Italy's Fiat and Chrysler of the United States have signed a preliminary, non-binding agreement to create a global partnership amid the financial crisis, local media reported Tuesday.
A formal accord, which foresees the automakers' cooperation in the production and distribution of cars and other motor vehicles, will be signed sometime in April after both sides approve the terms, Italian News Agency ANSA reported.
The non-cash accord calls for Fiat to take a 35-percent stake in the third largest American carmaker. That's in exchange for Fiat's platforms for its fuel-efficient, small and medium-sized compact cars, which will fill a gap in Chrysler's range of models.
Chrysler confirmed that the deal will allow it to demonstrate to the U.S. Treasury that it is meeting the conditions set to receive further federal bailout funds necessary for its restructuring and survival.
The U.S. automaker has already received US$4 billion on the condition that it shift production away from fuel-guzzling vehicles and slash production and operating costs.
Fiat CEO Sergio Marchionne called the accord a "milestone" for the troubled automobile sector which "confirms the determination and commitment of Fiat and Chrysler to play a significant role" in the global market.
"The accord will allow both companies access to important markets with products which are innovative and environmentally friendly, an area where Fiat is a recognized world leader, while generating significant cost savings," he said.
Chrysler Chairman and CEO Bob Nardelli said "a partnership between Chrysler and Fiat is an ideal combination which has the potential of creating a new, major player on a global level."
"It will give Chrysler a number of strategic benefits including access to products which complete our own range, access to a distribution network outside North America and savings in research, development, acquisitions, production, marketing and sales," he added.
Fiat Chairman Luca Cordero di Montezemolo said a global partnership with Chrysler "has great potential."
"It is positive for Fiat because it means selling technologies which cost significant investment and finally opens a market (the United States) which is very important for us," he said.
An alliance with Chrysler will give Fiat access to Chrysler's assembly plants as well as its sales and service networks, all necessary for the Italian automaker's goal of bringing Alfa Romeo back to the U.S. market and introducing its popular new Fiat 500 city car there. Both vehicles need to be produced in the United States to be profitable.
(Xinhua News Agency January 21, 2009)
