With the recent economic downturn, the Big Three automakers have been hit with some tough times. While Ford has said that it will not take any government bailout money, Chrysler and GM are looking for ways to survive the choppy financial waters, and Chrysler just got tossed a life preserver.
The savior, or potential savior at least, is the Italian car maker Fiat, who will be taking a 35% interest in the company. In return for that interest, Chrysler will receive access to Fiat’s proven line of small car platforms. Chrysler’s current lineup is heavily focused towards larger vehicles, featuring marquee brands like Jeep and the Dodge Ram trucks. Joint manufacturing between the two companies will also give Fiat new access to the North American market. Fiat has not sold its vehicles in North America since 1984.
There are some problems surrounding this alliance, however. First and most pressing is Chrysler’s current financial state. The company has already received $4 billion in government loans and is set to seek another $3 billion in credit this spring. That extra money, however, may end up being denied. There has been speculation that legislators will be unwilling to invest American taxpayers’ money into a company that could eventually benefit a foreign enterprise. Representatives of Fiat responded, saying that Fiat will not currently be injecting its own capital into Chrysler and that Chrysler cars based on Fiat platforms are at least two years away.
In those two years, it is up to the current Chrysler management to maintain the company’s viability. Also, while Fiat may one day take majority interest of Chrysler, the American company will retain control for the foreseeable future.