Will 1+1 = 2 For Chrysler

Italian automaker Fiat, Chrysler LLC’s next best hope for survival, announced today a level of industrial debt three times higher than even its own forecasts then slashed its profit outlook for 2009 by a third. Fiat just this week agreed to acquire a 35% share in Chrysler, a move that was supposed to make Fiat stronger by giving them a broader industrial base and a U.S. market share, and make Chrysler stronger by  giving the ailing U.S. company access to Fiat’s innovative (and smaller) fuel-efficient car platforms.

Now the deal is beginning to look a lot like the last ditch effort to save K-mart by tying it to the struggling Sears Corporation. If you tie two struggling auto makers together do you get one healthy one? That remains to be seen. Fiat’s no-cash bid for Chrylser — in exchange for Fiat giving Chrysler access to its small car technology and platforms — is contingent on Chrysler winning another $3 billion in U.S. government funding. Chrysler already has received $4 billion in such funding.