Even if a collaborative deal between Fiat and Chrysler is confirmed, the proposed arrival of donor small cars for Chrysler is still years away and will cost the troubled US firm billions of dollars in retooling costs, according to analysts at CSM Worldwide. 

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Under a memorandum of understanding recently signed by the two makers, a key element is that Fiat would act as a technology donor to Chrysler, supplying much needed small car platforms and engines in return for a 35% equity stake in the firm.


However, that will take time to implement and shouldn’t detract from Chrysler’s immediate priorities surrounding its transformation plan and liquidity issues, according to CSM.


The market analyst said in a report that distribution in the US of the Fiat 500 could take place in 2012 with sourcing from a Chrysler plant in Mexico a strong possibility.


There would also be Chrysler small cars and crossovers – badged Chrysler or Dodge – developed off Fiat platforms, alongside suitable Fiat engines.  

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CSM noted that the production of Fiat donor products would have to take place in North America to keep costs down and that retooling over the next 12-36 months would require billions of dollars in capital and resource requirements.


CSM also said that Chrysler still has scale and technology issues in larger product offerings.


Furthermore, Cerberus will still have to fund the interim period between now and when Fiat-developed Chrysler products could be introduced as well as a substantive vehicle/powertrain retooling/development program into 2012/2013, the report said.