Fiat set to take control of Chrysler
America’s Treasury Department announced late on Thursday that it is to sell its $500 million stake in Chrysler to Fiat.
The stake is worth six per cent of the company and will boost the Italian state-owned giant’s stake in Chrysler to 52 per cent, giving it control of the US manufacturer.
The move completes a two-year transformation for Chrysler which began in 2009 when the manufacturer filed for bankruptcy protection. It was saved by a $12.5 billion investment made by the US government as part of its rescue package for the US auto industry.
The rescue led to the involvement of Fiat, which initially bought a 25 per cent stake in Chrysler. It has been increasing this since to most recently 46 per cent.
In the last week Fiat repaid $7.6 billion in loans to the US and Canadian governments, loans which Fiat head Sergio Marchionne had previously criticized for their high interest rates.
Following the latest acquisition the US Treasury will have recovered $11.2 billion of its bailout funds.
Fiat has moved swiftly to integrate the two brands, with notably a number of Chrysler models heading for Europe wearing Fiat and Lancia badges.
Earlier this year Marchionne caused uproar amongst Italian trade unions by suggesting that in the future Fiat and Chrysler could merge to become one company with a single headquarters, possibly in America.
According to US newspaper Automotive News, Marchionne has planned a revival strategy for the two manufacturers which relies on them increasing their combined sales to 6.6 million vehicles by 2014.
Last year Fiat and Chrysler’s combined sales across the world was just over 3.6 million vehicles.
Speaking to the newspaper, Max Warburton, senior analyst at Bernstein Research in London, says that Fiat is moving far more decisively and quickly over Chrysler than was expected.
Words by: Andrew Charman