for sale in North America. Chrysler’s dealership network is expected to also serve as FIAT’s long awaited entry into the US market, bringing stylish new models from Alfa Romeo and perhaps the new FIAT 500. The deal is not without controversy though because FIAT is not parting with any cash for its initial 35% stake, and Chrysler just received $4 billion in loans from the US government. Not wanting to use taxpayer money to help a foreign automaker, Washington is making sure the deal doesn’t violate any terms of the loan triggering immediate repayment.

American fans of Italian cars are delighted though because this is as firm a commitment to date that would see Alfa Romeo return to US roads, which has been promising a return for close to 10 years now. Speculation regarding what FIAT will bring over is running rampant, and assuming this deal doesn’t run into trouble, they are expected to bring the Alfa Romeo 159 sedan, Brera and Spider sports cars, Mito hatchback, and FIAT 500 in maybe 18 months.