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Fiat CEO Threatens to Walk Away From Chrysler Deal

Fiat chief executive Sergio Marchionne said that the Italian automaker is "absolutely" prepared to call off a proposed merger with on-life-support Chrysler if it cannot win concessions from creditors and the United Auto Workers.

This is really, really bad news for Chrysler. Its only hope of survival as a company, auto analysts and the U.S. government agree, is for the merger with Fiat to go through. It's facing an April 30 deadline. Without a partner, Chrysler simply does not have enough money to stay in business, and it will have to be sold off as parts.

Of course, the Italian company is talking tough because Fiat knows it has Chrysler over a barrel and can extract the best deal possible.

"I think they need to see what state the industry is in," Marchionne said in an interview in the Toronto Globe and Mail today. "Canada and the U.S. are coming in as the lender of last resort. ... No one else would put a dollar in. This is the worst condemnation of the viability of this business."

The past couple of years have been humbling for all automakers, but none more so than Chrysler, which once was a legitimate member of the Big Three club, with its Dodge and now-defunct Plymouth lines.

In recent years, the company has become almost exclusively a maker of trucks, SUVs and vans, as it has been unable to build passenger cars that Americans want to buy. Each month during this recession, when the automakers release their data, sales of Chrysler cars have dived by shocking numbers -- 50 percent, 60 percent per month.

Which is why Fiat, which makes a number of smaller cars, is seen as a good strategic fit for Chrysler.

But not unless Marchionne gets more from Chrysler debt-holders and the UAW, it looks like.

-- Frank Ahrens
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By Frank Ahrens  |  April 15, 2009; 10:48 AM ET
Categories:  The Ticker  | Tags: Chrysler, Fiat, automakers  
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