Fiat closed its acquisition of Chrysler's strongest assets today, a key step in the Italian carmaker's ambitious plan to create a global player to ride out the worldwide car sales downturn.
The Fiat and Chrysler announced deal revives the 84-year old US carmaker that had been down to its last dollars before government intervention in late 2008 and completes an Obama administration-directed fast-track reorganization for Chrysler.
Other parts of Chrysler will remain in bankruptcy to be sold or closed.
Fiat chief executive Sergio Marchionne became CEO of the new Chrysler Group today. The carmaker's former CEO, Bob Nardelli, will return to Cerberus Capital, the former majority owner of Chrysler, as an adviser.
Chrysler's former vice chairman and president, Jim Press, has been named Mr Marchionne's deputy chief executive, and Fiat's chief financial officer, Richard Palmer, has been named CFO of the new company.
In a memo to employees, Mr Marchionne voiced optimism about the new company's outlook.
"There is no doubt in my mind that we will get the job done," he said. He called the alliance a "bold first step to implement" lessons learned.
Mr Marchionne added that Fiat will begin the process of transferring Fiat's technology, platforms and powertrains to Chrysler plants in the next few months.
In addition to Fiat, Chrysler Group LLC is owned by a union-aligned trust and the US and Canadian governments in taking over the best parts of Chrysler.
The White House welcomed the completion of the deal and said the new alliance was "poised to emerge as a competitive, viable automaker."
The Canadian government said a restructured Chrysler is good for the Canadian auto parts supply chain and for Canadian consumers.
The completion of the Chrysler sale in roughly the time frame planned has been seen by analysts as a good omen for the prospects of completing a similar process for General Motors, which filed for bankruptcy on June 1st.
The GM sale is expected to take longer due to the size and complexity of the No. 1 US based carmaker. GM will be majority owned by the US government when its sale is completed.
Chrysler filed for bankruptcy on April 30th and halted production to work through the sale to Fiat, heightening pressure on car parts suppliers that already had sustained losses due to production cuts at automakers in North America.
Chrysler said it would resume production soon, but did not give a time frame. GM also halted significant production starting in mid May for several weeks.
US and Canadian car suppliers are under heightened pressure as US carsales remain at their lowest level in 27 years. US sales are down 36.5 per cent in the first five months of 2009.
Shares of several large US car parts makers rose sharply today after the Chrysler deal completion erased fears that it could face liquidation if the deal did not go through and eased concerns over whether some auto suppliers could survive the current downturn.
Reuters