Fiat and Chrysler announce partnership

Fiat and Chrysler say they’ve signed a nonbinding agreement for a strategic global alliance that gives the Italian automaker a 35 percent share in the struggling Michigan firm. The two companies announced in a joint statement that they intend to share platforms and technologies. Fiat would not invest cash in Chrysler, but would provide access to fuel-efficient powertrains, small car platforms and its global distribution network.

The announcement comes less than 12 hours after we learned that the automakers were holding discussions.

Chrysler’s Chairman and CEO Bob Nardelli, said that the benefits are trifold.

“A Chrysler-Fiat partnership is a great fit as it creates the potential for a powerful, new global competitor, offering Chrysler a number of strategic benefits, including access to products that complement our current portfolio (and) a distribution network outside North America,” Nardelli said in a statement.

Chrysler has said that partnerships were its only way to succeed. The automaker had worked out a limited deal with Nissan that saw the Japanese automaker producing small cars for emerging markets for Dodge in exchange for Chrysler-built, Nissan-badged pickups in the future.

The partnership would essentially guarantee the mid-to-long-term viability for Chrysler, which analysts have said cannot survive on its own. By gaining access to small car platforms and powertrains, as well as distribution networks outside of North America, Chrysler’s future would look considerably brighter.

Chrysler would likely take advantage of Fiat’s Eastern European, Russian, South American and Chinese distribution networks. Fiat had been seeking to introduce a new low-cost line, but those plans could be put on hold if Chrysler took priority.

Fiat, fresh off its own successful restructuring plan, would also gain further access to the North American market as part of the deal. The automaker has been attempting to push its premium Alfa Romeo brand back into the market ever since it left amid a sales downturn in 1995.

Alfa Romeo did successfully sell 85 8C Competizione performance cars in the market late last year, but the brand is seeking a broad return. Fiat has also expressed interest in capitalizing on the Mini Cooper’s model by bringing its own Fiat 500 minicar to North America.

The alliance is subject to further review by both companies, as well as regulatory approvals in both Italy and the United States. Keep checking back as this story develops.