BREAKING: Supreme Court clears the way for Chrysler-Fiat deal

With the temporary stay issued yesterday lifted, the Supreme Court will allow the government-backed sale of Chrysler to Fiat. The high court rejected the request from Indiana pension funds and consumer advocates to delay the deal, clearing the way for the sale and setting a precedent for General Motors in its own bankruptcy proceedings.

REPORT: Chrysler products from Fiat could be here in 18 months

Will we see a new line of Fiats in America in just 18 months? According to Chrysler vice chairman and president Tom LaSorda, the answer is "yes." Responding to reports that some analysts predict it will take upwards of three years before the first Fiat is (once again) sold in America, LaSorda said:

"We've done a lot of pre-work in terms of homologations and emissions. Eighteen months is practical. Three years is fundamentally wrong. We can do it faster."

Of course, in light of Thursday's bankruptcy filing at Chrysler, perhaps a better question is whether we'll still see Chrysler vehicles in 18 months. Jim Press, another Chrysler VP, says the ailing automaker still plans to reduce the number of nameplates it currently sells and offer Chrysler, Dodge and Jeep dealers under one roof. It remains to be seen how Fiat fits in to the discussion, but CEO Sergio Marchionne says they are indeed coming.

So, what's up first? Hard to say, but LaSorda did suggest that the retrotastic Fiat 500 MINI-fighter is likely to be built somewhere in the United States, Canada or Mexico for sales in the U.S. market.

Peugeot may join Fiat-Chrysler alliance

Fiat Group, Chrysler and its parent company Cerberus Capital Management last week released a joint statement announcing they had signed a non-binding term sheet to establish a global strategic alliance. The alliance, to be a key element of Chrysler’s viability plan, would provide the American carmaker with access to competitive, fuel-efficient vehicle platforms, new powertrains, and components to be produced at Chrysler manufacturing sites. Now it appears PSA Peugoet Citroen may be joining the two as well, via a merger with Fiat.

The new deal between Fiat and Peugeot is far from certain, however. A Reuters report has Fiat searching Europe to secure a credit line of up to €5 billion ($6.4 billion) to finance a takeover of Peugeot. At the same time the Agnelli family, which owns about 30% of Fiat SpA, is financing an increase in its stake to the tune of €2 billion ($2.56 billion) in order to retain a controlling stake in the merged company. Neither Fiat nor Peugeot are commenting on the matter, however. Should the three carmakers - Fiat, Chrysler and Peugeot - partner, the conglomerate would become the third largest in the global industry, behind Toyota and GM.

While the Peugeot inclusion awaits further definition, however, the Fiat-Chrysler tie-up is well underway. Per that agreement, Fiat would provide distribution capabilities in key growth markets, as well as substantial cost saving opportunities and management expertise for Chrysler in addition to givign Chrysler access to its technology and components. The alliance would essentially allow both carmakers to take advantage of each other's distribution networks and production capabilities.

Importantly, the deal would not involve Fiat making a cash investment in Chrysler or committing to funding Chrysler in the future. Instead, in return for product and platform sharing, technology sharing, and access to additional markets, Fiat would receive an initial 35% equity interest in Chrysler.

Some of the proposed benefits for Chrysler include city and compact vehicles sourced from Fiat, fuel efficient and environmentally friendly powertrain technologies, and access to distribution channels for Chrysler vehicles in markets outside of North America.

At the same time, the deal would also provide Fiat with a much-needed platform for re-entry into the U.S. market. Cars like the tremendously successful Fiat 500 and any number of Alfa Romeos could find many happy homes among U.S. buyers increasingly concerned with emissions, fuel efficiency and vehicle cost. For Fiat, however, it's not a sensible business proposition to sell those cars in the U.S. unless they are built locally.