This news isn’t too recent, but it is big news nonetheless. On January 20, 2009, Chrysler announced that it would be forming a strategic partnership with Italy’s Fiat. Fiat will obtain a 35% stake in Chrysler; this brings to date three corporations that hold significant equity in Chrysler: Daimler AG (20%), Cerberus (42%) and Fiat (35%).

Given Chrysler’s beleaguered state and the fierce competition faced by Fiat in Europe, a lot of sense could be made of this partnership. But to touch lightly on the merits, Chrysler will get access to the small car infrastructure that it lacks and so urgently needs; in addition, it will get access to the European market, a market where it is virtually absent. Fiat, for it’s trouble (in addition to its 35% equity stake), get’s access to the U.S. market. For a company looking for government aid, Chrysler’s business model is strengthened, at least for the short term. The increased scope in operation will likely grant it a larger percentage of the total government bailout amount.

A quick glimpse of this news may suggest a brighter future for the Fiat and Chrysler, but as witnessed from Chrysler’s prior partnership with Daimler AG, such a partnership could a be a disaster waiting to happen. I’ll be writing a more in-depth article on this partnership, highlighting both its advantages and disadvantages. Look for it soon.