Chrysler paid back on Tuesday $7.6 billion in loans from the American and Canadian governments, paving the way for its Italian partner, Fiat, to increase its control over the Detroit carmaker.
The repayment of loans and interest owed to the US treasury and Export Development Canada is a significant milestone in Chrysler?s methodical comeback from bankruptcy in 2009.
Now the company?s revival will enter a new phase that depends heavily on its alliance with Fiat, which on Tuesday increased its stake in Chrysler to 46%, from 30%.
Fiat will most likely increase its ownership to 51% by the end of the year. Terms of Chrysler?s federal bailout allow the Italian company to gain an additional 5% interest when a prototype of a new fuel-efficient compact car is ready for production in the US.
Sergio Marchionne, who is chief executive of both auto companies, said the new car should be completed by December and would be produced beginning next year at a Chrysler plant in Illinois.
?It?s my intention for us to have the car ready by the fourth quarter,? Marchionne said at a ceremony marking the loan repayments.
Marchionne was joined at the event by Ron A Bloom and Brian Deese, two members of the auto task force that was assembled by President Obama to shepherd Chrysler and General Motors through bankruptcy reorganisation with taxpayer aid.