January 21, 2009 at 1:00 am

For Chrysler dealers, Fiat pact welcome

With plan to become partners, they 'now see how we are going to survive past March.'

Carl Galeana, who has Dodge and Chrysler dealerships, including this one in Warren, said the alliance plan is "a great shot at survival." (Ankur Dholakia / The Detroit News)

Chrysler LLC dealers across the nation said the possibility of selling small Fiat cars alongside Chrysler, Jeep and Dodge models is the best idea they've heard in a long time.

Chrysler and Italy's Fiat SpA plan to form an alliance that would give Chrysler access to Fiat's small-car platforms and potentially open Chrysler's dealer network to Fiat models sold under the Chrysler, Dodge or Jeep brands. Many details of a tie-up are still being worked out.

"I was not all happy with that (potential) GM-Chrysler merger," said Chuck Eddy, who owns Chrysler and Dodge dealerships in the Youngstown, Ohio, area, referring to discussions last year between General Motors Corp. and Chrysler about a possible tie-up. "It felt like cannibalization."

"But this is an endorsement of the viability of our long-term health," said Eddy, who testified before Congress in November in support of federal loans to prevent the collapse of GM and Chrysler. "This shows the government we are valued. It utilizes our excess capacity. We can offer a broad range of product on the showroom floor. It's all good, if you ask me."

Eddy's sentiment was echoed by seven Chrysler dealers around the country on Tuesday after the plan was announced. Alan Helfman, vice president of River Oaks Chrysler Jeep in Houston, said he was "ebullient." Carl Galeana, president of the Galeana Automotive Group, which has Dodge and Chrysler dealerships, including one in Warren, said, "It was a great shot at survival."

Chrysler told dealers about the plan during a conference call Tuesday morning. Jim Arrigo, a dealer in the West Palm Beach, Fla., area, and co-chairman of the Chrysler-Jeep National Dealer Council, said many dealers "now see how we are going to survive past March."

Arrigo said Chrysler did not provide much detail about the alliance with Fiat during the call, which was the first time dealers had any hint that a deal was being discussed.

"Most of what I know is really more from media reports than the conference call," Arrigo said. Despite the lack of information, "dealers are generally relieved and happy," he said. "People have been sitting on pins and needles for some time. This now feels like momentum because Fiat has a great image, and there seems very little overlap," between Fiat and Chrysler products.

Chrysler, which is operating on a $4 billion loan from the federal government, nearly ran out of money late last year. It must show by March 31 how it will become and remain a viable company to keep the loans. It is also seeking $3 billion in additional government funds.

"It sounds like good synergy," Galeana said. "With the better financing coming our way, I think we can see things pick up."

On Friday, Chrysler Financial LLC, the automaker's lending arm, won a $1.5 billion loan from the U.S. Treasury Department that should help Chrysler boost sales by making it easier for consumers to finance new vehicles.

Chrysler responded by unveiling a new incentive program to get customers into showrooms.

The offer, effective immediately, includes zero-percent financing for up to 60 months on many 2008 and 2009 models when financed through Chrysler Financial.

Chrysler Financial had underwritten just 3,800 car loans in December, compared with 50,000 vehicles financed in the same month a year ago.

Chrysler dealers have been struggling as the global credit crunch and economic worries kept consumers from buying.

Chrysler's U.S. sales plunged 53 percent in December -- and 30 percent for all of 2008 -- the biggest declines of any major automaker.

Industry sales fell 35.5 percent last month and 18 percent for the year.

Chrysler's decline came partly because the automaker stopped financing vehicle leases.