Chrysler Group LLC, 53.5% owned by Italy’s Fiat SpA (FIATY), plans to invest $72 million for modernizing its Toledo Machining Plant near Perrysburg in Ohio. The company intends to install new equipment at the plant that will produce new-generation torque converters and steering columns.
Currently, the facility manufactures steering columns for 8 assembly plants, including one in nearby Toledo. It also produces torque converters that help in changing gears by itself with the help of automatic transmissions..
The investment will give way to 640 hourly and salaried jobs at the plant. The plant had employed about 840 people till last month. The company will start work at the plant this year, which will be completed by early 2013.
Last month, Fiat raised its ownership interest in Chrysler from 46% to 53.5% by purchasing U.S. Treasury’s 6% ownership interest for $500 million and Canadian government’s remaining 1.5% ownership interest for $125 million.
The Italian automaker expects to gain an additional 5% stake in Chrysler during the fourth quarter in return for building a fuel-efficient car for the latter.
As part of Chrysler’s bailout deal in 2009, the U.S. Treasury bestowed managerial control of the company to Fiat as well as a 20% ownership. Under the deal, Fiat was allowed to increase its stake in Chrysler to 51% and beyond.
Fiat can also exercise an option to buy up to 40% of the interest held by VEBA starting in July 2012 and through the end of 2016. The company can acquire up to 8% of the VEBA's ownership interest in Chrysler every six months.
Chrysler posted a profit of $181 million in the second quarter of the year compared with a net loss of $172 million in the same quarter of 2010 (excluding special items).
Net revenues soared 30% to $13.7 billion during the quarter, driven by increased volumes and positive pricing and mix, which was attributable to the 16 all-new or significantly revamped products. The company’s worldwide sales rose 19% to 486,000 units during the quarter.
Chrysler’s domestic rival General Motors Company (GM) posted a profit of $2.54 billion or $1.54 per share in the second quarter of the year, which almost doubled from $1.33 billion or 85 cents per share in the same quarter of 2010.
Meanwhile, its other rival, Ford Motor Co. (F) posted a profit of $2.64 billion or 65 cents per share in the same quarter, which was a $67 million or 2.5% decline from $2.70 billion or 68 cents per share in the corresponding quarter of 2010.
FORD MOTOR CO (F): Free Stock Analysis Report
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GENERAL MOTORS (GM): Free Stock Analysis Report
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