Friday May 01, 2009

Chrysler files for bankruptcy, enters Fiat deal

This article belongs to the GM, Ford and Chrysler bankruptcy watch story arc.

news.yahoo.com :

Chrysler filed for bankruptcy, a first by a major US automaker, on Thursday [30 Apr 2009] and announced a deal with Fiat, after being pummeled by sliding auto sales and unable to reach agreement on restructuring its debt. Chrysler has struggled in recent years to compete, hurt by its near total reliance on the US market, poor quality and a truck and SUV-dominated vehicle line-up with the lowest combined fuel economy of any major automaker.

Chrysler entered an alliance with Fiat, which was given an initial stake of 20%. Over time, Fiat could eventually own 51% after Chrysler has repaid its US Treasury loans. Chrysler will also be 55% owned by the United Auto Workers' healthcare trust fund while the US and Canadian governments hold a combined stake of 10%.

- Here we go. The contrarians and peakoilers have been tracking this one for years, and a conclusion of sorts has been reached. But then it did not turn out quite like the community had earlier expected, however. When the news back then was of a "struggling Fiat", it would have taken quite a twist in the plot to turn Fiat into some kind of "white knight" to rescue the ailing Chrysler. And look how fast Daimler of Mercedes fame got rid of its remaining Chrysler stake on 27 Apr, with Chrysler going bankrupt 3 days later. This bankruptcy has been a long time coming, but things certainly move fast, once they really get started moving.

Up next, GM. And possibly Ford. So who are they going to reach deals with, Citroën and Volkswagen?

See also :

1. GM, Ford, Chrysler face bankruptcy risk on crisis : S&P
2. GM risks bankruptcy as it runs out of cash, losing $73 billion since 2004, suspends Chrysler merger
3. GM, Chrysler may go bankrupt after Senate rejects auto bailout plan as talks collapse
4. GM said to speed bankruptcy plans
5. Chrysler to proceed with bankruptcy

(2009-05-01 08:41:53 SGT) [Biz] Permalink

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