Chrysler Deal Reached with Fiat - Implications for Consumers

Consumer groups and product liability attorneys beware. One ramification of the new deal that gave most of Chrysler's assets to the Italian automaker, Fiat, on June 10, 2009, is that the new Chrysler Group will not be responsible for product liability claims before the takeover.

Consult an attorney for real legal advice, but the bottom line is that claims before this deal will not be the financial responsibility of the new Chrysler Group controlled by Fiat. I guess that means if you had a lawsuit going on or want to sue in the future for a defective Chrysler (especially if it causes bodily injury or death), you are out of luck. Much legal talk will probably center around this deal for years to come. This week the Supreme Court refused to hear an appeals hearing for the opponent groups (including secured debt holders in Indiana) who were trying to block the Chrysler deal with Fiat.

The Obama administration has played a big part in this deal and some other controversial interventions of the federal government into the financial and business markets in 2009. While Americans and the world will have to digest these big moves little by little, we may look back in a few years and be glad.

It will be interesting to see if the new CEO of Chrysler Group (also head of Fiat), will be able to turn the brands of Chrysler around. The new focus of the four Chrysler brands, according to news sources, will be smaller, hybrid vehicles.

Another outcome related to this deal is that about one-fourth of the lowest-performing Chrysler dealerships are out of business this week. While this may cause some job losses in many towns across the U.S., there will be opportunities for other dealers to come in and buy these properties. Some dealers will also continue selling the brands of other cars on their lots.

While consumers cannot begin to comprehend the far-reaching impacts of this big decision in one day, this Chrysler deal is a bold move for the U.S. Keep in mind that the U.S. and Canada will maintain a 10% stake in the new Chrysler group after this deal, how long will it be necessary to have the federal government keep bailing out the auto and financial industries?

The world economy is changing quickly. The U.S. is struggling to get back on its feet. We will see if these bold moves by the nation's best economic teams, including Obama's task force on saving the auto industry, will lead the country out of recession. Consumers should be watching and reading the news to find out how these important decisions will affect their investments (such as Chrysler-made cars) in the years to come.