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Chrysler '12 profit may top US$3 bil.

MILAN--Fiat-Chrysler Chief Executive Sergio Marchionne reiterated on Tuesday that Chrysler's operating profit in 2012 could exceed its US$3 billion target, commenting on June numbers released earlier in the day.

“Chrysler sold 1.23 million cars in the first half, which is over half of our target,” Marchionne said at a press conference. “The objective of US$3 billion is close at hand. We could overshoot it.”

Chrysler said earlier on Tuesday its June sales rose 20 percent year-on-year.

If Chrysler decides it wants to make more than 2.8 million cars in the United States, it will need to seek more production capacity, he said, without specifying where. Fiat's plan is to use the excess capacity in its five Italian plants to build cars to export to the U.S. market.

If Fiat is unable to guarantee the necessary labour flexibility in its Italian plants to satisfy export demand, it will consider closing an Italian plant, he said.

Fiat moved to increase its hold on Chrysler earlier on Tuesday, announcing it exercised an option to buy around 3.3 percent more of U.S. peer Chrysler from the VEBA trust fund, boosting its stake to 61.8 percent.

Fiat holds options to purchase up to 40 percent of the portion of Chrysler owned by union health care trust VEBA, or the Voluntary Employees Beneficiary Association. Fiat can purchase up to 3.32 percent at a time in any six-month period until June 30, 2016.

Asked about the timing of buying up the rest of Chrysler to gain total ownership, Marchionne said he “sees no reason” not to continue gradually buying up the stake up to 2016, as stipulated with VEBA.

He also added, however, that waiting until 2016 may be “a bit too long,” and that the acquisition of the remaining stake could be purchased with cash.

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Fiat Industrial Chief Marketing Officer Olivier Francois speaks at the launch of Fiat's new 500L in Turin, Italy, Tuesday, July 3. Italian carmaker Fiat says it is consolidating its ownership of Chrysler by exercising an option to purchase around 3.3 percent of Chrysler equity from a trust fund that manages health care for pensioners.

(AP)

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