By on January 10, 2011

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 %
Fiat 25.0 %
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.

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13 Comments on “Amazing Inventions: Fiat Produces Engine That Increases Ownership In Chrysler...”


  • avatar
    MrFixit1599

    So why not just start making the 500 for the USA in the USA?  That would get them another 5%.

  • avatar
    ez3276

    Where do the next two 5% shares come from? Only the UAW/VEBA has 10% to give by itself.

  • avatar
    Autojunkie


    Chrysler would be dead and gone if not for Fiat. I didn’t see anyone else, capable, stepping up to the plate to take it on.

  • avatar
    cmoibenlepro

    [quote]“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.[/quote]
    Does Chrysler plan to introduce an hybrid car?

  • avatar
    Robbie

    Does anyone among the B&B have any insight how viable Chrysler is at this point..?

    • 0 avatar
      Educator(of teachers)Dan

      Other than my sincere hopes and wishes cause I want to see the 300, Charger, and Challenger continue ad infinitum?  No I have no insight.  BTW I realized a few weeks ago how beautiful I think the old Crossfire is and how badly I want one.

    • 0 avatar
      jrlombard

      Good news Dan, they’re relatively ubiquitous and wicked cheap. A buddy has an SRT version. It’s rattly, creaky, but decently quick.

    • 0 avatar
      PeteMoran

      Fiat itself is a scratchy proposition.
       
      Last I read they were on track to minimise last year’s disastrous losses but I’ll admit it’s not a company I follow.

  • avatar
    pgcooldad

    Toyota, Mercedes, Huyndai, Volkswagen are really good inventors too. They get millions upon millions from local and state governments in tax breaks, training loans and infrastructure.
    The millions they save from not having to spend all that money goes to their bottom line and builds value for the company just like … ohhh Fiat.

  • avatar
    djn

    @MrFixit,
    Producing in Mexico gets them duty free access to the Brazilian market where they are #1 in sales. Mexico is in NAFTA so ditto for USA and Canada.

  • avatar
    jimboy

    A couple of years ago, no one would touch Chrysler with a 10′ pole. It was dead in the water, all ‘experts’ agreed. So stupid Fiat steps up to the plate and says “we can make this company work, but what’s in it for us?” Everybody laughed, and said it would never work. Now it’s starting to work, and everyone is saying “what did Fiat do to deserve this?” STFU.

  • avatar

    Here is a novel idea that would help everyone not only the car makers. How about we stop getting into free trade agreements and start going for balanced trade agreements. If China wants to sell us a million cars  they have to buy a million from us. The same should go for everything else too. If they don’t well let them keep there cars and we keep ours. If we started to demand balanced trade two things would happen. There would be one hell of a lot more jobs here and  we could wipe out trade deficits. Just think if we can’t get products made by slave labor and sweat shops overseas we might have to make it here.  The foreign countries couldn’t cry foul because we are not putting on tariffs just asking for a fair shake.

  • avatar

    Sure. That’ll work.
     
    Let’s start with bananas.
    Then move to something bigger, like oil.
    And if Boeing wants to sell planes abroad, we need to import Yaks and Ilyushins first.


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