Fiat Ready with 'Plan B' if Chrysler Deal Fails

Fiat CEO Marchionne frequently argues that the only way for car makers to overcome the huge setback for sales caused by the global economic crisis is to make alliances.

The Fiat auto group said on April 16 that it had a "plan B" ready if a proposed venture with Chrysler fails to come to fruition. The alliance with Chrysler "has a 50% chance of coming about... Let's see if it can work. Otherwise there is a plan B," Fiat president Luca Cordero di Montezemolo said.

The chief executive of Fiat, Sergio Marchionne, put pressure on trade unions at Chrysler on April 15, saying that the venture plan had only one chance in two of succeeding because progress had not been made in negotiations to cut pay. Later he qualified this, saying that there was "no reason why Fiat cannot conclude an agreement" with Chrysler by the end of the month and that he was "ready to do everything needed to turn the company (Chrysler) round."

Marchionne, who is credited with masterminding recovery at Fiat, also signaled that it was "possible" that he might take charge of operations at Chrysler in addition to running Fiat. In that event, he would be emulating Carlos Ghosn who is president and chief executive at Renault and at partner group Nissan.

Marchionne frequently argues that the only way for car makers to overcome the huge setback for sales caused by the global economic crisis is to make alliances, and that he intends Fiat to be in the forefront of the reorganization of the auto sector. In January, he said that the alliance with Chrysler was merely a "first step."

In recent months, the Italian press has noted on several occasions the possibility of a tie-up between Fiat and the French group PSA Peugeot Citroen.

The U.S. administration has given Chrysler until the end of April to sign a final alliance with Fiat, as an essential condition for Chrysler to return to profitability.

In January, the two companies signed a preliminary agreement allowing for Fiat to take a holding in Chrysler without payment, but in exchange for giving the U.S. group access to its small-car and clean-engine technology.

Copyright Agence France-Presse, 2009

Hide comments

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish