Fiat to pay $1.3 bil. to up stake in Chrysler

Logo for Italian carmaker Fiat displayed on a Fiat 500 car

STEVE CHIOTAKIS: Italy's Fiat today confirmed it'll buy into more of American carmaker Chrysler -- putting its stake at 46 percent.

Marketplace's Stephen Beard is with us live from London and has more on that story. Hi Stephen.

STEPHEN BEARD: Hello Steve.

CHIOTAKIS: So why is Fiat doing this?

BEARD: Well, Fiat already has 30 percent of Chrysler which it acquired since the company emerged from Chapter 11 two years ago. Fiat's running Chrysler at the moment, and it wants to own it, as you say, before the end of the year. Fiat wants to become a much bigger company, and it wants greater access to the all important U.S. market where historically, Fiat hasn't had much of a presence.

CHIOTAKIS: So, what is it going to mean if Chrysler is Italian-owned?

BEARD: Well, Chrysler would undoubtedly benefit from Fiat's expertise in making smaller economy cars. Here's David Bailey of Coventry University business school.

DAVID BAILEY: This could actually help Chrysler in the sense that they've had a pretty poor track record on developing fuel-efficient small cars. Chrysler can't really do that on its own. It needs another partner whether to develop cars with jointly, or whether it has a bigger owner with deeper pockets.

CHIOTAKIS: So is it a foregone conclusion then, Stephen? Will Chrysler be taken over?

BEARD: David Bailey thinks so, yes. Because the deal makes good industrial and economic sense, he says. He says it's difficult to see Chrysler surveying on its own. But this going to be a bit of a psychological blow for the U.S. -- one of the big 3 car makers falling under the control of a foreign company.

CHIOTAKIS: Marketplace's Stephen Beard in London. Stephen thanks.

BEARD: OK Steve.

About the author

Stephen Beard is the European bureau chief and provides daily coverage of Europe’s business and economic developments for the entire Marketplace portfolio.

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