Friday, September 11, 2009

Chrysler buys out engine plant in Dundee

Firm is likely to build four-cylinder Fiat motors at the factory

Chrysler Group LLC, the automaker run by Fiat SpA since exiting bankruptcy in June, said Thursday it bought out Mitsubishi Motors Corp. and Hyundai Motor Co. stakes in a Michigan engine factory.

The U.S. carmaker took full ownership of the Global Engine Manufacturing Alliance plant in Dundee, effective Aug. 31, said a statement. Financial terms weren't disclosed. The venture, formed in 2003, has been making four-cylinder engines used in Chrysler vehicles.

Buying out the two partners clears the way for Chrysler to produce Fiat-designed engines. Fiat owns 20 percent of the Auburn Hills-based automaker and can get an additional 5 percent by making fuel-efficient engines in the U.S., under terms of Chrysler's U.S. government-aided reorganization.

Chrysler probably intends to build Fiat four-cylinder engines there, said Ed Kim, an AutoPacific analyst in Tustin, Calif. GEMA is a decent engine, but with Fiat in the picture, it makes less sense to continue the GEMA relationship, especially since Chrysler and Fiat have been pretty public with their intention to incorporate small-displacement Fiat engines....Mike Ramsey and Bill Koenig / Bloomberg News

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