Italy’s Fiat took an initial 35 percent stake in Chrysler, launching a venture designed to secure both carmakers’ futures, according to Reuters.
Chrysler said on Tuesday that the deal involves no cash investment. The move is seen as crucial to Chrysler as giving it access to Fiat’s more fuel-efficient vehicle platforms and freeing up an initial $4 billion of funds from the U.S. government’s Troubled Asset Relief Program (TARP).
French Prime Minster Francois Fillon said his government was considering an aid package for the country’s carmakers worth 5-6 billion euros.
“I think all European governments share this opinion … There is an emergency. We need a massive response on the automobile sector’s financing,” he told a French car industry summit. He also said that measures would be announced in the coming days.
Chrysler’s CEO, Bob Nardelli, told employees in a letter the Obama administration would provide $4 billion of initial funding to Chrysler, and that the company would assist in bringing its partner’s brands to the U.S. market.
“Sharing technology should inevitably save costs,” said Bank of America Merrill Lynch analyst Harald Hendrikse to Reuters.
“Fiat is looking at Chrysler as an inexpensive way to re-enter the U.S. market …should gain access to cheap U.S. assembly…Chrysler’s U.S. distribution.”
Chrysler is the weakest of Detroit’s three car makers.