By Jorn Madslien
Business reporter, BBC News
Efforts to prop up Chrysler have failed, so the automotive group is about to come crashing to the ground.
It looks like the end of the road for Chrysler's chief executive Bob Nardelli.
The faltering US car firm he is still in charge of is entering the bankruptcy courts, and it plans to hand over the steering wheel to Italian industrial group Fiat.
Yet as Mr Nardelli looks back at his legacy, it seems his efforts in recent weeks to hammer out a deal between Chrysler's shareholders, workers and lenders have nevertheless yielded results.
Chrysler chief Bob Nardelli may soon find himself without a job.
During the last week or so:
- Following recent negotiations, aided by government arm twisting, Chrysler's United Auto Workers union have agreed to forego bonuses and pay rises, reduce unemployment and health care benefits, and limit their right to strike
- Daimler has agreed to give up its 19.9% stake in Chrysler and write off its debts
- Current owner Cerberus will forfeit its 80.1% stake
- Bond holders will get $2bn (£1.36bn) cash for the $6.9bn they are owed
- Union trust fund will take a 55% stake, the government 8%, Canada and Ontario 2%
- Fiat will take a 20% stake, rising to 35% and potentially to 51%.
Advantage of bankruptcy
The deals he has struck have smoothed the way for bankruptcy and a restructuring of the company, analysts say.
Chrysler's models remain unpopular outside the US.
Having reached such "general agreements on a plan going forward" mean Chrysler has narrowly avoided a chaotic collapse, observes Aaron Bragman, an automotive analyst at Global Insight.
"The uncontrolled liquidation bankruptcy that would have resulted had Chrysler not been able to bring all of its parties to the table" has been avoided, he says.
Instead, a Chapter 11 bankruptcy protection filing will help Chrysler "get dealer franchise contracts and supplier contracts renegotiated, or give the company the ability to sell assets free and clear of existing liens", Mr Bragman explains.
"With all the major stakeholders accounted for and in agreement, such a bankruptcy could be theoretically accomplished much more easily than it otherwise would have been," he says.
As such, it should be seen as a "useful method to accomplish the final restructuring that will allow the company to receive the $8bn in funds that the government has promised".
More troubled will be the nature of any contribution Fiat can make to the regeneration of Chrysler.
But this is not a happy ending where Chrysler and Fiat disappear into the sunset with a stash of government cash.
Their partnership will be fragile, shaped by the way it was created - arising as it has done from opportunities grasped, rather than from carefully crafted merger plans where synergies have been identified.
Essentially, Chrysler has no choice and is clutching at straws.
Fiat, in turn, is not committing much and has little to lose.
"I think it's madness," says independent automotive analyst Rob Golding.
Little to offer
These days, Chrysler's own cars - which also include the Dodge and Jeep marques - are hard enough to sell within the US, where sales have fallen off a cliff in recent months. Abroad it is even tougher.
Analysts say Fiat Group chief Marchione is adding to his difficulties.
In fact, Chrysler has little presence outside the US. When its former Germany parent company Daimler sold Chrysler in 2007, sales outside North America accounted for no more than 7% or 8% of its sales.
But if Chrysler has little to offer Fiat - let alone anyone else - then the reverse is also true.
Fiat is similarly reliant on its home market, bolstered by Italians snapping up the majority of the Fiats, Lancias and Alfa Romeos it makes.
Hence, although it might come across as global on paper, the Fiat-Chrysler alliance is not about to become an international automotive giant that will seriously rival the likes of, say, Toyota, Volkswagen Group or Nissan-Renault.
Indeed, there is no way it could emerge as a serious rival without significant injections of cash.
"Who is going to provide the money?" asks Mr Golding. "Fiat can't possibly do it.
"Fiat is easily the weakest of all the major automotive companies. It does not even generate enough revenue to fund its own investment."
Fiat will not pay anything for its stake in Chrysler, but will instead bring its small engines and small-car platforms to the table.
Chrysler can no longer rely on thirsty muscle-cars.
This will enable the American company to produce re-skinned, own-brand Fiat models in its US and Canadian factories, thus providing employment - an important consideration given that the union will own a major stake in Chrysler.
Fiat's input should also help reduce the group's average fleet emissions, but in spite of much reporting on how US drivers are switching to more efficient cars, there are few reasons to expect them to queue up to buy these home-built small Fiats.
"Entering the US market is not easy for anyone," points out Deutsche Bank' Eric Heymann, who analyses the automotive industry as a whole rather than individual companies.
"Just look at how long it took the German or Japanese carmakers to be successful in the US." Besides, he adds, "Americans prefer big cars".
The timing of Fiat's market entry, during a deep recession, is clearly not ideal either - regardless of which badge is slapped onto its cars.
Making matters worse is the fact that Fiat has never - not even during years of economic boom - enjoyed much success in the US with its funky, European motoring solutions.
There may be some appetite for its sporty Alfa Romeo brand in the US, though this marque is very small even in Europe and as such is quite marginal.
"For a company that narrowly escaped insolvency of its own just a couple of years ago, I would say that the risk is very high, and I say that independent of the current [gloomy] economic situation," observes one European automotive analyst who asked not to be named.
Fiat Group's chief executive, Sergio Marchione "would be better off focusing on Fiat's existing problems", the analyst insists.
Bringing together the two car companies' very different enterprise cultures is certainly going to be tricky.
In some ways, it seems, some of the trickiest challenges may still lie ahead.