OTTAWA — The federal and Ontario governments have sold their remaining stakes in automaker Chrysler to its parent company Italian car producer Fiat for US$140 million.
The sale, announced Thursday, is essentially the final repayment of Canadian government loans to the automaker two years ago as part of a $1.7-billion bailout to help the Detroit company survive the North American auto sector’s worst downturn ever.
The two Canadian governments received about a 1.7 per cent stake in Chrysler when they initially made the loans, as part of a wider bailout led by the United States government.
The help for Chrysler, and an even larger financial package for industry giant General Motors Corp. by the three governments, saved both North American carmakers and their Canadian operations from collapse.
Chrysler and GM slimmed down their operations and cut plants and thousands of jobs in both countries to become more competitive. However, Ottawa and Ontario estimate that 52,000 Canadian jobs were protected by government help for the battered auto sector.
Car sales collapsed during the 2008-2009 recession and the global credit crunch that ensued, making it difficult for consumers to finance car purchases and saddling the industry with billions of dollars in losses.
Both GM and Chrysler are now doing much better, with more competitive new models and far lower pension and labour costs. At Chrysler, the company is now being run by Fiat, which is helping to introduce new smaller fuel-efficient cars into the U.S. market.
Federal Finance Minister Jim Flaherty said the sale marks an important step in the turnaround of the U.S.-based car maker, which recently repaid its loans to the U.S., Canadian and Ontario governments.
“Chrysler’s recent repayment of its loans was an important step in the turnaround of this company,” Flaherty said in a joint statement from the two governments.
“Canada has now sold its remaining interests in Chrysler Group LLC to Fiat for US$140 million, fulfilling our commitment to exit from ownership of Chrysler as quickly as possible while maximizing value for taxpayers.”
Canada gets $125 million for its stake, plus an additional $15 million from an agreement between the U.S. Treasury department and the UAW Retiree Medical Benefits Trust.
Ontario will get one-third of the $140 million, or about $47 million, for its contribution to the Chrysler bailout. It will use the money to pay down its huge deficit
“The auto sector is a key driver of the Ontario — and the Canadian — economy,” Ontario Finance Minister Dwight Duncan said.
“Working together, our governments helped keep people employed, allowing them to continue to provide for their families.”
Chrysler Canada, based in Windsor, Ont., employs more than 8,000 people and has assembly plants in Windsor and Brampton, northwest of Toronto, as well as parts operations.