Can Fiat save Chrysler? Experts express doubt

MILAN (AP) — Fix it again, Sergio.

The U.S. government has anointed the Italian automaker Fiat in the role of savior for Chrysler LLC, making some $6 billion in additional aid conditional on a trans-Atlantic tie-up.

But can Fiat alone — which skirted bankruptcy itself in 2003-04 and rebounded under CEO Sergio Marchionne — save the failing U.S. auto colossus and give taxpayers a return on their investment?

Many industry experts think it’s a long shot.

There is broad consensus on both sides of the Atlantic — including on President Barack Obama’s auto industry panel — that a Fiat-Chrysler alliance makes a lot of sense.

Fiat has the small- and medium-car platforms that Chrysler lacks, which according to Obama’s panel could renew the U.S. automaker’s deficient product pipeline in those segments.

Fiat is an industry leader in fuel-efficient engines, where the panel believes Chrysler would struggle to meet new standards. It would provide entry into new markets, notably Europe, for Chrysler, which the panel said is too heavily weighted in North America.

But those technologies won’t make U.S. shores until 2011, and the Fiat deal does not include any cash payments.

Experts say Chrysler needs lots of cash to survive the next two to three years, when the Fiat relationship can begin to pay off.

Experts say if Chrysler doesn’t get it, bankruptcy could be the eventual outcome; Fiat has declined to put up cash and prefers looser industrial alliances, in any case.

Chrysler’s U.S. sales were down 30 percent last year compared with 2007, and during January and February, it sold only half the cars and trucks that it did for the same period last year.

The company told the government it lost $8 billion last year.

Marchionne has transformed Fiat since taking over in 2004 — ending a 17-quarter run of losses.