Chrysler’s proposed tie-up with Fiat depends on the American firm automaker receiving an extra $3bn emergency loan from the US government, a senior executive has said.

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“I think that is part of the deal,” product development chief Frank Klegon said when asked by Reuters if the automaker needed the additional $3bn for the Fiat deal to be completed. “That is part of the process. The expectation is that that is an important part of it.”


Chrysler, originally asked Congress for $7bn,  received $4bn on 2 January, and has said it needs the rest of the federal loan to stay in business.


Klegon believes the $3bn of additional government aid was part of a term sheet Chrysler had with Fiat on the alliance, Reuters said, noting that Chrysler has been calling the request for additional support a second tranche, or the second half of the original $7bn of aid it sought late last year.


Klegon reportedly said the US Treasury had been alerted to the deal and he hoped it would approve of the agreement. He added that discussions had been ongoing with Fiat on the product side for some time.

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“I had no knowledge there was a bigger discussion going on,” he told the news agency, adding the deal does not bar the automaker from other alliances.


Ge confirmed Chrysler’s alliance with Nissan Motor for small cars for Chrysler and large trucks for Nissan was still proceeding as was Chrysler minivan production for Volkswagen [the Routan sold only in North America].


Klegon told Reuters he did not know if Chrysler would keep all three brands, but, ultimately, that would not be the product development chief’s call.


“Cerberus are the guys making the deals. They are the ones who at the end of the day negotiate with Fiat,” he said. “We are obviously engaged as the operating side and the product side, but the actual deal is under Cerberus leadership.”