Auto

During the U.S. government led bailout in 2009, Fiat took over management control of Chrysler and was given a 20% stake in the company.

The government said Fiat's stake in Chrysler could increase to as much as 35% so long as they met three milestones.

Now, the Italian company now controls 30% of Chrysler after meeting the second milestone set forth by the U.S. government.

From the Detroit News:

Fiat SpA announced today it has increased its share in partner Chrysler Group LLC to 30 percent effective immediately.

The additional 5 percent stake is triggered automatically with Fiat's completion of the second of three performance-related conditions.

The first, achieved in January, was awarded for Chrysler's assembly in Dundee of a fuel-efficient Fiat engine.

The second condition was that the Italian automaker help Chrysler generate cumulative revenue of $1.5 billion outside North America and use Fiat's dealer network in Latin America to distribute Chrysler vehicles.

The third milestone, according to the Globe and Mail, is the development of a 40 mpg Dodge car built on a Fiat platform.

Once that milestone is reached, Fiat could solidify its ownership of Chrysler. From the Globe and Mail:

Dodge is developing a compact car on a Fiat platform that will reach 40 miles per gallon, which would satisfy the third test set by Treasury in 2009.

Mr. Marchionne told analysts on a conference call in October that he expected Fiat would meet all of the Treasury’s hurdles by the end of 2011.

The indications of progress are significant because the sooner Fiat can raise its Chrysler stake to 35 per cent, the quicker it could exercise an option to take majority ownership of the U.S. automaker.

The Detroit News reports that the current ownership of Chrysler breaks down this way:

1. 59.2% - United Auto Workers retiree health care trust
2. 30% - Fiat
3. 8.6% - U.S. government
4. 2.2% - Canada and Ontario governments combined
   

Detroit’s mayor says the city’s unions will have to give big contract concessions or the city of Detroit may end up in the hands of a state appointed Emergency Financial Manager. Mayor Dave Bing outlined his budget plan to the city council this morning.

Bing says pension and health care costs threaten to force the city into insolvency.  

“If we are unable or unwilling to make these changes, an Emergency Financial Manager will be appointed by the state to make them for us.  It’s that simple.”  

The city is facing a $155 million budget deficit. The mayor says that could grow to over a billion dollars in five years, unless deep cuts are made now. 

Michigan’s new Emergency Financial Manager law gives the state appointed administrator broad powers to throw out union contracts and make budget decisions.

Toyota will shut down its U.S. factories five extra days this spring because of parts shortages – and warns its American dealers to expect inventory shortfalls this summer. 

Rick Hodges is General Manager of Victory Toyota in Canton, Michigan.   It’s bad news, especially in the wake of last year’s recall crisis. 

"When the weather breaks, March all the way through August is normally when we’re going to sell 2/3 of all of our vehicles," says Hodges, "And it’s going to hurt our sales, sure."

Fiat could increase its ownership stake in Chrysler this week. 

Eventually, Fiat hopes to own a majority of the Detroit automaker. 

In 2009, the federal government agreed to give Fiat 20% of Chrysler in return for taking over management of the Detroit automaker.  The deal also set up incremental steps by which Fiat could reach 51%.    

Fiat CEO Sergio Marchionne says he expects Fiat’s stake to grow to 30% this week, after meeting a requirement to increase sales of Chrysler vehicles outside North America.  

Fiat CEO Sergio Marchionne says the Italian auto maker will increase its stake in Chrysler in the coming days.  Fiat currently controls about 25% of the Detroit auto company.  The Wall Street Journal reports Marchionne plans to add another 5%. 

If you seek rising gas prices, look about you.

Gas prices in Michigan have ticked up over the course of this past week, an increase of 11 cents, bringing the statewide average up to $3.86.

But what will the effect on Michigan drivers be?

Mantill Williams, a spokesperson for the American Public Transportation Authority, says there is a tipping point at which people begin to consider changing their driving habits.

From ABC News:

An influencial business forecasting company has named Flint as one of 13 "Comeback Cities" in 2011.  Kiplinger.com ranks Flint along side other American cities that weathered the economic recession that are poised to make a big comeback this year.