CEO Sergio Marchionne expects Fiat to boost its stake in Chrysler to 35% by late next year.
Look for Fiat to bump up its stake in Chrysler Group LLC to 35%, nearly double what it has held since the U.S. maker emerged from bankruptcy last year, says the man who serves as CEO for both automakers.
Coming out of Chapter 11, the White House approved a 20% stake for Fiat and said it could increase its holdings in 5% increments by meeting three critical objectives. “Barring unforeseen circumstances,” that will happen by the end of next year, Sergio Marchionne told analysts during a conference call to discuss the Italian maker’s third-quarter earnings.
The three hurdles for Fiat include boosting Chrysler’s global sales, something Marchionne admitted is “fraught with difficulties,” though the two partners are already working to expand worldwide distribution by, among other things, leveraging Fiat’s strong presence in markets like Latin America.
Another challenge is to bring new fuel-efficient powertrains to the U.S. market, which Chrysler will achieve by launching production of Fiat’s 1.4-liter MultiAir powertrain at a plant in Dundee, Michigan. It will be used in the Fiat 500 minicar which the partners plan to launch in December.
The third hurdle is to begin producing a vehicle for sale in the U.S. that will get at least 40 mpg. Marchionne told analysts that model will be a compact Dodge hatchback sharing components and platform with one of Fiat’s Italian products. It should reach the U.S. market by late next year.
Fiat could actually boost its stake in Chrysler to 51% once it sells off the stake taken by the U.S., Canadian and Ontario governments as part of the 2009 bailout. But Marchionne said, I’m not even playing with that notion today.”
The maker plans to follow General Motors, which is expected to stage its own IPO next month. Marchionne has indicated he won’t take Chrysler public again until sometime in 2011.