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Daily Auto News

A government-brokered deal between struggling U.S. automaker Chrysler and Italian automaker Fiat moved another step closer Monday, when United Auto Workers Union negotiators reached an agreement to accept concessions in exchange for what could eventually become majority ownership of Chrysler.

The Wall Street Journal reports, “The United Auto Workers union would eventually own 55% of the stock in a restructured Chrysler LLC under the deal reached by the union and the auto maker.” Fiat’s stake in Chrysler would be capped at 35 percent, “and the U.S. government and Chrysler’s secured lenders together will end up owning 10% of the company once it is reorganized.”

The move does not, however, mean more power for the union. The Journal notes, “Among the cost-cutting measures that the UAW leaders have accepted are a suspension of cost-of-living-adjustments and new limits on overtime pay,” and fewer holidays.

One of Chrysler’s former owners has agreed to walk away from the company for nothing. The Detroit News reports, “Chrysler LLC’s former owner Daimler AG agreed Monday to give up its final 19.9 percent share in the Auburn Hills automaker, ticking off yet another agreement required by the government for a Thursday deadline.” The German company “will forgive a $1.5 billion loan to Chrysler after ownership transferred to Cerberus.”

Fiat has agreed to provide Chrysler with small, fuel-efficient cars to sell, and Fiat’s CEO may oversee the combined company – but Fiat will not put its own money into Chrysler operations. Bloomberg explains that Fiat, “by insisting on not putting cash into Chrysler, is trying to avoid what Germany’s Daimler AG did — paying $36 billion for Chrysler in 1998 only to sell it nine years later for $7.4 billion.”

If you’re in the market for a new car, check out the U.S. News rankings of this year’s best cars as well as this month’s best car deals.