Fiat on Wednesday closed a deal to take over the strongest assets of bankrupt US automaker Chrysler, the first step in the Italian company's ambitious drive to create a global car giant.
New Chrysler Group LLC CEO Sergio Marchionne addresses employees in the US
Fiat Chief Executive Sergio Marchionne, who became CEO of the new Chrysler Group LLC on Wednesday, said he was optimistic about the new venture.
"There is no doubt in my mind that we will get the job done," Marchionne said in a letter to employees. He called the alliance a "bold first step to implement" lessons learned.
Fiat chief Sergio Marchionne is upbeat about the merged company's chances
Marchionne said earlier that the merged Chrysler and Fiat ranked as the world's sixth largest automaker.
Marchionne said Fiat will begin the process of transferring Fiat's technology, platforms and powertrains to Chrysler plants in the next few months.
The White House welcomed the completion of the deal and said the new alliance was "poised to emerge as a competitive, viable automaker."
US court paves way for deal
The deal's completion came a day after the US Supreme Court lifted a stay on a lower court's approval of the deal.
The court said a group of Indiana pension funds opposed to the deal had failed to show "that the circumstances justify" delaying proceedings to accommodate their challenge.
The funds had argued that the White House-backed sale of Chrysler to Fiat is unconstitutional because it puts the rights of junior creditors ahead of the rights of senior lenders.
They also said the US Treasury had overstepped its legal authority by using some $12 billion in financial bailout funds to reorganize Chrysler when Congress had intended the money for banks.
Chrysler's sale to Fiat, a union-aligned trust and the US and Canadian governments is aimed at pulling the company out of bankruptcy and reorganizing it to cope with changing economic conditions and consumer tastes.
Chrysler may get a new life under Fiat but it still needs to overcome past problems
The court gave the transaction the green light after the government filed a brief warning that Fiat could walk away from the Chrysler deal if it was not finalized by June 15.
"If Fiat is released from the obligation to consummate the transaction as currently structured, it will be free to demand additional concessions before concluding a new agreement," the justice dpartment brief said.
The statement said that because Chrysler is not manufacturing cars, each day of bankruptcy was costing the company approximately $100 million.
Chrysler filed for bankruptcy on April 30 and is seeking to re-emerge within the next 30 to 60 days.
Its rapid turnaround plan is expected to serve as a precedent for General Motors, which has filed for creditor protection as part of a plan that offloads its German subsidiary Opel and gives the US government a majority stake in the new GM.
"Cash for clunkers" bill approved
Meanwhile, the "cash for clunkers" bill, one of President Obama's consumer incentives for new car purchases, was approved by the House of Representatives this week. The bill aims to boost new car sales by allowing consumers to turn in their gas-guzzling cars and trucks for vouchers worth up to $4,500 toward more fuel-efficient vehicles.
The measure is part of the Obama's administration's efforts to stimulate car sales and increase the fleet of fuel-efficient vehicles on the nation's highways.
The US car industry has been searching for new incentives after months of poor car sale. In May, overall auto sales were 34 percent lower than a year ago.
Editor: Sonia Phalnikar