Chrysler plans to invest US$179m in the next five years at a Michigan (Dundee) factory to build the Italian company’s 4-cylinder, 1.4-litre engines.
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The production of as many as 250,000 engines annually will add 155 employees, according to documents Chrysler filed with the state for job-creation tax credits.
The state granted Chrysler a tax credit valued at US$4.6 million to help secure the project.
The fuel-efficient engine would be used in the Fiat 500 subcompact next year and satisfy a requirement for the Turin, Italy-based automaker to expand its 20 percent stake in Chrysler.
The confirmation is the first of Fiat technology being added to a Chrysler facility.
Fiat can acquire an additional 5 percent stake each time it reaches one of three targets, including building a fuel-efficient engine in the US. Fiat may get as much as 30 percent ownership by the end of March 2011 and the remaining portion at the end of 2011 according to Adam Jonas of Morgan Stanley.
Chrysler expects to double its use of 4-cylinder engines to 38 percent of its vehicles sold in 2014 from a projected 19 percent next year, according to the company’s business plan.
Fiat didn’t stump up cash for the 20% stake in Chrysler it received in June. Instead, Fiat promised to contribute technology and powertrains for small- and medium-size cars so Chrysler could develop a more fuel-efficient product line-up.
See also: US: Chrysler ends engine alliance
