Here’s How Fiat Plans to Make Chrysler a Major U.S. Player Again
The resurrection of the American car manufacturers was well documented by last month’s United States sales figures.
Of the Big Three Detroit Automakers — Ford (NYSE:F), General Motors (NYSE:GM), and Chrysler — Chrysler is clearly lagging behind. Together, in the month of April, these manufacturers captured 47 percent of all light vehicle sales, compared to the 44 percent sales by Asian and the 9.3 percent by European brands. But that figure broke down to a 18.5 percent market share for GM and a 16.5 percent share for Ford, while Chrysler only secured a 12.2 percent share.
Chief Executive Officer Sergio Marchionne, who heads both Fiat and Chrysler, has spent the last four years remolding the two regional automakers in a single global manufacturer, capable of competing with Toyota (NYSE:TM), General Motors, and Volkswagen. As a cohesive unit, the two companies would be able to target the mass-market with the Fiat, Chrysler, Jeep, and Dodge brands, as well as the high-end with the Ferrari and Maserati.
One part of his effort has just begun to gather momentum. Fiat is attempting to borrow as much as $10 billion from a varied pool of banks so that it can buy the 41.5 percent stake in Chrysler that it does not already own. Sources familiar with the talks told Bloomberg that this stake is held by the United Auto Workers’ retiree healthcare trust. The group of banks rumored to be involved includes Bank of America (NYSE:BAC), Deutsche Bank (NYSE:DB), Goldman Sachs (NYSE:GS), and BNP Paribas.
Fiat, which first took control of Chrysler in 2009 after it emerged from bankruptcy, plans to complete the purchase of the remaining stake by the end of the summer. Chairman John Elkann told Bloomberg reporters Thursday in Turin, Italy that the company would likely wait for its dispute with the healthcare trust over the value of Chrysler to be resolved before taking another step forward with the deal.