Fiat and Chrysler have entered into a strategic alliance following the decision by the American firm to file for bankruptcy protection.
Chrysler entered discussions with Fiat over a year ago and the deal has been expected for some time.
Through the agreement, Chrysler says it will now be able to expand its product range and create more environmentally-friendly cars.
Under the alliance, Fiat will hold a 20 per cent stake in Chrysler, the Voluntary Employee Beneficiary Association will own a 55 per cent share, and the US and Canadian governments will own proportionate shares of a 10 per cent stake.
Fiat will be able to increase its ownership stake by an additional 15 per cent in three stages by meeting different criteria: