FIAT AND Chrysler yesterday cemented a deal to create the world’s sixth-largest carmaker, saying it would “begin operations immediately”.
Fiat chief executive Sergio Marchionne is due to become chief executive of a “new Chrysler” comprising most of the bankrupt Detroit carmaker’s assets, in which the Italian group will take an initial 20 per cent stake.
The partnership, agreed in January, will double Fiat’s global scale to about four million cars and give Chrysler access to new technology, production platforms and engines, as well as the Italian carmaker’s distribution network, notably in Latin America and Russia.
It is the first major tie-up between carmakers to be concluded since the global car industry entered its worst crisis in decades.
Mr Marchionne wasted little time in putting his mark on the US carmaker, telling staff in an e-mail: “Chrysler will be back – strong and competitive and a rewarding place to work.”
He announced a sweeping management shake-up, including finance and communications chiefs brought in from Turin and new appointments to head the Chrysler, Jeep and Dodge brands as part of a “flattened organisation”.
Chrysler, with the help of the US government, passed through court-supervised reorganisation in just 41 days, auguring well for General Motors, which filed for chapter 11 bankruptcy protection on June 1st. Fiat will be allowed to increase its stake by another 15 per cent to 35 per cent but is barred from assuming majority control until Chrysler has repaid all US taxpayer-funded aid, which totalled $4 billion (€2.86 billion) when it filed for bankruptcy protection on April 30th.
The Italian group will hold three seats on Chrysler’s new nine-member board and Robert Kidder, a former chairman of Borden Chemical and Duracell International, will become its chairman.
Bob Nardelli will depart as Chrysler’s chief executive, returning to Cerberus Capital Management and formally ending the buyout group’s ill-fated involvement in Chrysler, which it bought from Germany’s Daimler in 2007.
Its plants, idled during the bankruptcy process, are “or will soon be up and running”, said Mr Marchionne.
