Fiat CEO says to meet U.S. authorities on Chrysler deal
Tue Mar 3, 2009 7:13am EST
GENEVA Fiat Chief Executive Officer Sergio Marchionne will go to the United States in the next few days to discuss its deal with Chrysler CBS.UL with authorities there, he told journalists at the annual motor show.
Fiat's alliance with Chrysler, announced earlier this year, is contingent on the U.S. car maker getting more federal aid.
Marchionne reiterated that his company had no plans for a capital increase, calling it "a bizarre idea."
He said recent incentives introduced by the Italian government to encourage trading in cars for less-polluting models would mean its Melfi factory in Italy would be able to survive but said the situation at its Pomigliano site was more difficult.
Fiat Would Gain Off-Road, SUV Designs From Chrysler Partnership
March 4
Fiat SpA would gain access to off- road vehicle technology in Chrysler LLC’s Jeep and Dodge brands if the Italian carmaker is able to take a stake in the U.S. company, a Fiat executive said.
“The Jeep and Dodge brands are extremely strong worldwide and we would be able to leverage on that,” Alfredo Altavilla, head of Fiat Powertrain Technologies, said in a Bloomberg Television interview at the Geneva International Motor Show.
Fiat, based in Turin, is poised to take a 35 percent stake in Chrysler, the Detroit automaker propped up by U.S. government aid. The Italian company’s chief executive officer, Sergio Marchionne, is traveling to Washington today to help Chrysler try to persuade the U.S. Treasury to approve the deal.
Chrysler says it wants a partnership with Fiat to gain access to the company’s small-car technology and global sales network. It may use a Fiat model as the basis for replacing the Dodge Caliber small car, for example. Fiat could use Jeep Grand Cherokee or Dodge Durango designs for a sport-utility vehicle.
Altavilla said the two companies would glean significant cost savings from the partnership.
“The increase in volumes would help reduce costs on both sides,” he said. Chrysler has identified $7.4 billion in additional revenue and cost cuts over the next seven years and Marchionne confirmed that estimate yesterday.
Fiat presented its Multiair electro-hydraulic engine technology today at the Geneva show. The new system, which reduces fuel consumption and carbon dioxide emissions by 10 percent, may be licensed to rivals, Altavilla said. Fiat invested 100 million euros ($126 million) in the new engine, he said.
Posted Wednesday, Mar 4, 2009, 1:02 pm in Employee News
Fiat has unveiled a new engine technology it says can reduce fuel consumption as much as 25 percent.
The system is expected to be available to all Fiat’s current and future partners, including possibly Chrysler LLC, Fiat powertrain chief Alfredo Altavilla said at Geneva’s annual auto show.
The first engine using the system goes on sale in the Alfa Romeo MiTo sporty compact in Europe later this year. The MiTo is among the cars Fiat’s Alfa Romeo brand hopes to sell in the Untied States if its alliance with Chrysler comes to pass.
Called Multiair, the system uses electronic controls and hydraulics to vary an engine’s valve timing over a wider range than the mechanical systems automakers use today. Many automakers have turned to variable valve timing to improve fuel economy and boost performance in recent years.
Development of Multiair began with Fiat’s Ferrari Formula One racing team.
The system will initially be fitted to Fiat’s family of 1.0-liter to 1.4-liter four-cylinder engines. It will also be used on an upcoming line of 900cc two-cylinder engines the automaker has developed for use in small cars. Fiat will eventually use it on all its automotive engines.
Multiair reduces an engine’s fuel consumption 10 percent, but its high power output will allow automakers to replace big engines with smaller ones, leading to the potential 25 percent decreased in overall fuel consumption, Altavilla said. It also reduces exhaust emissions by 40 percent to 60 percent he said.
Multiair can be used on both gasoline and diesel engines. Fiat thinks it will allow diesels to meet strict 2014 European emissions limits without the costly exhaust treatment systems other automakers have said they will use.
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WASHINGTON -- The chief executive of Fiat Group SpA told the Obama administration today that the Italian automaker could revive Chrysler LLC and help it repay billions in government loans.
Fiat CEO Sergio Marchionne said the administration’s auto task force was receptive to a proposed partnership that would give Fiat a 35% stake in the struggling U.S. automaker in exchange for new technology but no cash.
“We can add value,” Marchionne told reporters after the 2 1/2-hour meeting with the auto panel at the Treasury Department. “That’s the real issue and it’s a necessary ingredient of the revival of Chrysler.”
Fiat made its presentation in advance of the panel’s meeting with bondholders of General Motors Corp. later today. GM is holding negotiations with its bondholders to cut two-thirds of its $27 billion in unsecured debt under the terms of a loan agreement with the government.
General Motors and Chrysler have received $17.4 billion in federal loans and requested an additional $21.6 billion last month. The government is trying to revamp the companies by March 31 and has been meeting with stakeholders as it tries to find a way to resurrect the companies.
Chrysler contends the alliance with Fiat would help both auto manufacturers. Fiat could provide Chrysler with a broad array of fuel-efficient small and mid-size cars, something the Auburn Hills-based company lacks, and give Chrysler access to foreign markets.
Fiat’s Marchionne has been seeking a U.S. partner to bring Fiat’s successful update of the 500 subcompact and its sporty Alfa Romeo brand to the United States.
Fiat met with Steve Rattner and Ron Bloom, top advisers to Treasury Secretary Timothy Geithner, and other government officials. Marchionne said the panel “wanted to know what the industrial alliance will look like and what it will look like after we’re finished.”
“I think they were intelligently critical of all things that were relevant ... and rightly so. They’re looking at taxpayers’ funding,” he said. “They recognize the magnitude of the problem and there is an absolute determination to find a solution.”
Some members of Congress have questioned whether the government should save a company with a significant foreign stake in a major U.S. automaker.
Marchionne said “nothing is going to be taken out of the U.S. and the main objective is to repay every single dollar of taxpayer funding before anyone gets anything.”
TURIN, Italy -- It's hard to find anyone with a bad word to say about Fiat SpA's proposed alliance with Chrysler LLC in this ancient Italian city that is the automaker's home.
It's all upside, a stark contrast to the bleak outlook that doomed Chrysler's merger with Germany's Daimler-Benz.
Daimler-Benz's German executives obsessed over maintaining barriers between Mercedes-Benz and Chrysler. The German public had no gripe against the American company, but Daimler-Benz wanted to make sure Chrysler did not get too much technology and engineering so the Mercedes star would not be tarnished by its association with the American company.
In sunny Italy, across the Alps and a wider cultural divide from Germany, Fiat executives ponder how fast they can provide technology for the fuel-efficient engines, transmissions and small cars Chrysler needs to survive.
Analysts, Fiat's unions and a small sample of Italians on Turin's streets see the deal as a way for Fiat to grow at minimal risk or cost.
"Chrysler and Fiat together are surely better than Fiat alone," said Giorgio Airaudo, secretary of FIOM-CGIL, the largest of the unions representing Fiat's Italian workers. "Nobody in Italy is worried about this. It makes the dream of selling Fiat" and Alfa Romeo "cars in America possible."
Airaudo said he believes the deal is a precursor to a three-way alliance Fiat-Chrysler will eventually strike with another undetermined automaker.
Pocketbook issues win
In Turin's streets and cafés, the global recession and personal pocketbook issues trump Fiat-Chrysler in most conversations.
"As long as Fiat does not use my money -- Italian taxpayers' money -- to pay for it, this is OK," said Adriano Gianturco, a 25-year-old PhD student from Genoa, Italy. "Americans will like the Fiat 500" minicar "and Alfa Romeo MiTo" sporty subcompact.
The deal announced in January would give Fiat 35% of Chrysler in exchange for engine and transmission technology and vehicle platforms. Chrysler's North American factories and dealers would build and sell up to 600,000 Fiat-based small cars and crossovers annually. Those vehicles would fill as many as three of Chrysler's North American assembly plants. Fiat could later buy an additional 20% of Chrysler, giving it control of the automaker.
Chrysler designers would create new bodies for the cars to sell under the Chrysler, Dodge and possibly Jeep brands. Chrysler engineers will modify the vehicles for North American tastes. Bigger cupholders would be a good place to start.
In exchange, Fiat gets the North American assembly and sales network it wants and access to Chrysler platforms and technology in areas where it lags, such as Jeep SUVs, pickups, minivans and the next generation of the Chrysler 300 and Dodge Charger full-size performance sedans.
The viability plan Chrysler submitted to the U.S. government last month relies almost exclusively on Fiat to provide small, fuel-efficient vehicles.
"This is the solution to Chrysler's disaster," said Alberto Cipriani, Fiat coordinator for the FIM-CISL union. "It's good for sure for Chrysler workers. If Fiat becomes stronger through this agreement -- if Fiat cars are built and sold in the USA -- this is good for Fiat and Fiat workers."
Fiat also will distribute and sell Chrysler vehicles around the world, giving the North American automaker a wider reach and supplementing the Italian automaker's Fiat, Alfa Romeo and Lancia brands.
Chrysler's health a concern
Italians' recurring concern remains whether Chrysler can stay in business long enough for the alliance to bear fruit.
"Chrysler will not survive without Fiat," said Pierluigi Bellini, Milan, Italy-based analyst for IHS Global Insight. "It all depends on the U.S. government and whether it will provide loans to see Chrysler through."
Chrysler's prospects without the deal are so slim that veteran Italian journalist Luca Cifferi suggests Fiat should get more than 35% in exchange for supplying vital platforms and technology.
"Fiat says its contribution is worth $3 billion," said Cifferi, who covers Fiat closely and writes for Detroit-based Automotive News. "These things could be worth as much as 75% of Chrysler," he said, noting that Daimler has written its 19.1% holding in Chrysler down to zero value.
"The big question is whether Chrysler will still be alive by mid-2011, when the first of the vehicles come out of a Chrysler plant. There is no cash risk for Fiat. The only risk is that Chrysler doesn't make it to mid-2011."
But Nardelli wrote that Chrysler intends to keep its US market share at 10 per cent, and since 1992, it has lost only 2.4 percentage points in share. Ford and General Motors have lost 45 per cent of their market share during the same period, Nardelli wrote.
1:42PM Tuesday Mar 17, 2009
DETROIT - If Chrysler and Fiat Group join forces, Chrysler would get technology and other items worth $8 billion to $10 billion (NZ$15-18.8bn), Chrysler's chief executive said.
Chrysler has a tentative deal with Fiat that would give the Italian automaker a 35 per cent stake in Chrysler in exchange for mainly small-engine and small-car technology.
While Fiat wouldn't pay any cash for its stake, CEO Bob Nardelli said in an email to employees that Fiat's contribution would be equal to or greater than the loans Chrysler is seeking from the US government.
Nardelli said Chrysler is working to meet the conditions of its $4 billion federal loan and prove it deserves to get the additional $5 billion it has requested. All automakers are struggling as they try to make it through the worst US sales slump in 27 years.
"Fiat would make available to us its entire product portfolio and power train technology, worldwide distribution capabilities for vehicles we produce today and synergies in the areas of purchasing and engineering, among others," Nardelli wrote.
Nardelli said the terms of the Fiat deal are the same as those required by the US government to get more federal loans.
Chrysler is negotiating with stakeholders, including the United Auto Workers union, for concessions that the government has specified under the loan terms. Included are parity in total labour costs with Japanese manufacturers with US factories, swapping debt for equity in the company, and converting to equity half the $10.6 billion in payments to a union-run trust fund that will take over retiree health care costs next year.
"It is critical we meet all of our government requirements as the first step in finalising the alliance with Fiat," Nardelli wrote.
He also said the company would be viable without a partner, even with a conservative forecast of US auto sales. Chrysler's viability plan submitted to the government says it would have $2.9 billion in earnings before taxes this year if industry wide US auto sales total 10.1 million vehicles.
Chrysler said in its plan that it lost $8 billion last year, and industry analysts have questioned whether it can stand on its own or even survive the year. The company's sales so far this year are down 49 per cent when compared with the first two months of last year. In 2008, sales fell 30 per cent.
But Nardelli wrote that Chrysler intends to keep its US market share at 10 per cent, and since 1992, it has lost only 2.4 percentage points in share. Ford and General Motors have lost 45 per cent of their market share during the same period, Nardelli wrote.
He said maintaining steady market share is a conservative assumption because the company plans to launch 24 new products in the next two years.
Chrysler says Fiat to assume 35 percent of U.S. debt
Chrysler says Fiat to assume 35 percent of U.S. debt
Thu Mar 19, 2009
DETROIT Chrysler said proposed partner Fiat SpA would assume 35 percent of its debt to the U.S. government and the U.S. automaker would no longer pay retention bonuses to key executives.
"No new retention payments or any other form of bonus, will be awarded after January 2, 2009 as a result of the waivers signed by the company's top 25 executives," Chrysler said in a statement.
The statement follows public outrage over American International Group Inc's (AIG) decision to pay $165 million in retention bonuses to some employees after accepting $180 billion in government aid to prop up the company.
Chrysler received a $4 billion emergency loan from the U.S. government on January 2 and has requested another $5 billion.
The automaker said in November that bonuses were owed under its contracts to key executives, based on a retention package that was crafted early in 2007 by former German parent Daimler AG when it was preparing to sell the Chrysler unit.
The U.S. Treasury had approved the retention payments earned prior to the receipt of government loans, the company said.
Separately, Chief Executive Bob Nardelli said Chrysler's proposed partnership with Fiat would represent billions in value, considering development costs for vehicles.
The No. 3 U.S. automaker has a nonbinding deal with Italian automaker Fiat, which has agreed to take a 35 percent stake in Chrysler in exchange for access to technology and overseas markets.
Under the terms of the deal, Fiat will not pay cash for the stake in Chrysler, which is 80.1 percent owned by Cerberus Capital Management CBS.UL.
But in a video message praising the advantages of the deal with Fiat, Chrysler said Fiat would assume 35 percent of Chrysler's debt to U.S. government but would not receive any money from that pool.
"That's a significant commitment for Fiat," said Brad Coulter, restructuring advisor at Detroit area O'Keefe & Associates, who follows the auto industry closely.
In the same video, Nardelli said the proposed partnership was a "tremendous opportunity."
"We would leapfrog four, five or six years of development," he said. "It's a perfect fit, as opposed to conflicting brands, overlapping dealers, etc."
Chrysler also said the combined purchasing budget of the two companies would be $80 billion.
The automaker said earlier this week that the Fiat deal is worth up to $10 billion for Chrysler and could preserve 5,000 North American manufacturing jobs.
Posted Friday, Mar 20, 2009, 2:05 pm in Employee News
Chrysler LLC’s top executive and the head of the United Auto Workers both advocated the benefits of a partnership between the Auburn Hills carmaker and Italy’s Fiat SpA Thursday, saying it would preserve American jobs and generate huge savings, according to this story in the Detroit News.
“We are clearly viable on a stand-alone basis, but our viability would be significantly enhanced with a Fiat alliance,” Chrysler Chairman and CEO Bob Nardelli said on a video posted on the company’s blog.
Fiat and Chrysler are discussing sharing at least four vehicle platforms, two engines and two transmissions, he said. “When you think about what it’d cost us to develop that, it’s clearly in the range of $8 billion to $10 billion.”
Chrysler said an alliance between the two companies would preserve or create 5,000 jobs and help the U.S. automaker repay the government loans faster.
UAW President Ron Gettelfinger, in a radio interview with WJR-AM (760), said he was “very, very solidly supporting the Fiat alliance with Chrysler.”
Gettelfinger said he believed that Chrysler could survive on its own. But, he said, “if you want to look at the long term, the best thing that could happen here is if we had the alliance with Fiat and Chrysler.”
His remarks and Nardelli’s came a day after the White House auto task force met for a second time with Fiat Chief Executive Sergio Marchionne in Washington.
At Wednesday’s meeting, key task force members Steven Rattner and Ronald Bloom sought more detail on Fiat’s potential contribution to Chrysler.
Chrysler and Fiat have stressed that an alliance would not only generate up to $10 billion in savings, but would allow Chrysler to quickly produce a larger variety of smaller and more fuel-efficient vehicles. “We would leapfrog four to five to six years of development,” Nardelli said.
According to sources in Washington, the task force has been impressed by Marchionne’s presentations and by his turnaround of Fiat a few years ago.
Six years ago, Fiat was in a predicament similar to Chrysler’s today. The Turin-based automaker was widely viewed as the weakest European automaker, with many industry experts predicting it would not survive.
Chrysler borrowed $4 billion from the U.S. government in January to stay afloat and is seeking $5 billion in additional loans.
Under the terms of the government loans, it submitted viability plans last month demonstrating its ability to survive both on its own and as an alliance partner with Fiat. It is expected to submit a report by the end of March showing the progress it has achieved. By then, Fiat has said that it expects to have completed its due diligence examination of Chrysler. (Detroit News)
__________________
Rick
Nitro Year: 2007 (1 of 113,000 sold)
Nitro Model: R/T 4X4 Stone White
CAT-BACK Exhaust, CAI, Projector Head Lamps
Fully-Equipped w/all factory options
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