Ailing automaker Chrysler LLC said Monday it has agreed on the framework for a global alliance with Fiat SpA, but that there were still hurdles to a definitive pact with the Italian automaker.
The news came not long after President Barack Obama refused further long-term federal bailouts for General Motors Corp. and Chrysler LLC, saying more concessions were needed from unions, creditors and others before they could be approved. He raised the possibility of controlled bankruptcy for one or both of the beleaguered auto giants.
He said Chrysler’s situation is more perilous than GM's, and the government would give the company 30 days to overcome hurdles to a merger with Fiat SpA. If they are successful “we will consider lending up to $6 billion to help their plan succeed,” Obama said.
"We are encouraged by the commitments of the Administration, U.S. Treasury and President's Auto Task Force to the American automobile industry and Chrysler's viability, with a Fiat alliance," Chrysler Chairman and Chief Executive Officer Bob Nardelli said in a statement.
Nardelli said Chrysler would operate "business as usual" over the next 30 days. "While we recognize that we still have substantial hurdles to resolve, Chrysler is committed to working closely with Fiat, the Administration, U.S. Treasury and the Task Force to secure the support of necessary stakeholders," his statement said.
Fiat CEO Sergio Marchionne says a Fiat-Chrysler alliance will strengthen the U.S. carmaker’s finances and preserve American jobs.
Marchionne says an alliance would also accelerate Chrysler’s efforts to make fuel-efficient vehicles.
He says that “Fiat’s environmentally conscious technologies and small- and medium-car platforms will play a key role” in persuading U.S. consumers to buy Chrysler.
Marchionne in a statement Monday thanked Obama for his encouragement to finalize a deal.