Fiat CEO Sergio Marchionne has said he expects to increase the Italian carmaker’s stake in Chrysler Group to 35 percent within two years as he battles growing domestic fears that he is reducing Fiat’s historic base in Italy at the expense of building a global manufacturing footprint after leaked reports suggest Chrysler could assemble as many as 350,000 cars a year for Fiat’s brands. With new production projects set to kick off in Russia and China the Italian media has been vocalising fears of a steep dilution of Fiat’s Italian core.

Currently Fiat holds an initial 20 percent stake in Chrysler Group, which it was given last summer after agreeing to steer the fortunes of the bankrupt carmaker in exchange for providing new management and its efficient small car technology. The bulk of the ‘new’ Chrysler Group shares were handed over to the unions with the government taking a small stake. Fiat has the option to raise its shareholding by a further 15 percent, to a peak of 35 percent, once it hits certain criteria laid down by the U.S. government that will be phased in through three increments of 5 percent.

Marchionne said on Friday that Fiat will hit these targets within the next two years bringing its stake up to the full 35 percent. "There are three steps of five percent; we will do one share this year, with the launch of the 500 in the United States," Marchionne said at the end of last week. "We will add 15 percent within 24 months," he added. Targets kick off with the North American introduction a small, efficient car which Fiat will satisfy once its B-segment 500 starts being built in Mexico at the end of this year fitted with a new 1.4-litre petrol engine that will roll out of a Chrysler factory in Michigan, while further steps will be satisfied by increased sales in Europe and Latin America where sharp declines, particularly in the former region, have left the North American carmaker with little more than a niche presence.

"The most important thing is that Chrysler is proceeding on a turnaround plan, the results are good," Marchionne commented as he told Fiat’s shareholders last Friday that plans initiated for the recovery of Chrysler and its integration with Fiat are on track. Marchionne called the partnership, signed last summer as Chrysler Group emerged from a fast-tracked bankruptcy process, as a "second chance [for Chrysler]" and its faint global footprint is expected to be bolstered with Fiat expanding a series of new joint-venture deals in emerging auto markets such as Russia and China to include certain Chrysler Group models, most likely drawn from the Jeep portfolio which is generally regarded as the only Chrysler division to still retain any brand value.

Marchionne also tried to convince shareholders that Italy remains core to the carmaker’s plans although he plans to shut one plant, Termini Imerese in Sicily and shift its production of the Lancia Ypsilon to Poland and in the face of rumours that Chrysler could be set to build up to 350,000 vehicles a year in the U.S. on behalf of Fiat, Lancia and Alfa Romeo. "Choosing to go abroad was not a whim and certainly Fiat did not expand forgetting Italy, we expanded to make this company stronger,"

The meeting with shareholders came in the wake of sensational stories in the Italian media earlier last week that 5,000 jobs could be shed domestically in addition to the 1,400 already set to be lost at Termini Imerese. Marchionne maintained that the Sicilian plant’s closure was simply decided on financial grounds – it costs around 1,000 euros per car more to build at the island location where there is also only a very small supplier base – and he cited plans to switch production of Fiat’s A-segment Panda from Poland to the underused Alfa Romeo plant in Naples, despite a cost that will run into the hundred millions, as a clear indication that he will retain Fiat’s identity. "We are doing it within the limits of possibility and without endangering the solidity of our company,” Marchionne said, adding, "we maintain it is our duty to give priority to the country where Fiat has its roots." He told his audience that he perceived talk that Fiat was losing its Italian focus as being "unjust" and quoted the use of more than 30 million hours of the government’s temporary redundancy scheme last year to prevent real-time job-losses from occurring. He also reiterated that Fiat plans to hike Italian production from the current levels of around 650,000 units per year to a new target of 900,000.