May 24, 2012 / 7:30 PM / in 6 years

Fiat may build Mazda cars at Fiat, Chrysler plants

BELVIDERE, Illinois (Reuters) - Italian automaker Fiat SpA FIA.MI is open to expanding its newly announced partnership with Mazda Motor Corp (7261.T) and building the Japanese automaker’s vehicles at Fiat and Chrysler Group LLC factories worldwide.

Sergio Marchionne, the chief executive of both Fiat and Chrysler, added that Fiat was open to additional partnerships to help lower the automaker’s costs and expand its global reach.

“We will continue to look at other bilateral arrangements,” Marchionne told reporters on the sidelines of an event at a Chrysler plant in Belvidere, Illinois. “We’re totally open.”

Separately, Marchionne said there was a “better than 50 percent chance” that Fiat would boost its stake in Chrysler by 3.3 percent in July.

Fiat and Mazda announced on Wednesday a deal to jointly develop their most famous sports cars, the Alfa Romeo Spider and MX-5, respectively. The joint venture does not include any equity tie-ups, but will help the two automakers cut costs.

Fiat has already built the small Fiat 500 in a joint venture with Ford Motor Co’s (F.N) Ka; the Fiat Punto with General Motors Co’s (GM.N) Opel Corsa; and the Fiat Seidici with a Suzuki Motor Corp (7269.T) mini-SUV, sharing the investment costs of around 1 billion euros ($1.26 billion) needed to develop each new car.

“The economics make it very difficult” for most automakers to continue to produce all their own platforms and powertrains, Marchionne told reporters. “We’re willing to engage in discussions with anyone else.”

Fiat took management control and a 20 percent stake in Chrysler three years ago when the No. 3 U.S. automaker emerged from a government-funded bankruptcy. Fiat now owns 58.5 percent of Chrysler, while the retiree healthcare trust affiliated with the United Auto Workers union, the VEBA, owns the rest.

At the Belvidere Assembly Plant, Chrysler builds the Dodge Dart compact car, the first vehicle to be offered from a platform developed by both Fiat and Chrysler.

This platform will underpin all future compact cars, sedans and crossovers and will eventually be used for 2 million vehicles annually. The Dart will start arriving in dealerships in June.

Prior to linking up with Chrysler, Fiat was “geographically isolated to Europe,” and that approach will not be viable for automakers in the future. “The ones that are to weather it are going to be the ones with a global footprint,” Marchionne said.

Starting in July, Fiat has the option to buy 40 percent of the VEBA’s stake in Chrysler in small increments. Fiat can buy a maximum of 3.3 percent of Chrysler every six months. This option expires in 2016. Marchionne did not say how much he was willing to pay for the stake.

The VEBA is not managed by the union and its stake in Chrysler is managed by an independent fiduciary. In a statement, the trust said it had “no knowledge” of the arrangement.

The trust “is not a natural shareholder” and will want to sell its stake, Marchionne said. “I’m happy to help them with that.”

Fiat shares gained 4.4 percent to close at 4.05 euros in Italy on Thursday. Mazda shares fell 3.7 percent to close at 104 yen.

($1 = 0.7948 euros)

Reporting by Rick Popely; additional reporting by Deepa Seetharaman in Detroit; Editing by Phil Berlowitz and Matthew Lewis

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