Wednesday, September 30, 2009

Fiat Weighs Making Chryslers In Italy, Ending Magna Deal

By Gilles Castonguay
LA SPEZIA, Italy (Dow Jones)--Fiat SpA (F.MI) will let expire Magna International Inc.'s (MGA) contract to build Chrysler Group LLC vehicles in Europe and move their production to a manufacturing site in Italy that the Italian group bought at auction this summer.

"Absolutely," Fiat Chief Executive Sergio Marchionne told Dow Jones Newswires at a company event when asked if he would let expire the contract that has seen Magna build Chrysler vehicles at its Austria plant for years.

Fiat plans to invest EUR150 million during the next three years to convert the site of niche manufacturer Carrozzeria Bertone for Chrysler product assembly. The Italian group bought the defunct car plant, which has production capacity of 70,000 cars a year, at auction in August.

Magna currently builds the Chrysler 300C and the Jeep Grand Cherokee.

The move would be a continuation of Fiat's strategy to take control of Chrysler's manufacturing. Fiat has pulled Chrysler out of a number of partnerships with the likes of Japanese auto makers Nissan Motor Co. (7201.TO) and Mitsubishi Motors Corp. (7211.TO) as it sets about restructuring the third-biggest U.S. car maker, in which it owns a 20% stake.

It is unclear whether Fiat's decision was influenced by Magna's agreement earlier this month to acquire a majority stake in General Motors Co.'s European operations, which produce the Opel and Vauxhall brands. The deal has raised fears among customers of the Canadian auto-parts maker: Germany auto makers Volkswagen AG (VOW.XE) and BMW AG (BMW.XE) have expressed concern about sharing technical secrets with a supplier that now stands to become a direct competitor in making cars....More

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