Fiat Expected to Raise Chrysler Stake to 30% in Coming Weeks

Fiat is planning to increase its share of Chrysler to 30 percent in the next few weeks, according to some inside sources that were quoted by Bloomberg news in a recent article. The Italian carmaker that currently has a 25 percent stake in Chrysler will get an additional 5 from the US government, as it clears two performance criteria.

As you may already know, the first condition is that 90 percent of Fiat's Latin American dealers must offer Chrysler vehicles as well. To satisfy this requirement, Fiat CEO Sergio Marchionne plans to sell Chrysler models under the Fiat badge in Brazil, Latin America's largest market, where the Italian brand holds the number one spot. At present, Fiat has 550 dealerships in Brazil of the total 700 in Latin America, while Chrysler only has 35.

Chrysler will soon complete a dealership agreement outside North America, with “Brazil ready to start,” Marchionne said March 30 at Fiat’s annual meeting in Turin, Italy, without providing details.

The second demand from the US government is for Chrysler to have $1.5 billion in revenue outside North America, a condition Fiat has already met. The extra 5 percent will be given only after the Treasury Department is satisfied that the two criteria have been met.

The Italian carmaker obtained a 20 percent stake in Chrysler in June 2009, as the company emerged from bankruptcy. Fiat agreed to share technology, systems and management with the American carmaker in exchange for an initial 20 percent holding. The stake to 25 percent in January, after Chrysler received regulatory approval for an engine based on the Fiat FIRE family for US production.

Marchionne’s aim is to reach 51 percent by the end of the year. The first 35 percent will be obtained under the performance criteria system, but the other 16 percent will have to be paid for.