A quarter of a century after saying arrivederci to America, Fiat may be poised for a U.S. comeback.
The huge Italian conglomerate, which sells vehicles under the Fiat, Alfa Romeo, Lancia, Maserati and Ferrari nameplates, has been looking for a tie-up with another carmaker for some time. After reported discussions with the French company that makes Citroen and Peugeot appeared to go nowhere last year, Chrysler may be its next dance partner.
Such a deal could have obvious upsides for troubled Chrysler, which has a lineup sorely lacking in small cars and a limited international presence. With 2008 sales down 30%, it recently had to accept $5.5 billion in federal loans to stay afloat, including $1.5 billion to its financing arm last week.
But a tie-up also could be a huge winner for Fiat, which has been angling to get its phenomenally popular 500 model, as well as the stylish Alfa Romeo luxury brand, to American consumers for years. Chrysler's infrastructure could allow the Italian company to do that on the cheap.
"This makes a lot of sense," said auto analyst Jim Hall of 2953 Analytics. "Fiat has had its eyes on this market for some time."
Reports Monday in trade publication Automotive News and the Wall Street Journal suggested that Fiat could take as much as a 35% stake in Chrysler. The Auburn Hills, Mich., carmaker is 80% owned by Cerberus Capital Management and 20% owned by Daimler, the German maker of Mercedes Benz.
Another possibility, some in the industry say, is a nonequity joint venture. In both cases, however, the relationship would probably trade Chrysler's facilities and dealership network for Fiat's expertise in small cars as well as some cash, most likely as a direct investment in production facilities. The goal would be to produce small cars for sale in the U.S., and potentially bring Chrysler vehicles to Europe.
Individuals familiar with Chrysler's operations who requested anonymity because of business relationships said the carmakers had been negotiating an alliance for some time. Chrysler has an agreement with Nissan to trade its trucks for the Japanese company's small cars and had explored a linkup with Chinese automaker Chery.
A Chrysler spokeswoman would neither confirm nor deny a deal with Fiat on Monday.
"In today's economic environment, talks are going on between companies in all industries," said spokeswoman Lori McTavish. "Beyond those partnerships and alliances already announced, Chrysler has no further announcements to make at this time."
