The deal could lead to the Italian maker taking full control of the American brand, say insiders.
A partnership would give both companies crucial economies of scale – and, with Chrysler strong in the US, plus Fiat strong in Europe, there are few obvious conflicts.
The deal involves no cash payment by Fiat to start with. Chrysler instead gets access to FIat’s more economical vehicle platforms. The US division can therefore start to make cleaner cars.
This sustainability will help Chrysler meet the terms of the $4 billion bailout it received from the US Government. It has since asked for $3 billion more.
Fot Fiat, it means the brand has more scale, plus the entry into the US market it has sought for so long.
In the future, it is said Fiat will expand to take a majority stake in Chrysler. This would lead to Daimler, which still owns 20 per cent of Chrysler, selling its stake. The German maker has said it welcomes discussions here.
Come back to Car Dealer for more reactions as we get them…