Special Coverage

NADA Convention & Exposition

NEW ORLEANS – A proposed alliance agreement between Chrysler LLC and Fiat Auto Group is not a “done deal” yet, says Chrysler Vice Chairman and President Jim Press.

Success hinges on whether Chrysler’s viability plan meets the terms dictated by the U.S. government at the time it approved a $4 billion loan package for the Auburn Hills, MI, auto maker.

Press makes his remarks at a J.D. Power and Associates Automotive Roundtable, an event held in conjunction with the National Automobile Dealers Assn. annual convention here.

The non-binding agreement would give Fiat a 35% stake in Chrysler, while the Detroit auto maker would acquire access to Fiat’s small-car platforms and downsized, fuel-efficient engines. Those include next-generation platforms that support Fiat’s C-segment Bravo, B-segment Punto and A-segment 500.

“All of this comes together around March 31,” says Press. “We’ll go back to the government and show them our viability plan and (hopefully) get the $3 billion second installment of our loan package. That’s exactly what will trigger the approval of our deal with Fiat.

“Fifty percent of the U.S. market will be A-segment, B-segment and C-segment cars,” Press says. “That’s where we don’t have a lot of expertise, and to be honest, we don’t have the (money) necessary to gain that expertise.

“It should have been done over the last 10 years. We’ve been talking with a lot of potential partners. Nissan (Motor Co. Ltd.) is going to build a B-car for us. But now we’ve found a partnership that really makes sense.”

Press says there are four points to the auto maker’s turnaround:

  • Chrysler has invested in new product – the auto maker has eight new vehicles coming out in the next year and a half and 24 in the next 48 months.
  • The company will continue to support its dealers “with record levels of incentives.”
  • Credit is improving with the auto maker’s finance company.
  • Fiat has some of the best platforms in Europe in terms of cost and performance.

“(Fiat has) great expertise (with their platforms) and distribution network in Europe and around the world – but not (in the U.S.),” Press says. “We have a great dealer body and a wonderful distribution network. Nobody will ever wonder how good the Chrysler, Dodge and Jeep dealers are.”

In North America, Fiat would have access to Chrysler’s distribution network for its platforms, products and technology.

“Fiat has made available all of their technology, from the entire company, except for Ferrari,” the Chrysler executive says. “Billions and billions and billions of dollars will be invested in the car market, and they can be produced at our plants in North America.”

Press says an alliance between Chrysler and Fiat would be a good opportunity for U.S. suppliers. “They’ll have a chance to do a lot more business.”

Additionally, “we’ll be exporting our cars from here to other parts of the world,” he says. “We have cars right now we are starting to redesign. They’ll be built in North America and sold through Fiat’s distribution system. Not just Jeeps, but SUVs and other vehicles. It makes a ton of sense for us.”

Chrysler has new products in the pipeline, money coming for its Chrysler Financial financing arm and hopefully can finalize the alliance with Fiat, Press tells attendees.

Chrysler Financial recently received a $1.5 billion loan from the U.S. Treasury Dept. allowing the auto maker to offer 0% financing.

“Our company is scrapping,” Press says. “Getting Chrysler and Fiat together preserves jobs in America – in our environment and our economy today, that’s a pretty big statement. Not just for the manufacturer, but for our dealers. The dealers need the volume of products.

“We are going to sell our way out this, not ‘save’ our way out of this.”

dstark@wardsauto.com