Fiat and Chrysler said Tuesday they have signed a "non-binding" agreement that will see the Italian company get an initial 35 per cent stake in the U.S. automaker.
The two automakers said Fiat would not put any cash into Chrysler, but that the Italian firm would provide access to its small-car platforms as well as its fuel-efficient engine technology.
The fact that Fiat is getting an "initial" stake in financially troubled Chrysler — which is 80.1 per cent owned by Cerberus Capital Management LLP, was taken to mean the Italian company could eventually boost its holding in Chrysler.
"A Chrysler-Fiat partnership is a great fit as it creates the potential for a powerful, new global competitor, offering Chrysler a number of strategic benefits, including access to products that complement our current portfolio (and) a distribution network outside North America," said Bob Nardelli, the chairman and CEO of Chrysler LLC.
The partnership would give Chrysler access to markets outside of North America, while Fiat, which makes cars under the Fiat, Lancia, and Alfa Romeo brands, is eyeing entry into the U.S.
Chrysler is getting about $4 billion US in U.S. government aid in the form of loans, although market analysts are still questioning whether the company can remain financially viable enough to remain independent.