Fiat Cites Political Dispute as Canada Funding Bid Halted

Fiat SpA (F)’s Chrysler division is dropping a request for provincial and federal Canadian funding to develop new minivans and other models, saying the carmaker will escape political interference by using its own money.

“I don’t want politicians to screw around with the capital-expenditure program,” Chief Executive Officer Sergio Marchionne told reporters today at the Geneva International Motor Show. “This is not their business. I am not here to try to satisfy people’s egos or politicians’ ambitions. I make cars, as simple as that.”

Fiat rose to the highest level in more than six years.

Chrysler had been negotiating with Canadian officials for loans to help the U.S. carmaker’s factories in Windsor and Brampton, Ontario, prepare to build new vehicles. Marchionne said last month that an agreement was “not even close.” Tim Hudak, the leader of the Progressive Conservative party in Ontario’s parliament, urged the Liberal-led provincial government on Feb. 24 to refuse Chrysler’s request for “ransom” money.

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The U.S. company said yesterday that it’s withdrawing applications for government financial backing for the projects. Chrysler will be “much freer” to decide on investments in the Canadian plants without ties to government funds, Marchionne said today. Spending will be less than $10 billion, he said, declining to specify a figure.

Photographer: Ty Wright/Bloomberg

The body and chassis of Jeep Cherokee vehicles roll out on an automated line at the Chrysler Toledo Assembly Plant in Toledo, Ohio. Close

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Photographer: Ty Wright/Bloomberg

The body and chassis of Jeep Cherokee vehicles roll out on an automated line at the Chrysler Toledo Assembly Plant in Toledo, Ohio.

“These are private decisions, how much money we commit, and this is not up for public scrutiny,” Marchionne said.

Model Assignments

The plant in Windsor builds the Chrysler Town & Country and Dodge Caravan minivans, the second and third best-selling models in the segment in the U.S. last year, trailing the Honda Odyssey, according to Autodata Corp. Chrysler will begin work on the next version of its minivan line at the Windsor factory, the company said yesterday.

Marchionne’s decision was a pragmatic one, Dennis DesRosiers, president of DesRosiers Automotive Consultants in Richmond Hill, Ontario, said in a telephone interview. The company’s North American factories are at full capacity and moving production of the minivan would have delayed its introduction, he said.

“To go and get government aid you’re looking at at least a year, possibly longer,” DesRosiers said. “To move the plants out of Windsor would be a three-year delay, and I think Chrysler would look at any delay in getting these new products to the marketplace as a serious missed opportunity.”

Fiat rose 4.1 percent to 8.06 euros in Milan, the highest closing price since Dec. 10, 2007. The stock has almost doubled in the last 12 months, valuing the Turin, Italy-based manufacturer at 10.1 billion euros ($13.9 billion).

‘Political Football’

The Brampton site will produce new versions of the Chrysler 300 and Dodge Charger and Challenger cars that it already builds, the manufacturer said.

“It is clear to us that our projects are now being used as a political football, a process that, in our view, apart from being unnecessary and ill-advised, will ultimately not be to the benefit of Chrysler,” the carmaker said.

The investment may be the largest by Chrysler since it began accumulating stock as part of in the U.S. company rescue from bankruptcy in 2009. Marchionne said last month that he had heard from other jurisdictions, including locations in the U.S. and Mexico, suggesting potentially better incentives for production than in Canada.

Canada’s government said on Feb. 11 that it was increasing funding for automakers by C$500 million ($450 million) to attract more investment from companies such as Chrysler as output declined amid global competition.

The government missed an opportunity to secure Chrysler jobs in Canada for 30 years, said Jerry Dias, national president of Unifor, which represents auto workers for the three largest U.S. auto makers in Canada.

“What they announced is obviously the next generation of minivan, but what they didn’t announce is the far more significant piece, and that’s the longevity of the plant,” he said by phone from Port Elgin, Ontario.

To contact the reporters on this story: Tommaso Ebhardt in Geneva at tebhardt@bloomberg.net; Mark Clothier in Southfield, Michigan at mclothier@bloomberg.net

To contact the editors responsible for this story: Jamie Butters at jbutters@bloomberg.net; Chad Thomas at cthomas16@bloomberg.net

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