It’s easy to see why Sergio is feeling mighty pleased with himself. Fiat is predicted to turn a €400 million profit this year (that’s about $556m) and Fiat is expanding in Brazil, a huge car market. So can some of this good fortune rub off onto Chrysler? Possibly 35 percent of it can, if Sergio has his way.
The Freep reports that Sergio Marchionne, CEO of Fiat and Chrysler, has told analysts that Fiat is planning to raise its stake in Chrysler from 20 percent to 35 percent by the end of next year “barring unforeseen circumstances”. A big vote of confidence, indeed. When Fiat took its initial stake in Chrysler, it was given the option to increase its stake by 5 percent tranches, provided it could meet certain goals.
- First goal: Launch the manufacture of the 1.4 liter, four cylinder MultiAir engine at Chrysler’s plant in Dundee, Michigan. This will be done by next year, says Fiat.
- Second goal: Make Chrysler produce a car in the United States, which can achieve at least 40 mpg. Marchionne is confident that will happen by next year, too.
- Third goal: Get Chrysler growing outside of the United States, particularly in South America. Fiat has a clear strategy of making Chrysler grow in Europe. Just stop calling them Chryslers. But what about South America? Theoretically, this should have been the easiest to do, given Fiat’s strength in Brazil. Marchionne says that meeting this goal is “fraught with difficulties”. He bases this on Brazil’s regulations with regards to dealer networks. Apparently, Fiat is still working on that one. The Freep says that Fiat should ask for another goal. If I were Marchionne, I’d opt for that.
So to recap, Fiat is posting good profits, is strong in Brazil, is on the way to achieving 2 of their objectives for Chrysler, and may ask for a replacement of the third goal. Good job, Mr Marchionne!
How about going all out for 51 percent? Whoa, Nelly, he says. “I’m not even playing with that notion today,” said Mr Marchionne. Probably a good idea. So what’s he playing with instead?