Fiat tractors are parked outside the stock exchange in Milan, Italy. Fiat split its industrial vehicle business from its auto making unit on Monday in a move aimed at giving birth to a global automotive company with Chrysler LLC. The historic shift was complete with Fiat Industrial’s debut on the Milan Stock Exchange. Fiat Industrial includes CNH agriculture and construction vehicles and Iveco trucks.ap photos
MILAN — Fiat CEO Sergio Marchionne advanced his ambitious plan to create a global carmaker on Monday. He achieved his goal of splitting Fiat’s farm and truck businesses from autos then took immediate aim at the next prize: gaining a majority share at Chrysler.
The move comes as Chrysler sales have risen faster than the U.S. industry clip, and it prepares to roll out new models on smaller Fiat platforms and more fuel-efficient engines. Success is helping set the stage to make a move to consolidate Fiat’s 20-percent stake to a 51-percent majority in Chrysler more quickly than many had anticipated.
“I think it is possible, I don’t know whether it is likely, but it is possible that we go over the 50 percent if Chrysler decides to go to the market in 2011,” Marchionne, who is also CEO of Chrysler, told reporters at the stock exchange as Fiat Industrial began its trading life as an independent entity.
The Italian automaker took a controlling 20-percent share in Chrysler LLC in 2009, after Chrysler emerged from bankruptcy, in exchange for small-car and clean-engine technology, as well as management know-how. It expects to meet three milestones, each yielding another 5-percent share, to raise its total share to 35 percent this year.
To get to 51 percent, Fiat would have to repay Chrysler’s loans from the U.S. and Canadian governments.
UBS analyst Philippe Huchois said that is “very likely,” anticipating repayment as early as the second quarter. That, he said, would allow Fiat to buy the 16-percent share it needs at a discount over what it will likely go for once Chrysler resumes public trading.
Huchois said it would be contingent on Chrysler’s refinancing a portion of the $6.9 billion it owes to the U.S. and Canadian governments, which would create savings in long-term interest. He expected Chrysler would refinance all but $2 billion, which comes due in October.
“They need to find banks willing to lend money,” Huchois said, adding that the improving U.S. auto market and Chrysler sales should help prospects.
Chrysler sales have been boosted by new Jeep Grand Cherokee and other models.