The U.S. Treasury will sell its remaining 6 percent stake in Chrysler to Italy’s Fiat S.p.A. as it exits the smallest of the U.S. “Big Three” automakers, almost two years after its bankruptcy.
With this share purchase, Fiat and its CEO Sergio Marchionne will have majority ownership and control of the Auburn Hills, Mich.-based automaker with a 52 percent stake.
According to the company, Fiat will also have the option to purchase portions of shares of Chrysler currently held by the United Auto Workers union. It is also reportedly in talks with the Canadian and Ontario governments regarding purchasing their combined 1.7 percent share of the company.
Now that Chrysler is again a viable and profitable company and the U.S. government is no longer propping up the company by being a shareholder, its success may validate the much-maligned federal bailout of the auto industry in 2008. “As Treasury exits its investment in Chrysler, it’s clear that President Obama’s decision to stand behind and restructure this company was the right one,” said Treasury Secretary Timothy Geithner in a statement.
Exiting Europe
With Chrysler and Fiat operating more like one company, Marchionne has pulled back Chrysler’s ambitions in Europe and stopped selling all Chrysler vehicles in Europe.
According to the company, Fiat will convert all Chrysler dealers in Europe to Lancia-branded dealers. Lancia is a brand owned by Fiat.
“Lancia has a higher awareness in Europe, while for the U.S. and the rest of the world, Chrysler is a more global brand,” said Olivier Francois, a Fiat executive, in an interview on Bloomberg.
Chrysler has historically trailed its rivals Ford and General Motors in European sales. It sold its European operations to France’s Peugeot in 1978 as a way to raise cash, but revived its European business after its merger with Germany’s Daimler AG.
The Turin, Italy-based Fiat will continue to sell Jeep SUVs alongside Lancia cars in the new dealerships. Jeep has a deeper brand awareness globally than other Chrysler brands.
In the first quarter, Chrysler made $116 million in profit.
