DETROIT – Fiat will spend $1.3 billion to raise its ownership stake in Chrysler, the first time the Italian company will invest cash in the Detroit automaker.

It’s a sign that Fiat sees profits ahead for the once-troubled maker of Jeeps and minivans and wants a bigger cut now that Chrysler is rebounding from its 2009 bankruptcy.

Fiat already has acquired 30 percent of Chrysler in exchange for management expertise and technology. Fiat said Thursday that it has reached a deal to increase the stake to 46 percent — very close to majority ownership — through the cash investment.

The increased stake means Fiat CEO Sergio Marchionne wants to run Chrysler without interference from other big owners. He also wants a shot at pulling more of the company’s profits to Fiat’s bottom line, said Michael Robinet, from consulting firm IHS Automotive.

“The Fiat management likely wants to be in charge of their own domain, basically have the ability to fully control their business,” Robinet said.

In addition to control and profits, the larger stake gives Fiat a larger scale across the globe. Larger automakers can save money by spreading vehicle development costs across more of the world. Marchionne’s goal is to create a company capable of making 6 million cars a year — the scale he believes necessary to remain competitive — by 2014.

The U.S. government gave Fiat a 20 percent stake and management control of Chrysler when the company emerged from a government-funded bankruptcy two years ago.

Since then, Marchionne has revamped Chrysler’s aging product lineup and made available Fiat’s fuel-efficient small car and engine and transmission technology.

Fiat expects to gain another 5 percent, for a majority 51-percent share, by the end of the year.

 


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