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Breaking news: Fiat increases ownership of Chrysler to 30%

Chrysler Corporation announced this morning that the company has reached the second of three performance requirements set by the government, allowing Fiat to raise their ownership of the Chrysler Group from 25 to 30%.


The “second” performance requirement for Fiat to acquire an additional 5% stake in Chrysler was actually a two-part goal. The first portion stated that the Chrysler Group must reach $1.5 billion in revenues from sales outside of North America after June 10th, 2009. The second portion of this requirement was that Fiat put Chrysler Group vehicles in 90% of showrooms in both Europe and Brazil, including handling the legal proceedings like emission regulations and crash safety issues. Fiat has begun rebadging models like the Dodge Journey for other markets, thus spreading Chrysler Group models through Europe and Brazil with more Chrysler Group vehicles on the way for those markets. Thanks to vehicles like the Fiat Freemont (the European Dodge Journey) and the money made by Chrysler outside of North America, the feds decided that the second performance requirement had been met so as of April 12th, 2011, Fiat SpA officially owns 30% of the Chrysler Group.

Fiat can acquire another 5% from the US government if they can meet the third performance requirement, which states that Fiat must commercially produce a vehicle in the United States that gets 40 miles per gallon with the help of Fiat technology. The closest vehicle in the company lineup to that mark is the Mexican-built Fiat 500 but should the Chrysler Group begin building a company based on the 2012 Fiat 500 with improved fuel economy, they could fulfill the third performance requirements. Once they meet that requirement, the Italian automaker will officially hold 35% of the Chrysler Group before having to purchase the additional 16% needed to own a 51% majority stake in the Chrysler Group.

Fiat and Chrysler CEO Sergio Marchionne had planned to have Fiat own 51% by the end of 2011 but there has been news recently that the 51% goal may not happen until 2012. The biggest downside to waiting is that if Fiat buys the additional 16% in 2011, it will only cost them around $1.14 billion but if they have to wait until 2012, that price will be in the range of $1.36 billion.

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