Logo for Italian carmaker Fiat displayed on a Fiat 500 car
Logo for Italian carmaker Fiat displayed on a Fiat 500 car - 
Listen To The Story


Steve Chiotakis: Today, they made it official: Italy's Fiat and the people who bring you the Sebring and PT Cruiser have signed a non-binding agreement. Fiat gets a stake in Chrysler and access to its American assembly lines and market.

We're joined by Ashley Milne-Tyte who is following this story. Ashley, how is this all gonna work?

Ashley Milne-Tyte: So Fiat's planning to take a 35 percent stake in Chrysler, but interestingly it's not putting any cash into Chrysler. And a statement from Cerberus Capital Management, which owns Chrysler, makes clear that it really doesn't have any plans to put cash in -- at least for the foreseeable future. What it is doing is revamping some of the Chrysler plants so that the two companies can share platforms and technologies.

Chiotakis: So no money involved here. What's in it for both of them?

Milne-Tyte: Well, with regard to the revamping of the plants, that could let Fiat make cars here, and it'll help Chrysler produce its own more efficient small cars as well. And they've both been looking for a partner for some time. I mean, they're both trying to compete with bigger rivals like Toyota and Volkswagen that have a much more global presence. But I mean, the main thing for Chrysler is that virtually every Detroit watcher says that despite the loan money that they've got from the government, Chrysler isn't going to be able to make it on its own. It has to change, it has to make smaller cars. And that's exactly where Fiat's expertise lies. I mean, now Chrysler can go to the government and say, look, we're making an effort, we're cutting costs, we're becoming more efficient, we're producing greener cars.

Chiotakis: And Ashley, it's been awhile since Fiats have been sold in the United States. A long while, right?

Milne-Tyte: Yeah, it's been more than 20 years since they've been sold here, and Fiat's been really keen to get back into the market lately. They're particularly eager to bring back the Alpha Romeo, but the exchange rate has made it too expensive for Fiat to export them to the U.S. And obviously that would no longer be a problem if the cars were made here. So we could potentially see some Italian style on U.S. highways in the not-too-distant future.

Chiotakis: Ashley Milne-Tyte joining us from New York. Thank you.

Milne-Tyte: You're welcome!