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>> 1/May/2009 - Chrysler & Fiat Merge

One of the largest mergers in automotive has been approved by the U.S. Government, as Italian automaker Fiat and American car maker Chrysler join forces.

According to an official statement, Chrysler "has reached an agreement in principle to establish a global strategic alliance with Fiat SpA to form a vibrant new company."

The news is very positive for the North American auto industry, which has been teetering perilously close to a black hole since late 2008 as domestic new car sales dropped by more than a third, slashing income.

Creating one of the world's largest car companies, the merger came soon after Chrysler filed for Chapter 11 bankruptcy in the United States after overnight talks failed to renegotiate billions of dollars of debt.

Ultimately however, the bankruptcy filing of Chrysler will not affect the merger.

"While I am excited about the creation of the global alliance, I am personally disappointed that today Chrysler has filed for Chapter 11. This was not my first choice," said Bob Nardelli, Chairman and CEO of Chrysler.

Mr Nardelli later announced that he would step down as CEO once the bankruptcy filing was over.

The U.S. government will sink another $8 billion in Chrysler to clear its debts, becoming a large stake holder in the car maker until the government loans are repaid. 

Once this has happened, Fiat can take over as majority stake holder in the merged company if it meets certain benchmarks, like developing fuel efficient engines to be built in America and improving overall fuel efficiency of Chrysler vehicles.

This will result in more Chrysler brand vehicles being sold in Europe, and more Fiat brand vehicles being sold in the United States, which is expected to bolster sales for the new corporation.

"This partnership transforms Chrysler into a vibrant new company with a wealth of strategic advantages," said Bob Nardelli, Chrysler CEO.

"It enables us to better serve our customers and dealers with a broader and more competitive line-up of environmentally friendly, fuel-efficient high-quality vehicles. Benefits to the new company include access to exciting products that complement our current portfolio, technology cooperation and stronger global distribution," added Nardelli.

"We want to personally assure everyone that the new company will produce and support quality vehicles under the Jeep, Dodge and Chrysler brands as well as parts under the Mopar brand," said Nardelli.

The merger has saved Chrysler from dying a slow death and is expected to benefit both companies in the future and as the global financial crisis eases up in 2010 and beyond.

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