Fiat Group is locked in talks with Chrysler LLC to form a strategic partnership that could see the struggling American carmaker accessing Fiat's platforms and technology and even see the Italian firm grabbing an equity stake. Fiat and Chrysler have been linked together to different projects in the last couple of years. This new report came this afternoon from Automotive News Europe.

Chrysler, which earlier this month received US$4 billion in emergency loans from the US Congress just to keep it afloat until the end of March, under any deal could access Fiat's comprehensive range of existing and future small-to-medium platforms and powertrain technology as it seeks to re-launch itself and come up with a viable plan to secure its future. A strategic partnership with Fiat Group would provide Chrysler with the ability to tap into the Italian firm's leading-edge low-emission technology engines and front wheel-wheel drive platforms.

Chrysler LLC, which was bought from Germany's Daimler in 2007 by US private equity firm Cerebus Capital Management, saw its sales dramatically collapse by 30 pct last year, and it is already trying to obtain a further US$3 billion in bailout money. Chrysler's sales have considerably worsened in recent months at it has become one of the biggest losers from the economic downturn.

Of the three big North American carmakers, Chrysler has by far the bleakest future outlook as it seeks to turnaround an ageing and wrongly positioned model range. Ford and General Motors have compact models in their European portfolios that they can transfer to the US; however Chrysler has no such option to fall back on and talks with other global carmakers, including Japan's Nissan and China's Chery, have produced few tangible results.

ANE suggests that Fiat could receive money or even take an equity stake for allowing Chrysler to access its technology. The magazine also raises the idea that Chrysler could assist Fiat's ambitious plans to manufacture and sell cars in the US. Fiat CEO Sergio Marchionne has already held talks with Chrysler (as well as Ford and GM) over using excess factory capacity to manufacture Alfa Romeo models in the US. The dragged out stateside relaunch of the Alfa Romeo brand has now been postponed until 2011, while Marchionne has also commented in the past thar he would like to bring the Fiat 500 to the US if it can be manufactured there to reduce costs. If these car's platforms were being shared by Chrysler then they could be built side-by-side and costs would be significantly reduced. Accessing Chrysler's distribution and retail networks would be of benefit too.

At the same time, believes ANE, Chrysler could access Fiat's distribution and retail networks in Europe and Latin America. Chrysler has had little success in trying to establish a strong presence in Europe, while in South America Fiat has as market leading position: it is the largest manufacturer in the region's biggest market, Brazil.