A fight is brewing between FiatFiatItaly, 1899 > present159 models
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and the United Auto Workers. The UAW's VEBA medical pension used its ownership of 41.5% of ChryslerChryslerUnited States of America, 1925 > present70 models
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stock to force the company to file an initial public offering on the stock exchange in the United States. Fiat is retaliating by claiming that it will not support Chrysler in the future and laying off 500 recently hired workers to build the Jeep CherokeeJeep Cherokee Gen.3 [KL]United States of America, 2014 > present18 versions
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, which Chrysler claims is unrelated.

Fiat owns 58.5% of Chrysler stock, and VEBA owns the remainder. VEBA exercised an option that it had to submit the IPO after it and Fiat could not agree on a price for Chrysler stock.

"Fiat has informed us that it is reconsidering the benefits and costs of further expanding its relationship with us. This could include decisions on capital preservation and allocation, investments and locations of production facilities,” said Chrysler in its S-1 filing with the U.S. Securities and Exchange Commission.

Fiat is hoping that it can force VEBA back to the negotiating table before Chrysler is listed on the stock exchange in the first quarter of 2014 to get a better price for the company.

The problem is that VEBA may see Fiat’s move as a bluff because Fiat needs Chyrsler as much as Chrysler needs Fiat. In the first half of the year, Chrysler attributed to more than half of Fiat-Chrysler’s combined revenue, and without Chrysler, Fiat would have had a €501 million loss for the half, instead of a €435 million profit. It is hard for VEBA to take Fiat’s threats seriously when Chrysler is keeping Fiat financially viable in the world.

Also, ending support for Chrysler would harm Fiat’s tentative foothold in the US because the majority of its dealers are linked with Chrysler Group brands. Abandoning it, means leaving the entire American market, again.

Source: Automotive News