Fiat could increase stake in Chrysler within weeks

Fiat and Chrysler CEO Sergio Marchionne wants Fiat SpA to increase ownership of the Chrysler Group from 25 to 51% by the end of 2011 and if new reports are correct, Fiat could increase their stake in Chrysler by 5% in the coming weeks.

The US Government obtained a portion of the Chrysler Group as a portion of the controversial “bailout” but when Fiat SpA showed interested, the feds set up a deal with the Italian automaker to unload their share in Chrysler. Fiat received 25% at the time of the merger with another 10% promised if the new company could meet a trio of goals set by the government. The first 5% comes from a set of requirements; Chrysler Group must reach 1.5 billion in revenue outside of North America and 90% of Fiat’s Latin American dealerships must offer Chrysler vehicles. According to Automotive News, inside sources claim that the 1.5 billion in revenue has been achieved and with the rebadging of Chrysler vehicles as Fiats being sold at Latin American dealerships, the first 5% might be coming soon should the feds find that these two goals have been met.

The second 5% coming from the federal government is based on Fiat’s ability to offer a model in the US market that gets at least 40mpg. The 2012 Fiat 500 is the first step towards that goal, with the sporty compact offering 30/38 and with plenty more green technology available from the European market 500s, we could soon see a Fiat topping 40mpg in the US. The problem is that they would need to come up with this 40+ mpg vehicle soon in order to reach Marchionne’s goal of 51% by the end of 2011.

Once they have reached that goal and received that portion of ownership, Fiat SpA will officially own 35% of the Chrysler Group. From there, to hit their goal of 51% Fiat will have to pay cash for the final 16% needed which will cost the Italian company 1.14 billion dollars if they make the purchase in 2011 or 1.37 billion if they hold off until 2012.

[Pictured above, Fiat/Chrysler CEO Sergio Marchionne with Dodge brand CEO Ralph Gilles(Left) and Fiat brand CEO Laura Soave (Right). Ram brand CEO Fred Diaz is also in the background.]

Source: Automotive News

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