Fiat has confirmed that it will locate American production of its 1.4 litre petrol engine for use initially in the Fiat 500 (bottom) at Chrysler Group's GEMA factory in Dundee, Michigan (top), beating off a rival plan to build it at Saltillo in Mexico.

Fiat has confirmed that it will locate American production of its 1.4 litre petrol engine featuring MultiAir for use initially in the Fiat 500 model at Chrysler Group's GEMA factory in Dundee, Michigan, beating off a rival plan to build it at the Saltillo factory in Mexico. Locating the engine's production in Mexico would have positioned the supply closer to the Toluca plant that is set to build the Fiat 500 model from the end of next year, but it was in reality never much a contest as the state-of-the-art GEMA facility provided the best long-term option.

Holding a contest did allow Fiat to extract a US4.6 million tax credit from the State of Michigan towards the US179 million cost of the project. When it comes on stream in less than a year's time Fiat will be able to raise its stake in Chrysler from 20 to 25 percent as one of the incremental 5 percent increases in shareholding involves the Stateside production of a fuel-efficient engine. Fiat is on course to actually raise it stake to 30 percent within a year, by building a 40 mpg car in the U.S. ,with the final 5 percent (for expanding Chrysler overseas) coming fairly soon afterwards if plans to boost Jeep globally as outlined in the five-year plan at the beginning of the month work to plan.

The GEMA (Global Engine Manufacturing Alliance) factory in Dundee, Michigan, was opened in 2005 during Chrysler's previous ownership by German carmaker Daimler and was a three-way  partnership that comprised of Chrysler, Hyundai Motor Company and Mitsubishi Motors Corporation. The partnership was formed to serve the needs of all three companies, with the goal of manufacturing an advanced family of fuel-efficient, cost-competitive, in-line four-cylinder gasoline engines at locations around the world. These were based on a Hyundai engine block design came in 1.8, 2.0- and 2.4-litre configurations In August of this year Chrysler bought out the stakes held by Hyundai and Mitsubishi to take full control of the Dundee plant. In reality the GEMA engine has generally received poor reviews and although its future is assured in the five-year plan's projections it is likely to receive significant revisions in the future from Fiat's engineers. The other two manufacturers will continue to build their own versions of the GEMA engine family at factories in South Korea and Japan respectively.