Chrysler Expected To File Plan To Sell Assets

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Chrysler is expected to file a motion Saturday to sell substantially all of its assets to Italian automaker Fiat in an effort to deal with its bankruptcy. The move will result in five plants shutting down. The automaker must still work with creditors who rejected plans that could have kept Chrysler out of bankruptcy.

JACKI LYDEN, host:

From NPR News, this is ALL THINGS CONSIDERED. I'm Jacki Lyden.

What a week for the car business. Chrysler, the littlest of Detroit's big three, is in bankruptcy court. The company said it would file papers today to set up a sale of its top assets to Fiat, the Italian carmaker.

NPR's Frank Langfitt is just back from Detroit, where he watched this drama unfold. I asked him exactly how the alliance between Chrysler and Fiat is supposed to work.

FRANK LANGFITT: Well, Jacki, Fiat's going to get about 20 percent stake in Chrysler initially, and what it's going to give Chrysler is these fuel-efficient engines that it's engineered in Italy. And so, the idea is to allow Chrysler to build sort of competitive, small cars, and that's a part of the market where the company's just really failed.

LYDEN: This is such an interesting marriage. Both Fiat and Chrysler have had problems with quality. Are they going to sell Americans on these brands?

LANGFITT: That's a big question. I mean, Fiat was best known in the U.S. for these little sports cars in the 1980s, like the Spider. It was cute; it was fun. These were nice cars except they didn't run that well. They spent a lot of time in the shop.

So, I think anybody over 40 is going to be a bit leery of a Fiat, and maybe anybody under 40 might wonder, well, what really is a Fiat?

LYDEN: I've seen they're making this cute little car in Europe, the Fiat 500 or the Cinquecento.

LANGFITT: Yeah, it's a two-door. It's been a bit hit in Europe. It sells for about $12,000. That could do well with people here in their 20s, but it's hard to make money on cars that you sell at such a low price.

So, you're probably going to see Chrysler build that at its plant in Toluca, Mexico, to take advantage of the low wages there. It also means that U.S. workers probably aren't going to get those jobs.

LYDEN: So, when can we expect to see Fiat's and Chrysler's cars with Fiat engines rolling off the assembly lines?

LANGFITT: Well, early as maybe 18, 20 months, probably longer. And you've got to remember, in the car business, that's an eternity. And unless auto sales kind of come roaring back, the government's going to keep having to finance Chrysler to keep it afloat during that time.

U.S. has already given Chrysler at least $4 billion. The president has pledged another $8 billion to get Chrysler in and out of bankruptcy, but I think the worry here is the price tag for the taxpayers could keep going up.

LYDEN: Frank, I understand that the government will end up owning eight percent of Chrysler, and the union will get the majority of the stock. It's a little complicated.

LANGFITT: Yeah, it's really - it's kind of stunning in a sense, when you think about it. The union - it's actually the union health care trust fund for its retirees. That's going to get 55 percent of the company, and the reason is the company just didn't have the cash to give what it owned the union. There was nothing else to give them.

This could work out. If Chrysler survives and prospers, the union stake could do well. They could sell it off. But of course, if Chrysler fails, the retirees are going to take a big hit.

Now, United Auto Worker President Ron Gettelfinger, he seems to have played a weak hand pretty well here. He's going into bankruptcy as a partner with the government and with Fiat, and here's how he put it on MORNING EDITION yesterday.

Mr. RON GETTELFINGER (President, United Auto Workers): I'm very comfortable. It's not like we're going into this bankruptcy fighting with Chrysler and Fiat and the U.S. Treasury. We're going in there in lockstep to put our agreements in place.

LYDEN: Well, what about the big one of the Big Three, General Motors? How does the Chrysler bankruptcy affect what's ahead for GM?

LANGFITT: I think GM's going to be watching it very closely, and one of the things they want to see is if the bankruptcy really kills Chrysler sales. Yesterday, we found out that Chrysler's April sales were down 48 percent from last year. That's the worst of the Detroit companies. So, GM is going to be watching to see what happens in Chrysler showrooms to see what they could be in store for.

LYDEN: NPR's Frank Langfitt. Thank you, Frank. It's always a pleasure.

LANGFITT: Happy to do it, Jacki.

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