Fiat can't get hold of Chrysler cash
Fiat is losing a lot of money right now, but its purchase of currently cash-rich Chrysler was thought to be its lifeline.
However, according to a story on USA Today, Fiat is forbidden from taking Chrysler's cash, under the terms of its deal with the US Government. This situation was never anticipated when Chrysler was at death's door and Fiat agreed to take it off the US Government's hands. Then the big worry was that Chrysler would drag down Fiat.
Today, the US market has bounced back nicely and all three US car companies are making good money. In contrast, it is Fiat that is being dragged down by the European crisis. Chrysler is said to have combined cash and credit worth $13 billion, but Fiat boss Sergio Marchionne has said, "Firewalls are up, [Fiat] can't get to it."
While Chrysler is making around $2 billion (£1.3 billion) a year at present, Fiat is losing a not dissimilar amount on cars in Europe. It can take dividends from Chrysler's profit, but that is not the same as getting its hands on the cash pile. Hence Fiat has had to cut its spending and has delayed the introduction of new models like the next Fiat Punto.
It is a bit like marrying a rich partner and then discovering all their money is held in trust. That big new house that seemed to be within reach just isn't going to happen.