Yesterday (April 30), Chrysler had no choice but to file for bankruptcy protection in the USA. This was despite the efforts of President Obama and his administration to assist Chrysler in restructuring its finances. However, it turns out that the deal between Fiat and Chrysler will go ahead and the US government has committed to further aid to insure the company's continued survival.
Chrysler will face up to two months under 'Chapter 11' rules, which protects it from creditors while it reorganises. It is thought that Chrysler's US factories will stop producing cars during this time.
Once Chrysler comes out of bankruptcy it will be 55 percent owned by the Union of Auto Workers (UAW) and a workers' healthcare trust. Fiat's stake will initially be just 20 percent, though a plan has been put in place for the Italian maker to possibly take a majority shareholding in the future.
In return, Fiat will contribute its technological knowhow to Chrysler, especially with regards to small cars and 'green' technology and it has also committed to continue producing cars on American soil.
President Obama is right behind the deal, reassuring the American taxpayer: "As part of their agreement, every dime of new taxpayer money will be repaid before Fiat can take a majority ownership stake in Chrysler."
Though it is likely that Chrysler will, in the short term at least, rebadged several Fiat models, the company was quick to point out that it hopes to continue with its more American offerings too: "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 Bob Nardelli, Chairman and CEO of Chrysler.