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Sunday, June 26, 2011

Chrysler prepares to build Dodge small car

Chrysler Group LLC said it plans to begin test production in the second half of this year of the small car that will trigger U.S. government requirements to increase Fiat S.p.A.'s ownership stake.

Tooling for the small Dodge brand car will be installed at Chrysler's Belvidere, Ill., assembly plant in August, said Fred Goedtel, head of Chrysler's vehicle assembly operations.

"We'll start pilots in the fall" and official production begins "sometime" in the first quarter, he said.

Design work on the car, which is the vehicle Chrysler expects will trigger the final government ownership milestone, is done, said Ralph Gilles, head of Chrysler design.

"The company is really focused on it," he said of the vehicle.

Fiat is moving fast to consolidate control over Chrysler.

The Italian automaker is buying the U.S. Treasury Department's final stake in the U.S. automaker that was acquired as part of Chrysler's 2009 bankruptcy reorganization.

That purchase will raise Fiat's stake to 52 percent. Chrysler must test and commit to building a vehicle in the U.S. that achieves 40 mpg for Fiat to gain another 5 percent stake.

Its deal with the U.S. and Canada allowed Fiat to gain as much as 35 percent in Chrysler without paying cash in exchange for giving management experience and technology to Chrysler.

Fiat was also required to achieve various performance milestones.

The 40 mpg vehicle is the final such milestone. Fiat also exercised an option to purchase 16 percent of the company after Chrysler repaid the U.S. and Canadian government loans in May.

Sergio Marchionne, chief executive officer of both automakers, has said he expects Fiat will get its final 5 percent tied to the 40 mpg car by year's end.

The small Dodge car is based on Fiat's Alfa Romeo Giulietta, Marchionne has said. Gilles said the new Dodge model's name was decided earlier this week.

But he declined to provide the name.

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