The Chrysler Fiat-sco Continues

January 23, 2009

What first seemed a match made in heaven seems to have become a much more contentious marriage of convenience. Of course, Chrysler and Fiat are still elated, but the rest of the planet...maybe not so much.

On the upside, Chrysler will get Fiat's expertise in building fuel-efficient vehicles, which should pay off with drivers and with the scowling congressional committee Chrysler is set to face in a few weeks. Chrysler will also have access to three of Fiat's well-known front-wheel-drive platforms: the Panda, the Punto, and the Bravo.

Fiat, on the other hand, gains entree to the hurting but huge American marketplace through Chrysler's 3000+  dealerships. The company might also get its hands on the Jeep--something Fiat would appreciate, given its interest in the SUV and related markets.

Then there's the downside: Standard & Poor's is considering a downgrade of Fiat's rating--which currently hovers just above junk status. S&P isn't impressed with prospects for automakers in general, and Fiat's debt makes its position even more shaky.

As if that weren't enough,  at least one senator--Robert Menendez (D-NJ)--is insisting that Chrysler give up its bailout package, should Fiat take control of the merged corporation. There's no sign that's going to happen, but with all the fine print, you never know, do ya?

[sources: Autocar, Autonews sub required, Freep]

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