The US government should consider a proposed merger between Chrysler and Fiat if it is the only way for the distressed Detroit automaker to survive, a senator has said.


Tennessee Republican Bob Corker said there was little hope that Chrysler could remain a stand-alone company, despite its contention that it could with additional government capital, and those advocating consolidation should realise that a tie-up might involve foreign ownership, Reuters reported.


“What is it that can happen out there that creates the highest probability they can pay back (bailout funds)?” Corker asked in an interview with Reuters. “If the merger with Fiat is it, maybe that’s something we ought to consider.”


The government would have to approve any merger. There have been few details of the proposal, which was announced last month.


Corker told the news agency he had met with Fiat representatives to discuss the plan in which Fiat would take a 35% stake in Chrysler in exchange for access to technology and overseas markets.

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Chrysler submitted restructuring plans with the Obama administration on Tuesday, showing how it would survive as a stand-alone entity.


The automaker also repeated it was pursuing an alliance with Fiat as long as it could be made viable, but provided little detail.


Chrysler requested US$5bn in new government aid in its restructuring plan after receiving $4bn in bailout loan funds in December.


Corker reportedly also favours congressional hearings on the Chrysler turnaround proposal and a similar one, also submitted on Tuesday, from General Motors seeking $16.4bn on top of $13.4bn approved in December.


Another Republican and bailout critic, senator Richard Shelby of Alabama, said in a statement that the restructuring plans submitted by GM and Chrysler “fall short of providing credible strategies” for long-term viability.


“Instead of taking concrete steps to solve their business problems, GM and Chrysler hope to rely on additional taxpayer funding to avoid bankruptcy,” said Shelby, the top Republican on the US Senate Committee on Banking, Housing and Urban Affairs.


A task force led by the White House and Treasury Departments would oversee the restructuring of Chrysler and GM, Reuters noted.


Chrysler has said a failure to restructure its liabilities and get the $5bn of additional government funding by the end of March would force an orderly wind-down of operations.