Fiat is warning it could walk away from its alliance with Chrysler - which has helped the US maker develop new products like the Jeep Cherokee.

Chrysler Group’s new IPO filing offers some deep insight into the turnaround at a company that has made some significant gains since emerging from Chapter 11 bankruptcy just four years ago but which still has a number of serious challenges to deal with as it continues to merge its operations with those of Italian-based automaker Fiat SpA.

Among other things, the filing itself reveals some of the plans in the works for new vehicles aimed at filling the numerous gaps in the Chrysler line-up, including a “first ever” small crossover-utility vehicle now under development.

But the filing also raises the possibility that Fiat could abandon its alliance with the U.S. automaker, a relationship it launched in 2009 after Chrysler emerged from bankruptcy with the help of billions of dollars in federal aid.

“Fiat has informed us that it is reconsidering the benefits and costs of further expanding its relationship with us,” Chrysler warned in its S-1 filing with the U.S. Securities and Exchange Commission.

Chrysler announced its planned stock offering late Monday after a long debate over whether to go public again – for the first time since the company merged with Germany’s Daimler-Benz in 1998 – or complete a takeover by Fiat. But the latter approach has been put on hold due to an ongoing dispute over the value of shares held by the United Auto Workers Union’s retiree health care trust, or VEBA.

(For a closer look at the Chrysler IPO plan, Click Here.)

Fiat currently holds a 58.5% stake in Chrysler while the union retains a 41.5% stake. Under terms of the 2009 federal bailout of the U.S. automaker, the Italian automaker has the right to purchase the remaining shares in 3.3% tranches. But with a wide gap between what the two sides say the remaining shares are worth, and the dispute being analyzed by a Chancery Court in Delaware, the final resolution could be handed to Wall Street.

Maybe.  “Although a registration statement has been filed there can be no assurance that an offering will take place,” Fiat cautioned in a statement issued from Italy today.

With Sergio Marchionne, CEO of both Fiat and Chrysler hinting that the IPO could take place during the first quarter of 2014, reports from Europe suggest that the executive is worried the stock offering would complicate his plans to merge the companies into one.

That is a critical step, to Marchionne, in creating a worldwide player that could stand up to even larger global powerhouses such as General Motors, Toyota and Volkswagen AG. And the partners are warning that Fiat might now reconsider the merits of going forward with the Trans-Atlantic alliance.

(GM regains investment grade rating after big stock buyback. Click Here for the details.)

The Fiat-Chrysler partnership was intended to address weaknesses both makers have to resolve in the increasingly global auto industry.  Chrysler, for example, is a largely North American-focused manufacturer with a relatively limited line-up of products compared to cross-town rivals GM and Ford.  Fiat, meanwhile, remains centered in Europe – which is in the midst of its worst automotive downturn in decades. It has a modest stakes in South America. But both companies desperately need to expand their presence in key emerging markets, such as China and Russia.

They also need to rapidly increase their economies of scale in order to improve margins and boost their bottom-line performance. The lengthy IPO filing reveals several steps being taken to accomplish that goal. Chrysler has been rapidly reducing the number of underlying platforms it uses as it merges product development with Fiat. The current 11 “architectures” will be reduced to nine next year even as Chrysler expands the number of key segments it competes in from four to six.

A significant example is the Compact US Wide, or CUSW, platform that was developed jointly by the two makers.  Among other new models, it serves as the foundation for the new Dodge Dart as well as the 2014 Jeep Cherokee crossover-utility vehicle. Meanwhile, a version of the platform also will be used for a variety of Fiat models.

A report in USA Today finds buried in the Chrysler IPO hints at other products in the works, notably mention of a “first ever” small crossover that also will share its platform with a new Chrysler small car.  The document does not reveal which Chrysler brand or brands will get the new CUV.

Chrysler has been delivering a consistent string of monthly sales gains since emerging from Chapter 11 protection and the IPO document also reveals that its dealers are sharing in the upturn. In 2009, just 70% of those retailers were earning money. But as of mid-year 2013, the filing says 88% were in the black.