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Chrysler's sales push outside the NAFTA area
will be driven in particular by the off-road
Jeep brand (above, new Patriot facelift)
which Fiat hopes can reclaim its lost ground
in Europe as well as make strides into new,
and potentially lucrative, markets such as
China. |
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Fiat has raised its
ownership of the Chrysler Group by 5 percent to 25 percent
after completing the first of three steps laid down
under the U.S. and Canadian governments' bailout of the
carmaker in 2009. Fiat had been given an initial 20 percent stake
in the failed carmaker when it exited the Chapter 11
procedure.
As outlined in its June 10, 2009 Operating Agreement,
Chrysler Group has issued an irrevocable commitment
letter to the U.S. Treasury stating that the company has
received the appropriate governmental approvals and will
begin commercial production of the Fully Integrated
Robotized Engine (FIRE) in its Dundee, Mich., facility.
As a result, Fiat’s ownership interest increased
automatically under the terms of the Operating
Agreement.
The ownership interests of the Chrysler Group is now
made up of the UAW VEBA (63.5 percent), Fiat (now has 25
percent), the U.S. Treasury holds 9.2 percent while the
Canadian government holds the balance (2.3 percent).
The first North American
application of the 1.4-litre FIRE engine with MultiAir
Technology will be in the U.S. market specification Fiat
500, to be built in Mexico, which the Chrysler Group
will begin to distribute soon through newly appointed
dealers.
Fiat has the opportunity to further increase its
ownership in Chrysler to 35 percent, in 5 percent
increments, through two additional performance-related
milestones. The first milestone relates to revenue and
sales growth outside of the NAFTA region. The second
milestone relates to commercial production in the United
States of a 40-mile-per-gallon vehicle based on Fiat
platform technology.
None of the steps Fiat
has to achieve to raise its stake to 35 percent are
particularly arduous, although attempting to sell any of
the current portfolio of Chrysler Group models outside
the NAFTA area will be a more difficult proposition as
they fall well short of international automotive
standards. However realising this target will be driven
in particular by the Jeep brand, the only division
within the Chrysler Group that retains any international
value, and Fiat hopes the off-road vehicle manufacturer
can reclaim lost ground in Europe as well as make
significant strides into new and potentially lucrative
markets such as China. Fiat then also has the option to
raise its minority 35 percent stake in the Chrysler
Group to a controlling 51 percent (by taking a further
16 percent) once state government loans have been paid
off.
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