MORE HEREChrysler in talks with Tata, Fiat-sourcesReuters
Wednesday July 30 2008
By Kevin Krolicki and Poornima Gupta
DETROIT, July 30 (Reuters) - Automaker Chrysler LLC is in talks with India's Tata Motors Ltd and Italy's Fiat SpA , as it seeks to raise cash and open doors to faster-growing markets outside the United States, people briefed on the talks said on Wednesday.
Chrysler, the third largest U.S. automaker, is controlled by private equity firm Cerberus Capital Management LP [CBS.UL]. Chrysler has been in discussions with Tata about arrangements to sell its Jeep Wrangler SUV in India and possibly other Asian markets, the sources said.
In addition, Chrysler has been talking to Fiat about leasing Chrysler production capacity in North America and cooperating in retail distribution in the U.S. market, the sources said.
That could allow Fiat to push ahead with plans to return to the world's largest auto market, while allowing Chrysler to cut costs at a time when sales are down and it faces mounting pressure to shore up cash.
A Chrysler spokesperson declined to confirm the talks. Representatives from Tata had no immediate comment. Cerberus and Fiat representatives could not be reached immediately.
Gerry Meyers, a professor at the University of Michigan business school and chief executive of American Motors when it owned Jeep in the early 1980s, said it was clear that Chrysler needed international partners.
"In my mind, they're clearly under a financial strain. It may even be a liquidity strain. There are a lot of questions floating around about how much longer Chrysler can go on with problems like this," he said. He added that the pressure on Chrysler opened a door for an emerging-market partner.
A Chrysler tie-up with Tata could potentially open a new market for the Wrangler, the best-selling model from the brand widely seen as Chrysler's strongest.
Fiat and Tata already have a partnership. Fiat agreed this month to handle the financing in Europe for Tata's Jaguar and Land Rover brands, while Tata said it was open to Fiat selling its ultra-cheap Nano.
Fiat Chief Executive Sergio Marchionne, credited with steering a turnaround for the automaker behind the Alfa Romeo, Lancia and Fiat brands, has said Fiat could decide by year-end on the terms of its return to the North American market.
ELECTRIC VEHICLE TALKS UNDERWAY
The tie-up between Tata and Chrysler would extend a cooperative framework between the two automakers on launching an electric vehicle. Tata said in January that "exploratory discussions" had begun with Chrysler over sales for a battery-powered version of its Ace mini-truck.
Chrysler is continuing those talks with Tata after reaching of memorandum of understanding for the negotiations, one person familiar with the automaker's plans said.
Tata, which controls about 60 percent of India's truck and bus market, has global ambitions and an emerging line-up that runs the gamut from luxury to the sold-out Nano, the world's cheapest car with a price just-above $2,500.
In June, Tata completed a $2.3-billion deal for the British luxury brands Jaguar and Land Rover from Ford Motor Co.
By concluding a deal with Tata, Chrysler also could look to sell a version of the Jeep Wrangler to the Indian military, another person familiar with the talks said.
Chrysler currently has a small joint-venture in Cairo that has begun producing an armor-ready variant of the Wrangler called the J8, intended to be use by troops.
Chrysler re-designed the off-road-ready Wrangler in 2007, adding a popular four-door version of the SUV that has emerged as the linchpin of its Jeep line-up.
U.S. sales for the Wrangler dropped just 4 percent in the first half, outperforming the SUV segment overall where sales plunged by 15 percent as Americans shifted toward smaller and more fuel-efficient passenger cars.
The sudden shift away from light-trucks, including pickups, SUVs and vans, hit all three Detroit-based automakers hard in the first half and has forced them to restructure.
this could be a tactic to help them in their dealings with Nissan/Renault. If Nissan won't give them a platform for a small car, fine - Fiat will.
Didn't see it, I will merge them.already mentionned http://www.gminsidenews.com/forums/f58/chrysler-negotiations-tata-fiat-help-boost-bottom-line-67462/
maybe with the rising cost of developments and materials, Fiat and Tata wants to amortilize on a more wider range of cars their costs.
also someone posted a interesting theory on Jalopnik http://jalopnik.com/399582/chrysler-in-talks-to-sell-jeeps-in-india-fiats-in-north-america
Yes and no (if I remember even British Leyland don't have a portefolio of divisions that large). It all depends on how they'll market them as a niche player range. Some have a global presence and wider name recongnition but others don't. Some could be dropped but other could be amalgated like Jeep and Land Rover ("Jeep Rover"?) others could be rebadged in some local markets (lots of folks might have the image of "Fix It Again Tony" for Fiat, some Fiat models could be badged as Dodge or Nissan in Canada and the US)My M&A senses are tingling... how about we combine Tata, Nissan-Renault, Chrysler, and Fiat?