Tuesday, January 27, 2009

Chysler Fiat Marriage = Fiat Cars to Chysler Dealer Near You?

Last week, Chrysler and Fiat announced they signed a memorandum of understanding,, a non-binding agreement in which Fiat would receive a 35% stake in Chrysler, and could eventually raise its ownership stake to 55%. In return, Chrysler would have access to Fiat's small-car technologies. Each company would also have access to each other's plants and dealer networks. Fiat would also benefit by having access to Chrysler's dealership operations, which includes systems for tracking warranty work.

The deal between Chrysler LLC and Fiat SpA could lead to seven new cars for the North American market. The news comes after the leadership teams of the two automakers, which included Fiat CEO Sergio Marchionne, held an informal meeting in Auburn Hills over the weekend.

Of the seven vehicles, three would be Fiat or Alfa Romeo, a person familiar with the deal said. Those vehicles would be based on four Fiat platforms, ranging from the smallest, the so-called A or microcar platform, to the midsize D-segment, and reskinned for the US market. Fiat's highly fuel-efficient powertrain technology would also be shared with Chrysler. For Chrysler, which is essentially valueless, it allows Jeep to enter markets such as Brazil and Italy where Fiat already has dealerships.

Ultimately, Fiat's small-vehicle platforms could help Chrysler compete in the small-car segment, in which Fiat specializes, and in the midsize segment, where Chrysler has struggled to compete against the Toyota Camry and Honda Accord. The Fiat 500, a hot re-introduction of one of Fiat's most popular post-war vehicles, will surely enter the United States market and one or two of Chrysler's factories will be retooled to build the Fiat 500. Comau will re-tool Chrysler's factories and Magneti Marelli will sell more of its car parts, thus strengthening its business.

Fiat has little lose by the agreement, and much to gain, while Nardelli could use some intellectual and operations power to bail out Chrysler's inept management. If things go well we'll see Fiat's on the road by 2011, and if not then Chrysler will slide into bankruptcy and Fiat will pick the prized assets for a song. Either way, Fiat is well-positioned for its re-entry into the United States of America's markets.

After the jump video of 2009 Alfa Romeo Spider.

After the jump video of the new 2009 Fiat 500.

For more video of Italy visit WebVisionItaly.com

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