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Chrysler tonight pulled out of bankruptcy under the control of Italy's Fiat in the hope that it will undergo a phoenix-from-the-ashes-style transformation.
Although Daimler failed to pull it around, then private-equity group Cerberus oversaw its collapse into bankruptcy protection, Fiat reckons it can do better.
Fiat chief executive Sergio Marchionne was named CEO of the new Chrysler business with immediate effect. While the Italian group, currently enjoying strong worldwide sales of its retro-styled Fiat 500, has not put any cash into the business, it will cooperate with its management and technical expertise.
Most crucially, this will involve its small car and fuel-efficient engine nous. In return, it will be gifted 20% of the new company, Chrysler Group LLC, although that stake can be increased through hitting milestone targets such as the introduction of a 40 mpg engine by 2012.
The US and Canadian governments will hold 8% and 2%, while a United Auto Workers retiree healthcare trust fund will hold 55%. The US Treasury today decreed that Fiat cannot obtain a majority stake in the business until all taxpayer funds are repaid.
President Barack Obama sees the Chrysler experience as a key test of how he can use US bankruptcy protection laws to rescue the much-bigger General Motors.
Chrysler's new owners claimed tonight: “The new Chrysler emerges as a stronger, more competitive global company.”
Marchionne's team added that Fiat would also be offering Chrysler the prospect of a sales boost from the Italian group's distribution network and contacts in Latin America and Russia.
Chrysler only went into Chapter 11 bankruptcy protection six weeks ago.
Last night, the US Supreme Court overturned final appeals against the Fiat deal by creditors of the old Chrysler who feel they had been hard done by when they were hastily wiped out by the restructuring.
However, Obama and Chrysler successfully argued a deal had to be rushed through to save the company.
