Chrysler has closed its deal with Fiat, brokered by the U.S. government clearing the way for the restructured US carmaker to emerge from Chapter 11 bankruptcy protection.The new company, called Chrysler Group, will be run by Sergio Marchionne, chief executive of Fiat.Fiat has not put any money into Chrysler but has promised to share its fuel-efficient technology in return for an initial stake of 20 per cent and the right to increase its holding to 35 per cent."
This is a very significant day ... for the global automotive industry as a whole," said Sergio Marchionne, Fiat's chief executive who was named the CEO of Chrysler on Wednesday. "From the very beginning, we have been adamant that this alliance must be a constructive and important step towards solving the problems impacting our industry."
The New Chrysler Group
United Auto Workers union :55%
Fiat :20%
U.S. government : 8%
Canada : 2% share.
Fiat will not be allowed to take a majority stake until the new Chrysler pays back the $22.1 billion lent to it from the Treasury Department, including Wednesday's $6.6 billion wire transfer.
Marchionne said the Chrysler plants that had been shuttered as a result of the company's bankruptcy process will be back up and running "soon," and the company will focus on developing fuel-efficient vehicles that will "become Chrysler's hallmark going forward."
Jeremy Anwyl, CEO of Edmunds.com, said it will take 18 months to two years for Chrysler to begin unveiling smaller cars that have helped Fiat grow in Europe. Even after the Fiat integration is complete, Chrysler's future path is uncertain.Much of Chrysler's future success will depend on fuel prices and Americans' appetite for small cars," said Anwyl. "But Chrysler has an opportunity to look for niches that have been under-explored, as they did in the past with the PT Cruiser and minivan market."
The closure of the deal with Fiat is a triumph for President Barack Obama, whose auto taskforce helped broker the Chrysler's move into bankruptcy.
President Obama, who promised that the company would emerge from Chapter 11 in 30 to 60 days, hopes that Chrysler's bankruptcy process can be used as a blueprint for the more complex restructuring of General Motors.
The major car brands of Chrysler are Avenger, Caliber, Challenger and Viper.In the trucks category, the well-known names from the Chrysler stable include Dakota and Sprinter.Chrysler also has significant presence in the mini vans section with brands like Nitro, Durango and Grand Caravan.Meanwhile, as part of the strategic alliance.
Fiat Chief Executive Sergio Marchionne would also be the Chief of the new Chrysler.
"Those Chrysler operations assumed by the new company that were idled during this process have or will soon be back up and running, and work is already underway on developing new environmentally friendly, fuel-efficient, high-quality vehicles that we intend to become Chrysler's hallmark going forward," Marchionne said about the new Chrysler recently.With Fiat driving in, chrysler looks towards its second lease of life.