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Chrysler and FIAT in partnership talks

Posted by Hootan Mahallati | January 19, 2009 | In chrysler fiat news

The big automotive news of the day was reports of Chrysler and FIAT discussing a partnership. Chrysler has been given a lifeline by our generous government (actually, a generous us) and is desperately trying to improve its chances of survival. Therefore, it is reaching for just about any deal it thinks it can make.

FIAT, of course, has had a good run of late. If nothing else, it is enjoying the iPod-to-Mac-like halo effect of its successful Fiat 500, itself inspired by the iconic original. The company also owns Alfa Romeo, which plans to return to the US market next year. FIAT, therefore, stands to gain a great deal by tapping into Chrysler's sales and distribution network as it once again tries to seduce us with its stylish Italian products after a long breakup.

What does Chrysler have to gain? In the short-run, it can downsize by unloading some of its unused infrastructure - I certainly don't see people lining up outside Chrysler dealerships. However, some industry experts are talking about Chrysler's interest in expanding into the European market through a tit-for-tat arrangement with FIAT. This is precisely the part I have trouble with: the world car market has shrunk and will shrink significantly and increasingly, there will only be room for truly great products. You can draw your own conclusion on whether I think Chrysler is producing world-class products.

Source: [Automotive News free subscription]

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