With the March 31 government deadline for completing its restructuring plans fast approaching, Chrysler alliance with FIAT is most likely to exceed the value of all loans Chrysler gets from the US government Chrysler CEO Bob Nardelli told employees in an e-mail message today.
Nardelli was however quick to add that he believes Chrysler can make it with or without FIAT.
“We estimate the cash value of FIAT’s contribution to be between $8 [billion] and $10 billion,” Nardelli said. “The infusion of FIAT technology and platforms would help save Chrysler three to five years in developing a new generation of fuel-efficient vehicles”.
But the company’s survival hinges on successful financial restructuring. That restructuring includes ongoing negotiations with the UAW over wage and work rules concessions. Chrysler also wants to convert half of its $10.6 billion Voluntary Employees’ Beneficiary Association contribution from debt to equity.
Chrysler’s product sharing agreement with FIAT depends on getting additional federal loans. Under the plan, FIAT plans to acquire 35 percent of Chrysler in exchange for the infusion of vehicle platforms and technology. Chrysler received $4 billion in early January and seeks an additional $5 billion.
“Whether FIAT is part of its future or not, Chrysler can make it as a stand-alone automaker,” Nardelli said. “We showed clearly that with the addition of the $5 billion loan requested, Chrysler would be able to continue paying the wages of our employees, the invoices of our suppliers, as well as investing in our future product plan.”
Nardelli also announced Chrysler’s plans to introduce 24 new vehicles within the next 48 months though details are still under wraps. We’ll be sure to keep you posted of any developments.