Will Fiat takeover of Chrysler help US customers?

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Though Fiat is going to take over Chrysler with only 20 percent stake in the company, it is Fiat Group CEO Sergio Marchionne who will become the chief executive of Chrysler after the U.S. automaker emerges from bankruptcy. Its proceeding will take one or two months.  Fiat is not taking on any Chrysler’s debts either.

As a result 20 of Chrysler’s creditors have gone to bankruptcy course to block bankruptcy proceedings because they say they are going to lose their rights thanks to the proceedings. Chrysler is still hoping that its alliance with Fiat will make the US treasury department see that it is on a stronger wicket and lend it money.

Bob Nardelli, chairman and CEO of Chrysler said the company wanted to create a vibrant new company, and was using this structured bankruptcy to rapidly implement tough but necessary changes, including:

• the agreed upon wage and benefit structure for active and retired employees that is competitive with those of transplant manufacturers
• a reduction of debt and interest expense
• the disposition of idle assets
• a rationalized and more efficient dealer network; and sound agreements with our suppliers

Hopefully all these measures will help Chrysler’s US consumer.