Fiat SpA is in talks with Chrysler over a possible stake in the struggling US automaker, the vice-chairman of the Italian group confirmed today.
John Elkann, Fiat SpA vice-chairman confirmed the talks in comments to reported in Milan today. It is understood that a deal with Fiat would help Chrysler make vehicles that produce fewer harmful emissions.
A source close to the deal said that to get financing, "US (car makers) have to show that they are really committed to developing over the short term a new family of vehicles that pollute less," the source said.
"By itself, Chrysler would not be able to meet this condition."
Chrysler, the third largest US-based automaker behind General Motors and Ford Motor received $4 billion of US government loans to avert collapse and Chief Executive Bob Nardelli said last week it was counting on $3 billion more.
It had requested $7 billion of US government aid.
GM, which also received government money, and Chrysler are required to meet cost-cutting targets as a condition of the aid, including reducing labour costs and restructuring debt as well as demonstrating that they have plans to be viable.
"In today's economic environment, talks are going on between companies in all industries - ours is no different," Chrysler said in a statement in response to the reports of talks between the automaker and Fiat.
"Chrysler LLC as a matter of policy however, does not confirm or disclose the nature of its private business meetings," the automaker said. "Beyond those partnerships and alliances already announced, Chrysler has no further announcements to make at this time."
Chrysler owner, Cerberus Capital Management, declined to comment on the report. A Fiat representative was not immediately available for comment.
Agencies