Auburn Hills, Michigan – Chrysler Group LLC and Fiat Group have finalized their global alliance, forming a “new Chrysler” that will begin operations immediately. The new company will operate as Chrysler Group LLC.
As part of the alliance, Fiat will contribute technology, platforms and powertrains for small- and medium-sized cars to Chrysler, allowing the company to offer an expanded product line. Chrysler will also have access to Fiat’s international distribution network, with particular focus on Latin America and Russia.
Sergio Marchionne, CEO of Fiat, was also named CEO of Chrysler Group LLC, while Jim Press, formerly Chrysler LLC vice-chairman and president, has been appointed Deputy CEO and Special Advisor, reporting to Marchionne. The new company will be managed by a nine-member board of directors, consisting of three directors to be appointed by Fiat, four to be appointed by the U.S. government, and one each appointed by the Canadian government and the United Auto Workers’ Retiree Medical Benefits Trust. The board is expected to name C. Robert Kidder as chairman.
In Canada, Reid Bigland will continue to lead the company’s operations as president and CEO of Chrysler Canada.
“This is a very significant day, not only for Chrysler and its dedicated employees, who have persevered through a great deal of uncertainty during the past year, but for the global automotive industry as a whole,” Marchionne said. “From the very beginning, we have been adamant that this alliance must be a constructive and important step towards solving the problems impacting our industry. We now look forward to establishing a new paradigm for how automotive companies can operate profitably going forward.”
Under the terms approved by the U.S. Bankruptcy Court, Chrysler LLC formally sold substantially all of its assets, without certain debts and liabilities, to the new company. Chrysler Group in turn issued a 20 per cent equity interest to a subsidiary of Fiat. Fiat has also entered into a series of agreements necessary to transfer certain technology, platforms and powertrains to the new Chrysler. Fiat’s equity interest will increase in increments by up to a total of 35 per cent in the event that certain mandated milestones are achieved, but the Italian automaker cannot obtain a majority stake in Chrysler until all taxpayer funds are repaid.
The United Auto Workers’ Retiree Medical Benefits Trust has been issued an equity interest in Chrysler Group equal to 55 per cent, while the U.S. Treasury has been issued eight per cent and the Canadian government two per cent.
Chrysler will continue with its agreement with GMAC Financial Services to provide automotive financing products and services to its North American dealers and customers.