Chrysler-Fiat alliance is go

A US court has cleared the way for Chrysler LLC to sell most of its assets to a new company formed with Fiat SpA, to be known as Chrysler Group LLC.

The US Bankruptcy Court in the Southern District of New York approved Chrysler LLC’s request to sell “substantially all of its operations” to the new company yesterday in the US (June 1), the same day General Motors officially filed for Chapter 11 bankruptcy.

Chrysler’s Mexican, Canadian and other international operations will also be acquired by Chrysler Group, but Chrysler Australia last month said its local operations would be unaffected after its parent company filed for Chapter 11 bankruptcy a month ago on April 30.

Chrysler Australia managing director today Gerry Jenkins said it was premature to discuss the potential ramifications of the deal locally.

“We are very pleased with today’s announcement and the opportunities that it brings to our company,” said Mr Jenkins.

“At this stage, it is too early to comment or speculate about how the integration with Fiat might apply in Australia or New Zealand regarding all aspects of the operation including dealer body and distribution.”

Left: Chrysler Australia managing director Gerry Jenkins.

Chrysler says the alliance with Fiat provides it with access to “exciting products that complement the company’s current portfolio”, along with new technology and a stronger global distribution network.

It said work with Fiat is already well underway to develop “the next generation of environmentally friendly, fuel-efficient high-quality vehicles”.

“With this approval, the new Chrysler Group is created and can prepare to launch as a vibrant new company formed with Fiat,” said Robert Nardelli, the chairman and chief executive officer of Chrysler LLC, who as previously announced will resign from the company on completion of the transaction.

The CEO of Chrysler since August 2007, Mr Nardelli will return to Cerberus Capital Management LP as an advisor.

“Through the hard work and foresight of many Chrysler stakeholders, Chrysler Group will soon begin operations with significant strategic advantages, such as a wage and benefit structure for active and retired employees that is competitive with those of transplant manufacturers a reduction of debt and interest expense the disposition of idle assets a rationalised and more efficient dealer network and sound agreements with our suppliers.

“While this has been an extremely difficult chapter in Chrysler’s history for all involved, the new company and its customers, employees and suppliers can now begin on a fresh page.

“We are very grateful to loyal Chrysler customers who have supported us throughout this process and assure them Chrysler Group is well prepared to produce and support quality vehicles under the Jeep, Dodge and Chrysler brands as well as parts under the Mopar brand,” said Mr Nardelli.

President Barack Obama said the decision to approve the Chrysler sale paved the way for the new Chrysler to emerge a stronger, more competitive company.

"Only a month ago, this great American company's very future was in doubt,” he said.

“Now, as a result of a substantial commitment by the US government, and tough sacrifices from all stakeholders involved, Chrysler has a new lease on life.

“We said this process would be completed quickly and efficiently, and that's exactly what has been accomplished today. Tens of thousands of American jobs will be saved as a result of this extraordinary effort."

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