Chrysler Greets Fiat Visitors
January 27, 2009
By Michelle Krebs
AUBURN HILLS, Mich. -- Chrysler had a visit from executives of Italy's Fiat this weekend, including its high-profile CEO, Sergio Marchionne
.
Chrysler CEO Bob Nardelli told employees in a memo Monday that the executives from Fiat held meetings at the company's headquarters over the weekend. He characterized the meeting as positive and said the "alliance is very promising."
Fiat has offered to take a 35 percent stake in the Detroit automaker in a deal that could be completed by the end of April. It could eventually raise that stake to 55 percent.
No details were provided about what was discussed at those meetings but undoubtedly they included details of how the Chrysler-Fiat alliance would unfold, what products would be shared. In addition, Fiat is helping Chrysler with its viability plan, the first part of which must be submitted to the U.S. government by February 17. The second crucial date for the plan is March 31.
Chrysler is required to submit a viability plan in order to keep the $4 billion in federal loans it recently received and to obtain the additional $3 billion the automaker has requested.
Chrysler's deal with Fiat also is dependent upon a successful viability plan that obtains government loans.
More Cost Cuts Planned
Nardelli noted to employees in his memo that cost cuts will be stepped up as part of the viability plan.
Among the cost cuts in the works are: lower prices for parts from suppliers; margin reductions for dealers on car orders; equity to banks and lenders in exchange for reductions in loan obligations; and a restructuring of current and future retiree health care contributions, including contributions in the form of equity instead of cash, Bloomberg News reports.
Nardelli's memo also said the automaker will try to figure out how to help Daimler AG dispose of its 19.9 percent share in Chrysler. The German automaker has said it wants to get rid of its stake in Chrysler and has listed the stake on its books as worthless. Nardelli said Chrysler also would seek to complete a request for a $1 billion bridge loan from the Canadian government.
Hints About Chrysler-Fiat Product Plans
Chrysler executives have been hinting about what a Chrysler-Fiat alliance would birth in the way of new models for the American automaker.
Chrysler Product Chief Frank Klegon has said Chrysler is looking at vehicles in the A, B, C and perhaps D-size vehicle segments -- that's everything from microcars to midsize cars and includes small engines.
Chrysler Vice Chairman Jim Press announced at the National Automobile Dealers Association gathering in New Orleans this weekend that a Chrysler-badged Fiat could be introduced in less than two years.
Media speculation goes further, saying Chrysler would get seven vehicles out of the deal: four bearing Chrysler, Jeep or Dodge badges and three sold as with Fiat or Alfa Romeo nameplates, the Detroit Free Press and trade journal Automotive News report, quoting unnamed sources supposedly familiar with the deal. Those vehicles would be based on four Fiat platforms, ranging from the smallest -- A or microcar platform -- to the midsize D-segment, the paper said. Alfa Romeo has been planning a return to the U.S. in the next couple of years.
Chrysler's Toluca, Mexico, assembly plant, could produce Chrysler and Fiat vehicles, likely small cars, as it will be empty. Chrysler recently announced plans to end production of the Chrysler PT Cruiser, which is built there. The Mexico plant has the highest quality rankings of all Chrysler plants, a company insider told AutoObserver.
Chrysler and Fiat are also plotting to share each other's technology as well as suppliers.
Posted by Michelle Krebs at 6:09 AM under Business , Chrysler , Companies , Personalities | Comments (0) | digg this | Seed Newsvine
Leave a comment