Chrysler Talks Partnerships With Fiat and Tata, Reports Say
By Michelle Krebs July 31, 2008Chrysler is discussing possible alliances with foreign automakers including India's Tata
Motors and Italy's Fiat, according to media reports.
In recent weeks, Chrysler reportedly has discussed with Tata the possibility of selling and even assembling Jeeps in India, according to sources quoted by Reuters and the Wall Street Journal.
Chrysler also reportedly is talking with Fiat to lease factory space for car production and possibly share distribution with the Italian automaker, looking to return to the U.S. with its Alfa Romeo brand next year. Fiat also is considering selling its popular 500 small car here.
Worsening Chrysler Financials
The Wall Street Journal reports that sources say the preciptious downturn in the U.S. car market of late has caused Chrysler's owner, Cerberus Capital Management, to become more concerned about Chrysler's ability to turn around on its own and has stepped up efforts to reach out to foreign car companies.
Chrysler lost $1.6 billion in 2007, and the holding company that includes both the automaker and its financing unit, Chrysler Financial, lost $509 million in the first quarter. Fitch Ratings downgraded Chrysler this week saying the automaker could run out of cash by mid next year.
Of course, the privately held, tight-lipped Chrysler and Cerberus are confirming nothing of these reports.
Chrysler-Fiat-Tata Affiliations
Already, Chrysler has a deal with Nissan to provide Nissan with a version of its upcoming Dodge Ram to replace the Nissan Titan pickup truck. In turn, Nissan will provide Chrysler with a version of the Nissan Versa to fill the small car void in the Detroit automaker's line.
AutoObserver reported last week that Fiat was among the foreign automakers looking at Chrysler's new Dundee, Mich., plant for the production of four-cylinder engines.
After a 25-year hiatus, the now-thriving Fiat is looking to return to the U.S. market. It plans to sell Alfa Romeo models in the U.S. beginning next year and has mentioned the possibility of selling Fiat's wildly popularCinquencento (500) small car in the States.
It has given few details of its plan. However, Fiat Chief Executive Sergio Marchionne, credited with Fiat's turnaround, has said Fiat would like a partner for its North American return.
Chrysler's discussions with Tata, which recently completed the $2.3-billion purchase of Jaguar and Land Rover from Ford, reportedly center around selling the Jeep Wrangler in India and possibly other Asian markets.
A Chrysler tie-up with Tata could potentially open new markets for the Wrangler, including with India's military. Chrysler already assembles an armored version of the Wrangler in Egypt.
The iconic Jeep brand is seen as Chrysler's crown jewel and is often mentioned as a possibility to be spun off as it would generate more cash than any of Chrysler's other assets. An investment banker, who declined to be identified, told Reuters it was likely that a product-centered tie-up between Tata and Chrysler could lead to a larger deal over time.
Tata and Chrysler are already cooperating on developing an electric vehicle, a battery-powered version of Tata's Ace mini-truck.
Meantime, Fiat and Tata already have a partnership. This week Fiat took over handle the financing in Europe for Tata's Jaguar and Land Rover brands. Meantime, Tata has said it was open to Fiat selling its $2,500 Nano, billed as the world's cheapest car when it goes on sale late this year.
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