Fiat to Begin Production of 40-MPG Vehicle Needed for Additional Chrysler Stake

Fiat will begin testing the 40-mpg Alfa Romeo-based small car that will allow it to take ownership of the final piece of Chrysler held by the U.S. Government by the second half of this year, according to Bloomberg. After meeting all the other criteria established during the American automaker’s bankruptcy reorganization in 2009, Fiat is now working to meet the final requirement to acquire an additional five percent of Chrysler. This comes after the $5.1-billion federal loan Chrysler repaid last month and the $500-million payment Fiat made for the U.S. Government’s remaining interests in Chrysler earlier this month.

The new car will be sold under the Dodge brand and will be based on the Alfa Romeo Giulietta, which might solve the mystery of the one we caught in Michigan last month. Fred Goedtel, head of Chrysler’s assembly operations, said that the tooling to build the small Dodge-branded car will be installed in the company’s Belvidere, Illinois assembly plant in August and that official production will begin “sometime” in the first quarter of 2012.

The car’s design has been finalized, according to head of Chrysler design Ralph Gilles, and a name was decided on last week, but both are being kept under wraps for the time being. Speaking about the new vehicle, Gilles said, “The company is really focused on it.” The new Alfa-based car from Dodge should get at least 40 mpg, possibly with the help of Fiat’s MultiAir technology.

Once Fiat successfully completes the $500-million deal to buy the U.S. Treasury Department’s final cash-purchasable stake, the Italian automaker will raise its stake in Chrysler to 52 percent on a fully diluted basis. Fiat and Chrysler CEO Sergio Marchionne said that he expects Fiat to acquire the final five percent from the U.S. government by the end of the year, eventually raising Fiat’s stake to 57 percent.

Source: Bloomberg

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