Chrysler And Fiat Strike an Alliance

By contrast, the alliance of Nissan and Renault has been successful, in part, analysts say, because Carlos Ghosn has simultaneously held the chief executive position at both companies and closely coordinated vehicle plans.

UAW President Ronald A. Gettelfinger said the Fiat-Chrysler deal "offers Chrysler new opportunities to compete in the U.S. market and the global marketplace." He added that "as the U.S. auto industry undergoes a restructuring process, this alliance has the potential to preserve a wide range of choices for U.S. consumers, as well as good-paying manufacturing jobs for our communities."

"We're going to work with Chrysler and Fiat in the days and weeks ahead, and UAW members will have a voice as this new alliance takes shape," said UAW Vice President General Holiefield, who directs the union's Chrysler Department. "Our focus is going to be on preserving good jobs and building great vehicles."

Since 2007, Chrysler has discontinued four vehicle models and reduced employment 36 percent, to its lowest level since 1934, Nardelli wrote to stakeholders.

A critical element to the deal is the acceptance by dealers, who would likely be asked to sell Fiats.

"This is phenomenal," said Hayden Elder, co-chair of Chrysler's national dealer council and the owner of Elder Chrysler Dodge Jeep in Athens, Tex. "We've got a partner now."

The rumors about other potential partners for Chrysler -- including GM and Nissan -- had given dealers pause because Chrysler had so much in common with their product lines.

"When they were talking about GM . . . that was a scary thought. There was total overlap, so the question was who was going to go?" he said. "There's a GM dealer in town. Do they need both of us if we're one and the same?"

By contrast, Elder said, the Chrysler-Fiat alliance had "the opportunity of being a marriage made in heaven." He said: "They've got European distribution, we've got North American distribution. We've got the trucks and the SUVs. They have the high gas mileage cars. It looks perfect to me. The two blend perfectly."

Chrysler has made some modest moves toward fuel efficiency, with the Caliber and Patriot, but offers no hybrids.

Elder said those smaller Chryslers could be replaced with Fiats. Some of the existing smaller Chryslers are "in their second year or third year of their life cycle. When it comes to refresh them, will they do that? Do they spend a lot of money on them or do they bring something from Fiat in? That remains to be seen."

Chuck Eddy, of Bob & Chuck Eddy Chrysler Dodge Jeep in Youngstown, Ohio, said the blending of product lines would help both sides. "I have no problems with having the Fiats on our showroom floor," Eddy said. "Our minivans, our Jeeps are our bread and butter. We're looking for small cars. That's a huge part of our future -- cars that get 50 mpg or more. We have to plan for the future."