Fiat partners Chrysler

Fiat and Chrysler have signed a non-binding agreement that will give the Italian car manufacturer a 35 per cent stake in the troubled American car company.

Under the alliance, Fiat and Chrysler will share their distribution capabilities and global supplier base in order to provide cost-saving opportunities for both companies.

While Fiat’s share of Chrysler will not involve a cash investment, the deal will expand Chrysler’s current product portfolio by providing it with access to fuel efficient and environmentally-friendly powertrain technologies.

Sergio Marchionne, chief executive of Fiat, said: ‘The agreement will offer both companies access to the most relevant automotive markets with innovative and environmentally-friendly product offerings, a field in which Fiat is a recognised world leader, while gaining from additional cost synergies.

‘The deal follows a number of targeted alliances and partnerships signed by the Fiat Group with leading carmakers and automotive suppliers over the last five years aimed at supporting the growth and volume aspirations of the partners involved.’

Despite sharing a close customer base, the move has prompted some analysts to speculate that Fiat could be in danger of following in the footsteps of Daimler, which ended it’s partnership with Chrysler two years ago.

Nevertheless, the strategic alliance is expected to be significant for Chrysler’s submission of a viability plan to the US Treasury and could prove a lifeline for the company in light of the current economic recession.

Bob Nardelli, chairman and chief executive of Chrysler, said: ‘A Chrysler/Fiat partnership is a great fit as it creates the potential for a powerful new global competitor, offering Chrysler a number of strategic benefits, including access to products that complement our current portfolio; a distribution network outside North America; and cost savings in design, engineering, manufacturing, purchasing, sales and marketing.’