Automotive Journal

Chrysler and Fiat coming together is perhaps not too surprising. Look at the industrial logic. Fiat wants the added scale and presence in the US that Chrysler can help it with (manufacturing and distribution). Marchionne dropped a big hint recently that he wants an alliance.

And Chrysler needs a lifeline of some sort. The feedback about the state of Chrysler coming out of Detroit last week was pretty grim. Echoes of Rover's final days, even. 

Working with Fiat gives it the chance to develop the product it desperately needs but doesn't have - small cars (you'll recall that a deal to make a car in China fell apart and also that Phil Murtaugh has legged it). And Chrysler can get Fiat's assistance with distribution around the world. Perhaps even more importantly, Fiat's involvement makes Chrysler look much less like a dead duck as it formulates a plan for viability. Fiat has some pretty relevant turnaround experience - well, it turned itself around pretty successfully.

And if you'll recall your history, that Fiat turnaround followed a partnership break-up with GM when GM paid Fiat $2bn to let it walk away from a 'put' option that could have forced it to invest more in a then ailing Fiat. And now GM is close to bankruptcy and it looks like Fiat can have 35% of Chrysler and not even have to hand over any cash. Ah, the twists and turns, eh? 

ITALY/US: Fiat secures $2 billion from GM as ties are severed