Chrysler values Fiat partnership at $10 billion

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Filed under: Government/Legal, Chrysler, LLC., Earnings/Financials, FIAT

In an email to employees, Chrysler Corp. CEO Bob Nardelli has valued his company's potential partnership with Fiat at around $10 billion. That number is comprised of things like the cost of developing new vehicles that Chrysler would incur on its own, but should pocket in a tie-up with Fiat, which would provide the Auburn Hills-based automaker with ready made small cars to sell. Selling Chrysler-badged Fiats in the U.S. would not only save Chrysler money, it would also save years of development time and countless sales lost from not having a suitable small car to sell. Fiat would also likely utilize a portion of Chrysler's production capacity in North America to build its own cars for sale here, which would save a number of Pentastar employees' jobs and maybe even create some more.

Nardelli told his employees that the value of partnering with Fiat is greater than the total amount of money that Chrysler has requested (so far) from the government, which stands at around $9 billion. Both, however, are related, as partnering with Fiat, which would involve the Italian company taking up to a 35% stake in Chrysler and getting access to production capacity and distribution networks in the U.S. in return for supplying vehicles and engines, requires the approval of the President's Auto Task Force. Fiat chief Sergio Marchionnne has already met with the Task Force, as has Chrysler, which has a lot of work to do getting concessions from the UAW and its bondholders before a March 31st deadline. Otherwise, the government may decide not to grant Chrysler its current request of $5 billion in loans, which could scare Fiat away. Chrysler claims it can survive even if the partnership with Fiat falls through, but for the automaker's sake, we hope it doesn't.

[Source: Washington Post | Photo by Brendan Hoffman/Getty]

Chrysler values Fiat partnership at $10 billion originally appeared on Autoblog on Tue, 17 Mar 2009 11:29:00 EST. Please see our terms for use of feeds.

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