Chrysler and Fiat form joint venture

Italian automaker Fiat SpA and Chrysler LLC agreed Tuesday to form a partnership that would give Fiat a 35 percent stake in the third largest U.S. auto company.

The agreement includes an option for Fiat to increase its Chrysler holdings to 55 percent, The Wall Street Journal reported Tuesday.

The deal will not give Chrysler an immediate cash infusion. Instead, it is a pragmatic deal in which the companies will share production and technology.

Chrysler, whose cash needs forced it to seek an emergency government loan last year, has a similar agreement with Nissan worked out last year.

The Fiat deal may complicate the arrangement with Nissan, given certain vehicle models Chrysler is scheduled to make for each foreign company could be seen as competitors, the Journal reported.

Last year, Chrysler sold about 2 million vehicles, while Fiat sold 2.5 million. Fiat’s base is strongly tied to Europe, especially Italy, while Chrysler’s sales are predominantly based in the United States.

The agreement gives each a chance at a larger global presence, the Journal said.