Fiat Rumoured To Take Majority Shareholding in Chrysler

This week saw Chrysler repay in full the loans it received from the US and Canadian governments when the North American car industry imploded three years ago.

The return of the $7.6 billion sum is six years ahead of schedule, showing what a great job Fiat has done to turn things around — the Italian manufacturer took a stake in the US Number 3 at the same time as the bail out and placed its own senior staff into Chrysler to run things.

The loan repayment reduces the two governments’ shares in the company to 6.6% for the US and just 1.7% for the Canadian government.  Fiat’s share is currently 46%.

But the Italians have options to take up to 70% stake in the newly envigorated car giant and are rumoured to be working towards a 54% stake by the end of July.  The basis of what Fiat has to pay for Chrysler stock is determined by the US company’s performance which, in a resurgent market and with increasing sales in its domestic market, Russia, India and China, is on the ascent.  Good news for Fiat, but only if it buys in quickly, ahead of things going too well and the target stock becoming too expensive.  July is, critically, ahead of Chrysler’s next set of financial results being announced.

It’s not so long ago that Fiat itself was on its uppers.  Few would have bet on it making such an impact in the World’s largest car market so soon.

Both companies are hard at work on new small cars for the increasingly energy conscious US market, as well as integrating brands — the latter will see Lancias sold as Chryslers in the UK market.

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