The Obama administration has given a further $500 million to keep Chrysler afloat, but Washington signaled yesterday it increasingly believes Chrysler will not survive as an independent company. Treasury officials met yesterday with CEO Robert Nardelli, as well as the heads of the United Auto Workers and Italian automaker Fiat. If it fails to strike a deal with Fiat, Chrysler could file for bankruptcy or liquidation by next week.
Washington has offered $6 billion to help finance a Chrysler-Fiat alliance, which would see Chrysler build smaller Italian-style cars while offering Fiat facilities to build light trucks and sell to American markets. Yet if Chrysler ends up collapsing, Fiat might still acquire parts of the automaker in a government-brokered sale of assets, and GM might absorb some of its business as well.