Fiat Ups Stake in Chrysler To 30 Percent

April 12, 2011

Fiat has announced that it is increasing its ownership stake in Chrysler from 25 percent to 30 percent, effective immediately. This is due to Chrysler meeting the second of three performance milestones laid out by Fiat in its operating agreement with the Detroit automaker on June 10, 2009.

The new milestone is broken down into several parts. The primary component was for Chrysler to achieve more than $1.5 billion in revenue from sources outside the U.S., Canada and Mexico.

The next part is broken down into three segments. Part one says Chrysler must enter into an agreement covering at least 90 percent of Fiat dealers in Brazil to distribute Chrysler products, including rebadged Fiats. Part two involved expanding Chrysler's presence in Europe -- again either with its own brand or with cars rebadged as Fiats -- and pooling Chrysler and Fiat vehicles for European carbon dioxide ratings. Third was an agreement for compensation for the use of technology by Fiat outside of the U.S., Canadian and Mexican markets.

The final milestone, which will increase Fiat's stake to 35 percent, will be the introduction of a 40-mpg vehicle for the U.S. market. That's expected to happen next year, when Dodge unveils a new compact car that will replace the Caliber hatchback.

Currently, the UAW VEBA (voluntary employee benefits association) is the largest shareholder for Chrysler, with more than 59 percent of the company. The U.S. and Canadian government stakes account for slightly less than 11 percent.


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