Alfas in Detroit? Fiat takes 35% stake in Chrysler

Only independent from the DaimlerChrysler partnership for a year and a half, the smallest of the big three has given a 35% stake to the Turin-based conglomerate Fiat. Basically, the deal is that Fiat will pay for retooling Chrysler factories to build Fiat-based small cars and efficient engines. However, Fiat won’t actually put any cash into the automaker. As the New York Times points out, “[t]he speed and terms of the Chrysler-Fiat talks illustrated the emergency facing Chrysler, which was willing to give away more than a third of the company essentially for free.”

Fiat also has an option of increasing their stake to 55%. While that would mean Chrysler would be foreign-owned again, I’m not sure that they had any choice. They were majority-owned by New York-based Cerberus Capital (80% stake), so I assume that their stake was simply reduced and given to Fiat.

What does this mean for Chrysler? Well, despite Fiat and their related brands leaving US shores in disgrace in the 80s and early 90s, they’ve apparently gotten their act together and are now putting together a decent car. The new (nuova) Fiat 500 is a MINI competitor, and the Alfa Romeo line looks really sharp (especially the Brera and 8C Competizione). Are we going to get Fiat (or Alfa, Lancia, etc) branded cars, or are we simply going to get new Dodge and Chrysler small cars based on Italian platforms? It’s probably too early to tell.

The bottom line? Chrysler needs a partner. Why not Fiat?