Chrysler to begin test production of Dodge small car later this year

Article by Christian Andrei, on June 25, 2011

Test production will start in the second half of this year for the small Dodge brand car, according to Chrysler Group LLC. This car is expected to trigger the U.S. government requirements to increase the ownership stake of Fiat S.p.A.

Fred Goedtel, head of Chrysler's vehicle assembly operations, said this August, tooling for the small Dodge brand car will be installed at Chrysler's Belvidere, Ill., assembly plant.

He added that pilots will start in the fall and that production will officially start in the first quarter. Ralph Gilles, head of Chrysler design, said that the company has already accomplished the design work on the car. He said that Chrysler is “really focused” on this car, which is expected to trigger the final government ownership milestone.

Fiat is quickly moving to consolidate control over Chrysler. Fiat is purchasing the final stake owned by the U.S. Treasury Department in Chrysler that was included in the bankruptcy reorganization of Chrysler in 2009.

From this purchase, Fiat will be able to raise its stake to 52%. For Fiat to gain another 5% stake, Chrysler would have to conduct tests and commit to producing a vehicle in the U.S. that achieves 40 mpg.

Fiat’s deal with the U.S. and Canada allowed it to gain up to 35% in Chrysler without having to pay cash in exchange for providing management experience and technology to Chrysler.

In addition, Fiat was tasked to complete different performance milestones. The final item on this list is the 40 mpg vehicle. Furthermore, Fiat has exercised an option to buy 16% of Chrysler after the U.S. and Canadian government loans were repaid in May.

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