Chrysler to Launch New Small Dodge Model, Giving Fiat Ownership Stake

Chrysler Group LLC has announced that it will begin limited production of a new small car this year to meet the U.S. government’s requirement for Fiat S.p.A. to take a larger stake in the company.

According to Chrysler’s head of vehicle assembly operations, Fred Goedtel, the tooling for the new small car will be installed at the automaker’s Belvidere, Illinois assembly plant this coming August.

Goedtel said, “We’ll start pilots in the fall.” He also predicted that full production of the vehicle will commence something in the first quarter of 2012.

Chrysler’s head of design, Ralph Gilles, said the design work on the vehicle is already completed. Italian automaker, Fiat S.p.A. is anxious to meet the federal government’s small vehicle milestone.

Under the terms of Chrysler’s 2009 bankruptcy reorganization, Fiat was awarded a 35 percent stake in the troubled automaker in exchange for sharing its technology and management expertise. The agreement also called for Chrysler to test and commit to domestic production of a vehicle that delivers 40 mpg.

Gilles said Chrysler is “really focused” on launching the new model as soon as possible.

Fiat will buy the U.S. Treasury’s final stake in Chrysler as required in the U.S. automaker’s 2009. The purchase will increase the Italian automaker’s stake in Chrysler to 52 percent.

Fiat has already exercised its option to purchase a 16 percent stake in Chrysler after the U.S. automaker repaid the U.S. and Canadian governments last May. Domestic production of a vehicle that achieves 40 mpg is the final milestone in Fiat’s bid to take a majority stake in Chrysler.

Fiat S.p.A. CEO Sergio Marchionne predicts that his company will be awarded the final 5 percent stake in Chrysler by the end of this year.

According to Marchionne, Chrysler’s new small car, which is based on the Alfa Romeo Giulietta hatchback platform, will will be available as a sedan, not a hatchback, and will bear the Dodge nameplate. Giles said the name for the new model was decided on last week but declined to reveal it to reporters.

The new model will compete with the Chevrolet Cruze, Volkswagen Jetta, Ford Focus and Honda Civic. The new model will replace the Dodge Caliber.

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