Fiat and Chrysler join forces

Fiat has agreed to take up a 35 per cent stake in the US car-maker Chrysler in a deal aimed at tackling the current economic downturn.

The deal will see the Italian firm receive a stake in Chrysler, who in return will gain access to Fiat's fuel-efficient vehicle technologies.

The car manufactures will hope the deal will help them survive the current crisis in the sector.

Chrysler is the third largest car producer in the United States but recently required a billion dollar government bailout to avoid bankruptcy.

In a joint statement Fiat chief executive Sergio Marchionne described the deal as "a key milestone in the rapidly changing landscape of the automotive sector".

While Chrysler chairman Bob Nardelli said the agreement created the potential for a "powerful, new global competitor".

The deal will now need to be approved by a number of regulatory authorities including the US Treasury.