Italian automaker Fiat, which three years ago rescued ailing Chrysler, is now looking to its revived partner for an infusion of cash.
Fiat, Italy's largest private-sector employer, is struggling financially and therefore turning to its American partner Chrysler for help, says the Financial Times. It's quite a reversal of fortune since 2009, when Fiat took an initial 20 per cent stake in Chrysler, which was bleeding $1 billion US per month.
With Fiat's investments, plus government bailouts from both the United States and Canada, Chrysler began to recover.
Now, it's time for payback to Fiat.
With an ownership stake of almost 62 per cent in Chrysler, Fiat chief Sergio Marchionne may soon have access to the American automaker's $10 billion US in gross cash - as well as EBITDA (earnings before interest, taxes, depreciation, and amortisation) reported as about $6 billion US, says the British newspaper.
The newspaper report pushed Fiat shares 1.76% lower on trading Friday morning on the Milan stock exchange.
Across Europe, but particularly in Italy, Fiat has been hit hard by the sovereign debt and banking crisis, and the subsequent recession. The company's reliance on Italy as its base, both for manufacturing autos but also as a sales market, is taking a severe toll.
With the Italian economy in recession, new car sales for all manufacturers plunged 24% per cent in Italy in June compared with the previous year.
As a result, Fiat's Italian car plants are operating at about 53 per cent capacity, the lowest among its European operations, the Financial Times reports. Annual sales in Italy for Fiat have fallen by almost half compared with 2000, to about 550,000 units today from almost 1 million.
In contrast, Chrysler is looking considerably stronger and better able to assist its benefactor.
Chrysler, which has repaid its loans, sold 145,000 vehicles in the U.S. last month - a 20% increase over the previous June and the best sales results for the month since 2007, says the Financial Times.