According to Reuters, Chrysler is talking with India’s Tata Motors and Italy’s Fiat, as it seeks to raise cash and open doors to faster-growing markets outside the U.S. Chrysler has been in discussions with Tata about arrangements to sell its Jeep Wrangler SUV in India and possibly other Asian markets. In addition, Chrysler has been talking to Fiat about leasing Chrysler production capacity in North America and cooperating in retail distribution in the U.S. market. This scenario could allow Fiat to return to the world’s largest auto market, while allowing Chrysler to cut costs at a time when sales are down and it faces mounting pressure to shore up cash.
Gerry Meyers, a professor at the University of Michigan business school and chief executive of American Motors when it owned Jeep in the early 1980s, said it was clear that Chrysler needed international partners. "In my mind, they’re clearly under a financial strain. It may even be a liquidity strain. There are a lot of questions floating around about how much longer Chrysler can go on with problems like this," he said.
Chrysler lost $1.6 billion in 2007. On Tuesday Fitch Ratings downgraded Chrysler, warning that the automaker could run below the "minimum required levels" of cash to finance operations by the second half of 2009 if industry-wide sales remain flat or worsen.
Fiat and Tata already have a partnership. Fiat agreed this month to handle the financing in Europe for Tata’s Jaguar and Land Rover brands, while Tata said it was open to Fiat selling its Nano.
On the same day that the story above appeared in Reuters, BBC News reported that Tata has seen net profits fall 30% due to high material costs and losses from changes in foreign exchange rates.
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