Troubled U.S. auto giant Chrysler finalized its merger with Italian automaker Fiat after clearing two court hurdles late Tuesday. The new firm now must prove it can become a viable, competitive auto company despite a challenging economic climate and weakened demand for cars.
Chrysler emerged from a carefully planned bankruptcy Wednesday, with Fiat now taking an initial 20 percent stake in the beleaguered auto company.
The Supreme Court Tuesday cleared the way for the deal after declining to consider a last ditch effort by a group of investors to block the sale, claiming the agreement is unfair to Chrysler's debtholders. A separate court ruling also approved Chrysler's plan to close 789 dealerships, about 25 percent of its base.
Jack Fitzgerald has sold cars for 43 years but his dealership is on the list to be cut. He says he will continue to service his customer's cars regardless of what the Detroit does. "The object is to keep people working. Not to put them out of work. What good is it to put 50,000 people to work in Michigan, and put a 100,000 people out of work across the country?” he asks.
The White House signaled it was pleased with the efficiency of Chrysler's bankruptcy proceedings. President Barack Obama is now saddled with the more difficult task of ushering the largest U.S. automaker, General Motors, through its bankruptcy.
Press Secretary Robert Gibbs said the merger should give Chrysler new confidence. "It gives Chrysler a restructured opportunity to move forward,” said Gibbs yesterday. “And it's our strong hope that the same happens relatively quickly for GM."
Fiat Chief Executive Sergio Marchionne, who now assumes the role as Chrysler's CEO, said in a statement that plants that had been closed during the bankruptcy will soon reopen. He also said work is already underway to develop more fuel-efficient vehicles.
But for now, dealerships that remain open will have to continue selling their traditional line of trucks and sport utility vehicles until a new fleet is introduced.