Fiat will own a 20% stake in the company, which can grow to as much as 35%, and the UAW Retiree Medical Benefits Trust will own 55% of the new Chrysler Group. The rest is split between the U.S. Treasury and Canadian Government at 8% and 2%, respectively. Fiat can't take a majority share in the company until the Taxpayers are paid back. Full press release and information on the deal below.

Press Release: Chrysler Group LLC and Fiat Finalize Global Strategic Alliance;
New Chrysler Emerges as a Stronger, More Competitive Global Company

Auburn Hills, Mich. / Turin, Italy - Chrysler Group LLC and Fiat Group announced today that they have finalized their previously announced global strategic alliance, forming a "new" Chrysler that has the resources, technology and worldwide distribution network required to compete effectively on a global scale. The new Chrysler will begin operations immediately.

As part of the alliance, Fiat will contribute to Chrysler its world-class technology, platforms and powertrains for small- and medium-sized cars, allowing the company to offer an expanded product line including environmentally friendly vehicles increasingly in demand by consumers. Chrysler will also benefit from Fiat's management expertise in business turnaround and access to Fiat's international distribution network with particular focus on Latin America and Russia.

"This is a very significant day, not only for Chrysler and its dedicated employees, who have persevered through a great deal of uncertainty during the past year, but for the global automotive industry as a whole," said Sergio Marchionne, who today was named Chief Executive Officer of Chrysler Group LLC. "From the very beginning, we have been adamant that this alliance must be a constructive and important step towards solving the problems impacting our industry. We now look forward to establishing a new paradigm for how automotive companies can operate profitably going forward."

Mr. Marchionne continued: "We intend to build on Chrysler's culture of innovation and Fiat's complementary technology and expertise to expand Chrysler's product portfolio both in North America and overseas. Those Chrysler operations assumed by the new company that were idled during this process will soon be back up and running, and work is already underway on developing new environmentally friendly, fuel-efficient, high-quality vehicles that we intend to become Chrysler's hallmark going forward.

"The same attributes that first attracted us to this alliance – a global automotive company with first-class technology, a devoted workforce, improved efficiency, a strong, global distribution network and an unyielding passion for building great cars that consumers want – are even more true today. While it does not solve every issue faced by the automotive industry today, this alliance, established with the full support of President Obama's Administration, is a very significant step toward positioning Fiat and Chrysler to be leaders among the next breed of global automakers. This has, I know, been a difficult process for everyone involved, but we are ready to prove to the American consumer that Chrysler can once again be a strong, competitive company that produces a full portfolio of reliable vehicles that capture the imagination and inspire loyalty," Mr. Marchionne said.

Under the terms approved by the U.S. Bankruptcy Court in New York and various regulatory and antitrust regulators, the company formerly known as Chrysler LLC today formally sold substantially all of its assets, without certain debts and liabilities, to a new company that will operate as Chrysler Group LLC.

Chrysler Group in turn issued to a subsidiary of Fiat a 20 percent equity interest on a fully diluted basis in the new company. Fiat has also entered into a series of agreements necessary to transfer certain technology, platforms and powertrains to the new Chrysler. Fiat's equity interest will increase in increments by up to a total of 35 percent in the event that certain milestones mandated by the agreement are achieved, but Fiat cannot obtain a majority stake in Chrysler until all taxpayer funds are repaid.

Similarly, the United Auto Workers' Retiree Medical Benefits Trust, a voluntary employees' beneficiary association trust (VEBA) has been issued an equity interest in Chrysler Group equal to 55 percent on a fully diluted basis. The U.S. Treasury and the Canadian Government have been issued an equity interest equal to 8 percent and 2 percent on a fully diluted basis, respectively. These interests reflect the anticipated share dilution as a result of Fiat's incremental equity assumption once the milestones outlined in the strategic alliance agreement are achieved.

In addition to Mr. Marchionne, currently the Chief Executive Officer of Fiat S.p.A. serving as CEO, the new Chrysler will be managed by a nine-member Board of Directors, consisting of three directors to be appointed by Fiat, four directors to be appointed by the U.S. Government, one director to be appointed by the Canadian Government and one director to be appointed by the United Auto Workers' Retiree Medical Benefits Trust. The Board is expected to name C. Robert Kidder as Chairman. The process of determining additional board members is continuing and updates will be announced as appropriate.

As previously announced, Chrysler has entered into an agreement with GMAC Financial Services to provide automotive financing products and services to the Company's North American (NAFTA) dealers and customers. GMAC Financial Services will be the preferred lender in North America for Chrysler, Jeep® and Dodge dealer and consumer business, including wholesale of new and used vehicles as well as retail.

• C. Robert Kidder to be named Chairman of U.S. Automaker
• Sergio Marchionne to Serve as Chief Executive Officer

Here's the full press release:

C. Robert Kidder to Become Chairman of Chrysler Group LLC

Chrysler LLC today announced that C. Robert Kidder, former Chairman of Borden Chemical Inc. and of Duracell International Inc., will become Chairman of Chrysler Group LLC, once it completes its acquisition of the operating assets of Chrysler LLC and completes a global alliance with Fiat SpA. He will succeed Robert L. Nardelli.

"We are most fortunate that Bob Kidder will lead the new company through its transformation," said Nardelli. "My number one priority has been to preserve Chrysler and the livelihoods of thousands of people who depend on its success. With his broad expertise serving on numerous world-class boards and his accomplished business background, Bob will provide the leadership and strategic counsel that will help to create a strong global competitor moving forward."

With more than 40 years of experience, Kidder currently serves on the boards of Morgan Stanley, where he is the lead director, Schering-Plough Corporation, and Microvi Biotech Inc. He previously has served as Chairman and Chief Executive Officer of both Duracell International Inc. and Borden Chemical Inc. and as director of such companies as Electronic Data Systems Corporation and General Signal Corporation. During his tenure with McKinsey and Co. Inc., Bob worked with a major OEM client in the automotive industry. Bob currently is Chairman and CEO of 3Stone Advisors LLC, an investment firm that focuses on clean-tech companies. He holds an M.S., Industrial Economics from Iowa State University and a B.S., Industrial Engineering from the University of Michigan. He resides with his family in Columbus, Ohio.

"I am pleased to join Chrysler at a time when Chrysler is poised to launch an exciting new era," said Kidder. "I am confident that Chrysler will emerge from Chapter 11 a lean and powerful competitor, combining its own rich history of innovation with Fiat's technology and expertise to invigorate the American car market and to challenge other car companies around the globe."

Chrysler LLC announced on April 30, 2009, that, as a result of the comprehensive restructuring plan agreed to by many of its stakeholders, it had reached an agreement in principle to establish a global strategic alliance with Fiat to form a vibrant new company.

On the same day, Chrysler LLC and 24 of its wholly-owned U.S. subsidiaries also filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code in U.S. Bankruptcy Court for the Southern District of New York. Chrysler also filed a motion under Section 363 of the Bankruptcy Code requesting the swift approval by the Court of the agreement with Fiat and the sale of Chrysler's principal assets to the new company. The benefit of this type of filing is speed. It will allow a leaner new company to emerge in less than 60 days from the time of filing, well positioned for long-term viability.

Nardelli, Chrysler's Chairman and CEO since August 2007, announced on April 30 his plan to leave the company following the completion of the transactions. He will return to Cerberus Capital Management LP as an advisor. He said that it was "an appropriate time to let others take the lead in the transformation of Chrysler with Fiat, and I will work closely with all of our stakeholders to see that this new company swiftly emerges with a successful closing of the alliance."

As stated in the terms of agreement, upon successful completion of the alliance, a board of directors for the new company will be appointed. The majority of the directors will be independent (not employees of Chrysler or Fiat). The board will select a CEO with Fiat's concurrence.

Since it seems like half of the punditocracy, Republicans in Congress and every anti-car hippie with a blog seems to be interested, even giddy, at the prospect of a couple of the not-so-Big Three going under, we thought we'd try to put a little perspective on just what that means. It's easy for people to say "Detroit" deserves to fail, but it's not really just Detroit that would fail, it's pretty much the entire Midwest. We've put together a Google Maps overlay of all US manufacturing facilities currently in operation by one of the big three. Peruse at your leisure, then imagine all of those factories across the US empty and silent.

View Larger Map

"I don't have anything specific I want to talk about at this point," he said. "There may be ways (to help a merger) ... but I better leave it at that."

Levin obviously has his own ideas about how to facilitate a GM/Chrysler deal. Whether he's thinking low-interest loans — more of them — or something more akin to the recent banking deal that saw the federal government gain minor stakes in the companies themselves remains to be seen. But at this point, we're not sure the federal government is in any better shape than GM or Chrysler. [Detroit News]

Regarding the number of new models coming, analysts seem to think the real number will be closer to five, with "nine" referring to total vehicles including variations on a single platform. Auburn Hills apparently isn't taking the Chevy Volt for granted either: According to the Freep, dealers have been shown "post-prototype" electric vehicles Chrysler is reportedly working on, meaning the company may be closer to an EV or plug-in hybrid than critics think. It's hard to believe that such a groundbreaking vehicle could be kept so quiet, but when asked, Press took a swipe at GM's Volt launch process, saying "they've been selling the Volt now for five years." So, we know Chrysler still has its swagger. Let's see some product to back it up. [Freep]

Jalopnik Snap Judgment: As we expected, Chrysler is going to try to bring the monthly cost of purchasing down to the same level at which leasing used to be. The key word is "monthly." Consumers will still be paying more in the long run by purchasing a vehicle than they may have through a carefully negotiated lease. But no matter how it's viewed, excluding leasing from the mix is going to sell more small, inexpensive vehicles to the detriment of more expensive offerings. Chrysler is just trying to prevent consumers from going elsewhere for them.

Auburn Hills, Mich. - As the market makes a shift from leasing to retail purchasing, Chrysler LLC today announced that in August the Company will repackage its incentives to make purchasing a vehicle more affordable than ever. The new strategy includes 72-month finance deals on an expanded range of compact, mid-size and full-size vehicles. The program creates retail payments similar to 36-month lease payments, and lower than previously offered finance payments. With these new incentive offers, customers can get lower payments with the benefits of ownership.

The Company is able to achieve this by repackaging incentive resources from leasing to retail. Helping achieve these low-finance payments are special retail finance rates and a bonus consumer cash program in which customers can now receive up to $2,000 cash back on select retail purchases when financed through Chrysler Financial.

"As part of our annual August model-year clearance, we are leveraging the move from leasing to retail purchases to offer our customers the best deals of the year and make buying as affordable as renting," Vice Chairman and President Jim Press said. "We have re-packaged our incentive spending typically spent on leasing into retail purchase packages to lower monthly payments on select vehicles from the Dodge Caliber and Dodge Charger to the Chrysler Town & Country and Jeep® Liberty. With the model year ending on 2008 vehicles, the time to buy has never been better."

Returning lease customers will receive a Lease Loyalty incentive up to $750 for use towards the retail purchase of an eligible new Chrysler, Jeep or Dodge vehicle. The disposition fee, up to $425, will be waived by Chrysler Financial.

Special deals for August also include the continuation of 0 percent APR for 72- month deals on the Dodge Ram, Dodge Durango, Chrysler Aspen, Jeep Grand Cherokee and Jeep Commander.

For those customers who still wish to lease a Chrysler, Jeep or Dodge vehicle through an independent financial institution, they can take advantage of Chrysler's Customer Cash Allowance on select vehicles up to $2,000.

The Company also announced its "Shop 'Til You Drive Sales Event" sales promotion campaign consisting of new television ads, radio spots, a new national print campaign and Internet promotions. These initiatives are intended to substantially increase awareness and consideration levels of retail purchases, offering lower monthly payments among the Chrysler, Jeep and Dodge brands.

Jalopnik Snap Judgment: A little more math, based on the fact that Chrysler really has nothing besides the Ram truck coming out this year, tells us Chrysler is on track for a $2-billion-plus loss for the year, breaking their previous record of $1.6 billion. As Rebecca Lindland, auto analyst at Global Insight, said, "From a product perspective, you can't point to a light at the end of the tunnel." Ouch. So Chrysler's survival will depend upon how deep owner Halliburton Cerberus Capital Management's pockets are. Or how quick they can sell it off. [Detroit News]

The plant was down to one shift already; after the closure, Chrysler will source the Grand Caravan and Town & Country from its Windsor, Ontario minivan plant. Additionally, on Sept. 2, the St. Louis North truck plant will be pared down to one shift, resulting in about 900 layoffs. Chrysler had spent approximately $800 million in plant improvements to the two facilites over the past two years, so look for Cerberus to increase the price of a Town & Country Limited from $36,755 to $288,995 in an effort to recoup costs. Union leaders speculate that some of Chrysler's decision was based on political circumstances, as both St. Louis facilities voted down last fall's master contract between Chrysler and the UAW, ratifying it only after significant negotiations. Health care costs may also have played a part: According to Glenn Kage Jr., financial secretary at UAW Local 136, Chrysler can make minivans in Windsor, Ontario, for $1,000 per vehicle less than St. Louis South because of the savings to the company of Canada's national health care system.
[Automotive News (Sub. Req.)]

The bankruptcy rumors seem to have sprung from reports this week that Chrysler drew down on a line of credit from Daimler. However, under Cerberus' purchase terms, Chrysler had to exercise the credit line before Aug. 3, so there's a "use it or lose it" component to the whole financial story too. Chrysler spokespeople state that the borrowing of $1.5 billion from Daimler and $500 million from Cerberus is not an indication that the company is having cash flow problems, and that Chrysler has $9 billion in cash. Sure sounds good, but all the "categorical denials" and "without merits" pouring out of Auburn Hills don't do much to soothe the nerves.
[BusinessWeek]

Chrysler says the in-car WiFi will be available wherever cellular service is offered (pretty much anywhere you can take a car these days) and have a a range of about 100 feet. The system's range capability means you won't actually have to be in your car to use the system — no doubt a huge relief to Caliber owners.
[Freep]

Not surprisingly, Nardelli said that Chrysler might have to "go back and resize" production plans. He also reiterated his expectation that Chrysler would remain a private company, explaining that there were clear advantages to running Chrysler under private equity ownership rather than as a public company. For example, not having to tell reporters a damn thing except, "we are guarded but optimistic. We are very encouraged in what we have accomplished." Which would be what, exactly?
[Automotive News (Sub. Req.), Photo Credit: Bill Pugliano/Getty Images]

Nardelli, speaking at the Automotive News World Congress, would not say what the vehicle would be but Chrysler is already introducing the Dodge Journey, a mid-size vehicle, to world markets this year. Bob "The Builder" Nardelli also announced the new midsize team will be headed by Michael Donoughe, who has recently been vice president of body on frame and core team leader of product development. Here's to hoping Donoughe's next vehicle is more of a looker than the Journey. [Automotive News]

Photo Credit: Bill Pugliano / Getty Images News

Jason H. Vines Resigns as Vice President-Communications at Chrysler LLC Company Realigns Corporate Communications Department

AUBURN HILLS, Mich., Dec. 10 - Chrysler LLC today announced that Jason H. Vines, its Vice President-Communications has elected to resign and, therefore, the company is announcing a realignment of its Corporate Communications Department.

"Now that Chrysler is an independent company again, we are taking every opportunity to realign functions in a more holistic manner that allows us to more effectively drive company strategy," said Bob Nardelli, Chairman and CEO. "As part of this realignment, the corporate communications function will now report to Nancy Rae, Senior Vice President-Human Resources."

Several executives in the corporate communications department will report directly to Rae. David Barnas, who has been in the corporate communications department for six years, will be responsible for internal and corporate communications, which includes dealing with the news media.

Vines' resignation is effective immediately, although he has agreed to remain at Chrysler through the end of December to assist in the transition. "Jason has served Chrysler well, and we are very grateful for his many contributions over the years," said Nardelli.

Vines began his career at Chrysler Corporation in 1983, serving first as an economics researcher in the Labor Relations Department and later through various assignments in Employee Communications and Public Relations. He left Chrysler in 1998 and became Vice President-Communications for Nissan North America. In February 2000, he was appointed Vice President-Communications for Ford Motor Company. He returned to Chrysler in 2003 as Vice President- Communications.

"This was a tough decision, considering the many talented, longtime friends I have throughout the company," Vines said. "I wish them all the best and will continue to root for them."

Mike Aberlich, who has served the company as Director, Corporate and Internal Communications, also announced last week that he has decided to retire at the end of this year. "We thank Mike for his dedication and contributions to the company," Nardelli added.

Chrysler LLC, headquartered in Auburn Hills, Mich., produces Chrysler, Jeep, Dodge and Mopar brand vehicles and products. Total sales worldwide in 2006 were 2.7 million vehicles. Sales outside of North America were the highest in a decade with an increase of 15 percent over 2005. On the heels of the company's record product launch last year (Chrysler launched 10 all-new vehicles in 2006), the company extended that streak with eight all-new products in 2007. Its product lineup features some of the world's most recognizable vehicles, including the Chrysler 300, Jeep Commander and Dodge Charger. Chrysler is a unit of Cerberus Capital Management. [Source: Chrysler]