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The Detroit News

WASHINGTON -- The chief executive of Fiat SpA told the White House auto task force Thursday that the Italian automaker could help Chrysler LLC recover and repay the billions it is borrowing from the government.
CEO Sergio Marchionne also assured U.S. officials that none of the money lent to Chrysler would leave the United States if Fiat and Chrysler concluded their proposed alliance.

"The main objective is going to be to repay every single dollar of taxpayer funding before anybody gets anything," he said after meeting with key members of the task force.

Speaking with reporters as he left the U.S. Treasury building, Marchionne said he outlined to the task force the contributions Fiat would bring to Chrysler. "We think we're adding significant technology and products to the offerings of Chrysler. With them, I think they've got a fair chance of making it."

In spite of the U.S. auto market's collapse in the past two months, Marchionne said he was as optimistic now about the potential benefits of an alliance as he was at the start of the year, when Fiat and Chrysler's majority owner, Cerberus Capital Management LP, concluded a preliminary agreement.
"Nothing has happened that would change my mind," he said after the 2 1/2 -hour, closed-door meeting, which Fiat officials characterized as friendly and informal.

Steve Rattner, a restructuring expert who co-founded Quadrangle Group LLC, a Wall Street firm, and former labor adviser Ron Bloom ran the meeting, peppering Marchionne with questions not only about the proposed deal with Chrysler but also about the European market. Marchionne said he was encouraged by the U.S. officials' grasp of the industry's difficulties.

"The feeling that I got from them is that they recognize the magnitude of the problem and there's an absolute determination to finding a solution," he said.
Treasury officials were not available for comment.

Marchionne, an affable Italian-Canadian businessman credited with turning Fiat around, said the Turin-based carmaker was "well advanced" with its due-diligence examination of Chrysler, which is preparing its own report for the U.S. government.

Chrysler and General Motors Corp. are required to submit reports by March 31 detailing their efforts to restructure, reduce their debts and cut labor costs to become viable businesses, as a condition of the federal aid.

In addition to $4 billion in loans Chrysler has received, the automaker is seeking $5 billion. Marchionne declined to say whether the deal hinged on those loans but said, "the project is subject to additional financing coming in."

As the smallest of Detroit's automakers, Chrysler is widely viewed as the weakest because of its extreme reliance on the U.S. market, and notably on large-vehicle segments that have been battered in this downturn.

While some politicians and industry analysts say Chrysler could fail without endangering the entire U.S. auto industry, Marchionne said he didn't get any sense that the task force viewed Chrysler as being of secondary importance. "They were as keenly interested in Chrysler as they would have been in anyone else in the automotive industry," he said.

Another auto expert, Craig Cather, president of forecasting and consulting firm CSM Worldwide of Northville, said the viability plan Chrysler submitted last month to the government appeared weaker than GM's, and some of its assumptions seemed optimistic.

But he said at a briefing here Wednesday that a collapse of Chrysler would threaten the industry because it could endanger suppliers on the verge of failing -- and that, in turn, would imperil Detroit's bigger automakers.

Chrysler has told the government that it can survive alone, but signaled in its plan that it would fare better with a partner. In its submission to the government, it estimated the deal with Fiat would create synergies of about $7 billion by 2016.

Fiat has proposed to take a 35 percent stake in Chrysler, with an option to acquire another 20 percent, in exchange for sharing small-car platforms and engines with Chrysler.

It will not invest cash in Chrysler but Marchionne said the expertise it will share entails "technology, platforms, engines, know-how -- all stuff that has been paid for and worked on by Fiat over a number of years."
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