Fiat signs tie-up with Chrysler

Fiat has agreed a deal with Chrysler to form a strategic partnership with the struggling Detroit automaker. The deal would see Fiat take a stake of up to 35% in US-owned Chrysler and help it launch a series of smaller electric models over the next five years.

The deal would enable Chrysler to proceed with its planned restructure, which it promised the US government it would undertake as part of its $4bn (£2.9bn) bailout loan.

It is understood that Italian carmarker could give Chrysler access to its mini, small and mid-sized car platforms, engines and transmissions. It would help Chrysler make vehicles that produce fewer harmful emissions – one of the terms of the US bailout loan.

Chrysler is currently struggling to avoid bankruptcy and last week chief executive Bob Nardelli said it was counting on $3bn (£2.1bn) more in government aid to survive.

In 2002, Fiat was itself near-collapse and had to axe over 5,000 jobs in order to secure its future. The company has admitted that it is too small to survive the world auto crisis alone and needs a partner to provide enough production volume to be profitable. The group won over new customers with its compact and green offerings, but has struggled to maintain sales in the downturn.

Possible extensions to a Fiat-Chrysler deal could include access for Fiat to Chrysler’s North American manufacturing operations and distribution network.

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