Fiat reportedly set to raise stake in Chrysler

Sergio Marchionne, CEO of Fiat and Chrysler, has reportedly indicated that the Italian automaker is interested in raising its stake in the Auburn Hills automaker. Currently, Fiat owns 20 percent of Chrysler and it wants to raise that figure to 35 percent by the end of 2011. Fiat has had a strong third quarter, earning around $236 million.

According to the Detroit Free Press, in order to increase its ownership stake by 15 percent, Fiat has to hit three specific targets that are worth five percent apiece. The first goal is to launch the 1.4-liter MultiAir engine being built at Chrysler's plant in Dundee, Michigan. That engine is slated to go into the upcoming Fiat 500.

Second on the task list is for Chrysler to produce a car that achieves 40 miles per gallon. Marchionne believes this vehicle will enter production towards the end of 2011. It will be a compact hatchback branded as a Dodge.

The final five percent will be earned when Chrysler increases its sales outside of the US. Specifically, it will focus sales efforts to increase volume in South America. Per Marchionne, this last objective will prove the most difficult because of the way Brazil regulates its dealer networks. In fact, Fiat is looking for alternative ways to earn the final five percent stake it seeks from Chrysler.

Thirty-five percent is a hefty piece of the Chrysler pie, but much more can be made available in the not-too-distant future. Once Chrysler is able to repay both the Canadian and U.S. governments for the $8 billion in loans it received, the Italian automaker will be able to raise its stake to 51 percent.

[Source: Detroit Free Press | Image: Massimo Pinca/AP]

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