Fiat CEO: Chrysler Alliance is Crucial, But No Merger Needed Before 2014

Earlier this month, Fiat and Chrysler Group CEO Sergio Marchionne mentioned the possibility of Chrysler and Fiat eventually merging into one entity. Marchionne recently clarified this, saying that no merger is needed before 2014, but Fiat’s alliance with Chrysler is crucial to the company’s survival.

“It’s not only true that Fiat saved Chrysler, but also that Chrysler is determining for the group’s future,” Marchionne told the Italian parliament at a hearing on Tuesday. “We are strengthening our product range and widening our horizon.”

Evidence of Chrysler helping Fiat bolster its European portfolio lies with the recently revealed Lancia Flavia, Thema, and Grand Voyager, along with the Fiat Freemont — all of which are based heavily on existing Chrysler models. Fiat’s alliance with Chrysler also helped give the company a way back into the U.S. market after a 27-year absence.

While Marchionne says that the alliance with Chrysler is crucial, the executive does add that a complete merger with the company isn’t a pressing issue.

“I don’t think there’s any necessity to look at it before 2014, but I left the door open on everything,” Marchionne told Automotive Newsafter the parliamentary hearing in Rome. “We need to resolve the financial stability of the house [Chrysler and Fiat] first.”

Presently, Fiat owns 25 percent of Chrysler, but aims to increase that stake to 51 percent after the company repays loans issued by the U.S. and Canadian governments. Marchionne hopes to at least partially increase Fiat’s stake by the end of the year, when he aims to return Chrysler to public trading again. The CEO said he’s currently in discussions with a number of banks to refinance Chrysler’s government loans, which are worth roughly $7.46 billion.

Once the two companies do merge after 2014, Fiat and Chrysler will take a look at its management bureaucracy and determine the best way to manage the company. Marchionne previously said that the single entity could have its headquarters in the U.S., but later added that there would be four management centers — Turin, Detroit, Brazil, and Asia — with the main corporate headquarters in Italy.

“Fiat is a part of [Italy]. It has no intention of leaving Italy,” Marchionne told the Italian parliament.

Source: Reuters, Automotive News (Subscription required)

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