Fiat to Up Ownership of Chrysler to 52 Percent, Take Controlling Interest

Today, Fiat announced that it would be spending an additional $500 million to buy the last of the U.S. Treasury’s shares in Chrysler, which will give it a controlling 52-percent share in the Pentastar company. Just a week ago, Fiat pumped $1.3 billion into Chrysler, upping its stake from 30 to 46 percent of the automaker.

When the deal is approved by the appropriate federal regulatory agencies, Fiat will become the fourth body to control Chrysler in the past 10 years. None of these owners saw success with Chrysler: Daimler paid $36 billion in its merger/takeover of Chrysler in 1998, and sold it for $7.4 billion in 2009. Cerberus, the private equity firm that acquired Chrysler in 2009, oversaw the automaker’s descent into bankruptcy. The U.S. government, which then took over Chrysler, says that it will likely have lost $1.3 billion when it finally ceases to have any ownership in the company this year. (Some would argue, of course, that $1.3 billion was a fair government price to pay for keeping a major American industrial producer afloat. Others, maybe not.)

By the end of the year, Fiat may up its stake in Chrysler even further, to 57 percent. As of now, the second-largest shareholder in Chrysler is the United Auto Worker’s benefits fund, which is called the VEBA; it has 41.5 percent of the company.

Fiat’s CEO, Sergio Marchionne, also told reporters of an ambitious plan to sell 6.6 million cars worldwide between the two corporations in 2014. The combined sales for all of the Fiat- and Chrysler-owned brands globally in 2010 was 3.6 million, casting a dubious light on Mr. Marchionne’s claim. Fiat’s launch in the U.S. with the new 500 has been less than a smash hit; the company had previously targeted 50,000 sales for 2011, and revised that number downward to 45,000 a few weeks ago. To date, just 3141 examples of the stylish hatch have been sold, and we expect total sales for 2011 to fall well short of the hoped figure. BMW’s Mini line—which consisted of the hatchback, convertible, and Clubman at the time—racked up 45,644 U.S. sales in 2010.

We’ll bring you more news on Fiat’s takeover of Chrysler as it develops.

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Chrysler Asks Fan to Show Their Most Insanely Tuned Mopars in the Mopar Top Eliminator Competition

Mopar Top Eliminator winner, 2007

For the fifth year, Chrysler’s Mopar division is challenging owners of Chryslers, Dodges, and Plymouths of all vintages to produce highly modified masterpieces for its Top Eliminator competition. While “Top Eliminator” sounds like it could be a new, testosterone-laden trim level for the Grand Caravan, it’s actually a serious contest for the company: The most spectacular entries will be taken to Vegas in the fall, where they will be featured on the Mopar stand at the annual SEMA show. After that, one winner will be picked at each of three events by panel of Mopar representatives. The first gathering is coming up soon—on June 4th and 5th—at the 27th-annual “Midwest Mopars in the Park,” in Farmington, Minnesota. The next winner will be chosen at the Carlisle Chrysler Nationals in Carlisle, Pennsylvania, taking place from June 8th to the 10th. And the last one will be selected among the many Mopars that will be rumbling through Royal Oak, Michigan on August 20th during the Woodward Dream Cruise.

Past winners have mostly been muscle cars, including a 1970 Challenger, a 1968 Dodge Coronet, a 1970 Plymouth Super Bee, a 1971 Plymouth GTX, as well as a 2006 Dodge Charger SRT-8. Sadly, no Grand Caravan has been crowned Top Eliminator, though we think a turbocharged, stick-shifted Caravan from the 80s would win over the hearts and minds of any true fans of Mopar muscle.

Chrysler’s sponsorship of this program is no surprise, considering the important role that Chrysler’s storied aftermarket division now plays in the marketing of Chrysler’s new cars. Mopar has been very busy lately, making nifty add-ons for Challengers, an awesome pickup-truck conversion for the Jeep Wrangler, and a go-anywhere pack for Ram trucks. As we reported a few weeks ago, Mopar is giving customers of its 2012 Chrysler 300 a choice of no fewer than eight grille options and six accessory wheel and tire packages.

Top Eliminator is the sort of program we love, encouraging real passion for automotive ownership and personalization. Kudos to Mopar for shining the spotlight on its most creative and loyal customers. Check back this fall to see the winning vehicles.

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Chrysler Repays Debt to U.S. Government with New Loans, Clearing the Way for Fiat Takeover

May 24, 2011 at 4:10pm by Justin Berkowitz

Chrysler has just announced that earlier today, it repaid the entirety of the company’s outstanding loans to the U.S. and Canadian governments. The company made payments of $5.9 billion and $1.7 billion to the U.S. Treasury and to Export Development Canada, respectively, retiring the loans made to Chrysler during its bankruptcy in June 2009. This means the U.S. government no longer has a stake in Chrysler.

We should bear in mind, however, that Chrysler didn’t take $6.7 billion from an enormous piggy bank (it would need to hold 67 pallets of cash, by our estimation). While the company did draw the money from liquid reserves (the corporate equivalent of a piggy bank), it recently secured $7.5 billion in new loans from banks, bonds, and an infusion of cash from Fiat. All it took in return for Fiat’s $1.3 billion was an additional 16-percent stake in the company, meaning Fiat now owns 46 percent of Chrysler.

The most important consequence of this news, however, is that it clears Fiat to take a majority stake in Chrysler. One of the conditions of the big Chrysler bailout was that the loans had to be repaid before Fiat could increase its share in Chrysler to 51 percent. With this in mind, we expect Fiat to finish its takeover of Chrysler soon, and probably even before an initial public offering of shares in Chrysler to the public.

Tags: Chrysler |

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Chrysler Cancels B-segment Car for U.S., Chrysler-Badged Civic Rival Now Very Unlikely

April 21, 2011 at 2:20pm by Justin Berkowitz

It was in November 2009 that Sergio Marchionne and the rest of the Chrysler/Fiat politburo detonated a PowerPoint explosion detailing the next several years’ worth of product plans for the new Fiat and Chrysler family. Since then, the two companies have toed the line and insisted that the full array of vehicles is still on track for the originally scheduled launches; this included a Chrysler-badged subcompact and compact for the U.S. market.

Now, however, the company is tweaking the strategy. In speaking with Chrysler/Lancia brand president Olivier Francois at this week’s New York auto show, we learned that the plan to launch a B-segment Chrysler here—something about the size of a Honda Fit or Ford Fiesta—is as good as dead. The vehicle would have been a rebadged version of the newly launched Lancia Ypsilon; the Yp is closely related to the Fiat 500, though, and Francois says the company sees the two as being too similar to offer both here.

There also were plans to sell Americans a compact sedan wearing the Chrysler wings, something along the lines of the Honda Civic or Ford Focus. This, too, looks to be a no-go. Francois explains that the project is “under review” indefinitely, and that only one American brand—Dodge or Chrysler—would end up with the car. Ralph Gilles confirmed that Dodge will definitely get a compact car to replace the Caliber, meaning the music has stopped and the Chrysler brand likely will be left without a chair. On the upside, Gilles promises that the Dodge sedan will be “very competitive,” especially in the fuel-economy department, and that it will draw on Fiat’s expansive bin of efficient four-cylinder engines.

Tags: 2011 New York auto show, auto shows, Chrysler, Dodge, Lancia |

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2012 Chrysler 300C SRT8 Debuts @ 2011 New York Auto Show – Video

April 26, 2011 at 2:48pm by Car and Driver Tags: 2011 New York auto show, American, auto shows, Chrysler, Chrysler 300, Chrysler 300C SRT8, Chrysler SRT, New York Auto Show, sedan, video |

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