Want to know how to get a good chunk of the Detroit 3, no money down? Easy: Today, Fiat increased its ownership of Chrysler from 20 percent to 25 percent. What did they pay for it? Niente. Fiat received the extra shares “upon the Company’s achievement of the first of three performance-related milestones,” as a Chrysler Group LLC press release proclaims. And what is that milestone? They started making an engine.
“An irrevocable commitment letter” was sent “to the U.S. Treasury stating that the Company has received the appropriate governmental approvals and will begin commercial production of the Fully Integrated Robotized Engine (FIRE) in its Dundee, Mich., facility. As a result, Fiat’s ownership interest increased automatically under the terms of the Operating Agreement.”
That was easy!
They didn’t invent a new engine. They moved the production of the engine that will go into the Fiat 500 to an American factory. Where it is highly tax efficient, even if it otherwise makes no sense to make Fiat 500 engines there.
Says the Freep: “While Chrysler is assembling the 500 minicar at its plant in Toluca, Mexico, the engines are produced at Chrysler’s newest and most efficient engine plant in Dundee. Chrysler employs 274 workers in the Dundee plant, which opened in 2005.” Wow.
So now, the ownership of Chrysler is as follows:
|UAW VEBA||63.5 %|
|U.S. Treasury||9.2 %|
|Canadian Governments||2.3 %|
If Fiat wants more shares, it has to fulfill the following extremely tough milestones:
- “The first milestone relates to revenue and sales growth outside of the NAFTA region.” That will get them 5 percent.
- “The second milestone relates to commercial production in the United States of a 40-mile-per-gallon vehicle based on Fiat platform technology.” That will get them another 5 percent.